Executive Summary

Q4 (13 weeks ended Feb 1, 2025): Net sales fell 9.4% to $5.18B, comps -6.7%; total revenue $5.40B. GAAP EPS was $0.43; adjusted EPS $0.95 after excluding $76M of impairments/store closing/other costs; gross margin expanded 49 bps to 32.9% .
2025 outlook set a cautious bar: net sales -5% to -7%, comps -4% to -6%, operating margin 2.2%–2.6%, EPS $0.10–$0.60; capex $400–$425M; quarterly dividend cut to $0.125 (from $0.50 in 2024), prioritizing balance sheet flexibility .
Operating drivers were mixed: Sephora beauty comps +13% and gross margin execution helped, but digital comps -13.4% (impacted by an online inventory suppression issue now corrected) and legacy home softness weighed on sales; stores comps -3.1% outperformed digital .
Restructuring: closure of 27 underperforming stores and one e-commerce fulfillment center (EFC) incurred $76M in charges; long-term debt reduced by $113M via redemption of 9.50% notes; Board declared the $0.125 dividend concurrent with results .

What Went Well and What Went Wrong

What Went Well

Gross margin execution: Q4 GM rate rose 49 bps YoY to 32.9% on optimized promotions and lower digital penetration; FY GM +50 bps to 37.2% .
Beauty momentum: Sephora at Kohl’s comps +13% in Q4, accelerating from Q3; management called the shop-in-shop a traffic driver with high-margin tailwinds .
Cost discipline: SG&A fell 4.5% YoY to $1.54B in Q4, with savings across stores, marketing, and supply chain; CFO also highlighted lower interest expense and continued expense optimization into 2025 .

Management quotes:

“We have identified key areas of focus and are taking action in 2025 to reposition Kohl’s for future success… I am confident that the areas we identified will deliver on what customers want and expect from Kohl’s.” – CEO Ashley Buchanan .
“Gross margin… [was] driven primarily by optimizing our promotional events as well as lower digital penetration.” – CFO Jill Timm .
“Sephora continued to be a strong sales driver… comparable beauty sales increasing 13%.” – CFO Jill Timm .

What Went Wrong

Top-line pressure: Q4 net sales -9.4% (benefit last year from 14th week ~$164M), comps -6.7%; operating income margin fell 270 bps YoY to 2.3% .
Digital weakness: Digital comps -13.4% in Q4 on legacy home softness and a conversion headwind from an inventory suppression issue (since corrected) .
Credit revenue headwind: “Other revenue” declined $24M YoY in Q4 due to lower revolving credit balances and lower late fees; 2025 guidance also contemplates a decline in “other revenue” on accounting change and lower AR balances .

Financial Results

Metric	Q2 FY2024 (13w to Aug 3, 2024)	Q3 FY2024 (13w to Nov 2, 2024)	Q4 FY2024 (13w to Feb 1, 2025)
Total Revenue ($MM)	$3,732	$3,710	$5,397
Net Sales ($MM)	$3,525	$3,507	$5,175
Gross Margin %	39.6%	39.1%	32.9%
Operating Income ($MM)	$166	$98	$126
Operating Margin %	4.4%	2.7%	2.3%
Diluted EPS (GAAP)	$0.59	$0.20	$0.43
Adjusted Diluted EPS (non-GAAP)	N/A	N/A	$0.95

Notes:

Q4 includes ~$76M of impairments/store closing/other costs (closure of 27 stores and one EFC; severance/exit costs; asset impairments; lease gains) .
Last year’s Q4 had a 14th week contributing ~$164M net sales; comps compare 13 weeks YoY .

KPIs and Operating Detail

KPI	Q4 FY2024	YoY / Sequential Color
Comparable Sales	-6.7%	Lapped 14th week prior year; comps based on 13w vs 13w
Stores Comp	-3.1%	Improved during quarter; January strongest month
Digital Comp	-13.4%	Hurt by legacy home and conversion issue (since corrected)
Sephora Beauty Comp	+13%	Acceleration from Q3; strong fragrance, bath & body, skincare
SG&A ($MM)	$1,539	-4.5% YoY; deleveraged 148 bps
Inventory ($MM)	$2,945	+2% YoY to rebuild proprietary brands
Operating Cash Flow ($MM)	$596 (Q4)	$648 for FY2024

Actual vs. Consensus (S&P Global)

Metric	Actual	Consensus	Beat/Miss
Revenue ($MM)	$5,397	N/A	N/A
Diluted EPS (GAAP)	$0.43	N/A	N/A
Adjusted EPS (non-GAAP)	$0.95	N/A	N/A

