KOHLS Corp (KSS)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 results and call materials are not yet available; Kohl’s has scheduled its Q3 2025 earnings conference call for November 25, 2025, making this a pre-call recap anchored in prior-quarter trends and current quarter press releases .
• Trajectory into Q3: Q1 2025 comps declined 3.9% with gross margin up 37 bps and diluted loss per share of ($0.13) ; Q2 2025 comps declined 4.2% with gross margin at 39.9% and diluted EPS of $1.35 (adjusted $0.56) .
• Guidance was raised in Q2: adjusted operating margin to 2.5–2.7% (from 2.2–2.6%) and adjusted diluted EPS to $0.50–$0.80 (from $0.10–$0.60) for FY 2025; net sales decline narrowed to (5%)–(6%) .
• Q3 seasonal setup: Kohl’s launched holiday promotions and Black Friday events to drive value and traffic, and declared a $0.125 quarterly dividend (payable December 24, 2025), a potential sentiment support into the print .

What Went Well and What Went Wrong

• What Went Well

  • Proprietary brands and value orientation gained momentum; management quantified margin uplift from proprietary penetration and cited sequential gains, including July comps turning flat in Q2 .
  • Accessories/jewelry outperformed; jewelry sales up ~12% YoY in Q2 after reinstating fine jewelry presence and “accessories pad,” supported by impulse queuing rollout (+30% sales) .
  • Disciplined cost control and inventory: SG&A down 4.1% YoY in Q2; inventory down 5% YoY; receipts managed down in the mid-teens, supporting margin and cash flow .

• What Went Wrong

  • Core Kohl’s card customer performance lagged (sales down low-teens in Q2), weighing on credit-related “other revenue”; management is working to re-engage this segment via coupons and assortment corrections .
  • Traffic remains the key pressure point; Q2 sales decline driven primarily by fewer transactions, with value-seeking behavior and trade-down into opening price points noted by management .
  • Category softness: men’s/kids and active footwear underperformed in Q2; tariffs/macro uncertainty remain headwinds prompting margin guide to the low end of prior range to preserve promotional flexibility .

Financial Results

Quarterly performance context (prior-year Q3 and first two quarters of FY 2025):

Segment mix (Q2 2025 vs Q2 2024):

KPIs and balance sheet/cash flow:

Note: The Q2 press release/MD&A referenced operating cash flow of $598 million; cash flow statements show $506 million for the six months ended August 2, 2025 (difference likely due to rounding or reporting conventions; we anchor on the cash flow statements) .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We delivered comparable sales of down 4.2% and adjusted EPS of $0.56—both ahead of our expectations… our efforts are beginning to resonate with customers” (Michael Bender, Q2 call) .
• “For every 100 bps of proprietary brand penetration, gross margin improves 10–15 bps… we expect the benefit to accelerate” (Jill Timm, Q2 call) .
• “Accessories and jewelry showed meaningful strength after re-establishing the category and investing in fashion jewelry inventory” (Michael Bender, Q2 call) .
• “Our core credit customer remains under pressure… coupon eligibility expansions are reengaging this segment” (Jill Timm, Q2 call) .

Q&A Highlights

• Value/proprietary brands and coupon eligibility are the most material drivers of top-line improvement; July comps were flat, showing momentum (management responses to Baird, Gordon Haskett) .
• Margin cadence: proprietary mix and tight inventory management offset tariff pressures; guide set to low end for flexibility into holiday (Evercore ISI) .
• Credit/other revenue: co-brand launch benefit comped in 2H; lagging Kohl’s card segment weighs on AR balances, with re-engagement initiatives underway (Bank of America) .

Estimates Context

• S&P Global Wall Street consensus for Q3 2025 could not be retrieved due to a platform limit; therefore, S&P consensus is unavailable for this report.
• Third-party directional context: TipRanks shows Q3 2025 consensus EPS forecast of approximately -$0.16 and confirms the Nov 25, 2025 report date . Nasdaq’s calendar similarly estimates Nov 25, 2025 with an EPS consensus near -$0.17 . LSEG’s retail preview notes Kohl’s projected Q3 2025 same-store sales decline of ~4% .

Key Takeaways for Investors

• Near-term catalyst: Q3 earnings call on Nov 25, 2025; watch for any guidance updates vs the raised FY 2025 outlook and holiday commentary .
• Margin resilience depends on proprietary penetration, tight receipts, and promotional strategy; management quantified margin leverage from private labels and preserved flexibility for holiday pricing .
• Category strategy is working: jewelry/accessories/impulse queuing are incremental unit drivers; monitor whether strength extends to men’s/kids and active where softness persisted .
• Customer mix risk: Kohl’s card/credit customer underperformance is a headwind to other revenue; coupon inclusions and value messaging are essential to re-engage this cohort .
• Liquidity improved heading into Q3: revolver borrowings reduced to $75M and July 2025 notes repaid; long-term debt increased with 10% secured notes—watch interest expense trajectory .
• Promotional calendar and dividend support sentiment: Black Friday “Holiday Quest” and $0.125 dividend declared Nov 12 may aid traffic/value perception into year-end .
• Macro/tariffs remain fluid; management’s diversified sourcing and elasticity-managed buys mitigate impacts, but competitive holiday promo could weigh on margins (guide set accordingly) .

Sources

• Q3 event scheduling and investor materials page .
• Q1 2025 press release and 8-K ; Q1 earnings call transcript .
• Q2 2025 press release and 8-K ; Q2 10-Q ; Q2 earnings call transcript .
• Prior-year Q3 2024 press release for YoY context .
• Q3 seasonal press releases (Black Friday) and dividend declaration .
• Third-party estimates/calendar context .