Kohl's Corporation

Q1 2026: net sales declined 1.7%, comparable sales declined 1.1%, and the company said this was its best quarterly comp performance in over 4 years. Gross margin improved 4 basis points versus last year, SG&A fell about $20 million or 1.6%, operating cash flow is expected to be around $900 million for the year, capital expenditures are expected to be $350 million to $400 million, and management reaffirmed full-year 2026 guidance for comps of down 2% to flat, operating margin of 2.8% to 3.4%, and EPS of $1 to $1.60. Q1 also included a net loss of $14 million, or $0.13 per diluted share; interest expense was $63 million, and the company ended the quarter with $429 million of cash and no borrowings on its ABL. Management said it submitted $140 million of claims related to Phase 1 tariffs and is eligible to receive $190 million in total tariff refunds, but none were received in Q1.

Michael Bender framed the quarter as evidence that Kohl’s reset strategy is starting to work, pointing to better execution, tighter inventory, and more disciplined assortment edits. He emphasized proprietary brands as the key driver, saying the business is strengthening across women’s, kids and juniors, while seasonal and inventory fixes helped spring business run up mid-teens. His tone was constructive but realistic, repeatedly saying Kohl’s is “not satisfied” yet and still has significant work ahead.

Jill Timm focused on the operating and financial mechanics behind the quarter: net sales down 1.7%, comps down 1.1%, gross margin up 4 bps, SG&A down about $20 million, and EPS loss of $0.13. She highlighted a cleaner balance sheet with $429 million of cash and no ABL borrowings versus $153 million of cash and $545 million of ABL borrowings last year, plus $50 million of debt repurchased at a $9 million discount. On capital allocation, she said Q1 capex was $84 million, full-year capex should be $350 million to $400 million, and the company is prioritizing investment in the business, the dividend, opportunistic debt repurchases, and only later share buybacks once cash and performance stabilize.

Analysts pressed management on what drove the improvement, and Bender/Timm said it was mainly proprietary brands, better inventory positioning, and spring seasonal fixes rather than a one-time effect. They also addressed weaker spots: stores, Sephora, men’s and footwear, with management saying those should improve gradually through the year as newness rolls in, including MAC expanding at Sephora, more footwear depth for back-to-school, and men’s assortment edits. Questions on credit trends and tariff refunds drew the response that the Kohl’s Charge customer is stabilizing, with payment rates up and loss rates down, while tariff refunds are not included in guidance and would be upside if received.