S&P Global consensus estimates were unavailable at the time of analysis due to data access limits. Where estimates are absent, please note they were unavailable from S&P Global at the time of writing.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales	FY2025	N/A (first issuance)	-5% to -7% vs 2024	New
Comparable Sales	FY2025	N/A	-4% to -6%	New
Operating Margin	FY2025	N/A	2.2%–2.6%	New
Diluted EPS (GAAP)	FY2025	N/A	$0.10–$0.60	New
Capital Expenditures	FY2025	N/A	$400–$425M	New
Other Revenue	FY2025	N/A	Down ~12% (mix shift/AR balances; accounting change)	New
SG&A dollars	FY2025	N/A	-3.5% to -5% YoY	New
Dividend (Quarterly)	FY2025	$0.50 (declared Nov 13, 2024)	$0.125 (declared Mar 11, 2025)	Lowered
Debt	FY2025	N/A	Refinance July 2025 maturities	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 FY2024)	Current Period (Q4 FY2024)	Trend
Beauty/Sephora	Key growth area; strong performance cited in Q2/Q3 updates	Beauty comps +13%; rollout completing in 2025; cross-shopping opportunity	Improving
Core Apparel/Footwear	Softness pressured sales in Q3	Rebalancing assortment; rebuild proprietary brands; regain traction in petites, jewelry, legacy home	Early improvement, still challenged
Promotions/Value Strategy	Margin discipline and promotions referenced generally	Simplify offers; reverse coupon exclusions on many brands; focus on price clarity	Reset under way
Digital/Omnichannel	Noted omnichannel, no specific digital weakness called out in Q2/Q3 PRs	Digital comp -13.4% due to legacy home softness and a conversion issue; issue corrected; omni enhancements planned	Near-term pressure, fix in progress
Supply Chain	Inventory reductions (Q2); operational execution	Supply chain diversity lauded; opportunity in allocation; restore in-stocks (trip assurance)	Stable/positive
Cost Structure	Expense management supporting earnings (Q2/Q3)	SG&A -3.5% to -5% in FY25; store/EFC closures; marketing efficiency; self-checkout tests	Ongoing optimization
Macro/Consumer	Challenging environment noted (Q2)	Lower-income consumer constrained; heightened value-seeking behavior	Persistent headwind
Capital Allocation	Dividend maintained at $0.50 in 2024	Dividend cut to $0.125; rebuild cash, reduce revolver reliance; refinance 2025 maturities	More conservative

Management Commentary

“We need to reprioritize our initiatives… deliver on these key tenants to better serve all of our customers… most of what we need to do is in our control.” – CEO Ashley Buchanan .
“Reestablish [Kohl’s] as a leader in quality and value… reverse some of these [coupon] exclusions to simplify the experience.” – CEO Ashley Buchanan .
“We experienced underperformance in our digital business… due to an online inventory suppression issue… we have corrected this issue and are seeing improved conversion quarter-to-date.” – CFO Jill Timm .
“During the fourth quarter, the company announced the closure of 27 underperforming stores and 1 e-commerce fulfillment center… [resulting in] a onetime charge of $76 million.” – CFO Jill Timm .
“In 2025, our focus will be rebuilding our cash balance… addressing our July 2025 maturities… the Board has made the decision to reduce the dividend… to $0.125 per share.” – CFO Jill Timm .

Q&A Highlights

Merchandising reset: Management acknowledged self-inflicted friction from prior resets (e.g., removing productive categories/space), with a plan to rebuild proprietary brands and restore lost categories (petites, jewelry) while maintaining growth categories (Sephora, home decor, impulse) .
Promotions and coupons: Kohl’s excluded “too many” brands from coupons; management is reversing unilateral exclusions to re-establish value clarity, while seeking more efficient, elastic promotion spend versus register markdowns .
Digital/omni: Digital underperformed; inventory suppression issue fixed; omni enhancements and store layout optimization planned to improve conversion and trip assurance .
Customer and macro: Lower-income cohorts remain constrained; value focus is elevated and likely persists near term; strategy pivots aim to meet customers where they are .
Cost and fleet: Despite closing 27 stores, overall fleet remains profitable; more lease maturities offer flexibility; SG&A leverage targeted via labor, marketing, supply chain and inventory turns .

Estimates Context

S&P Global consensus estimates for Q4 FY2024 (revenue/EPS) were unavailable at the time of analysis due to data access limits. Given management’s FY2025 guidance of EPS $0.10–$0.60 and sales declines of 5%–7%, Street models above the high end will need to recalibrate to the guide’s range .
Where consensus values are missing in the tables, note they were unavailable from S&P Global at the time of writing.

Key Takeaways for Investors

Near-term: Cautious FY2025 guide (sales declines, low EPS range) and dividend cut to $0.125 signal a balance-sheet-first posture and a multi-quarter turnaround; potential near-term pressure until assortment, coupon, and digital fixes translate to traffic and conversion .
Margin mix: Beauty (Sephora) growth and mix may support margins even in a soft top-line environment, while better promotion efficiency and proprietary brand rebuild could modestly expand gross margin in 2025 (+30–50 bps guided) .
Execution watchpoints: Proof points include sustained digital conversion recovery, re-engagement of core customer (petites, jewelry), and measured improvement in legacy home; management is correcting coupon exclusions that frustrated loyalists .
Cost discipline: SG&A plans (-3.5% to -5%) and store/EFC rationalization should help protect EBIT despite lower sales; however, lower “other revenue” (credit) is a headwind in 2025 .
Liquidity/debt: Focus on rebuilding cash, reducing revolver reliance, and refinancing 2025 maturities reduces risk but limits near-term capital returns (lower dividend; repurchases deferred) .
Medium term: If proprietary brands, simplified value messaging, and omni enhancements restore the core customer and improve digital traction, comps can stabilize and margins lift; Sephora rollout completion reduces incremental contribution—growth must come from basket expansion and cross-shopping .
Monitor leadership transition: Subsequent to Q4 call, the Board terminated CEO Ashley Buchanan for cause and appointed Michael Bender as Interim CEO; organizational focus remains on simplification and efficiency while the search for a permanent CEO proceeds .

KOHLS Corp (KSS)·Q4 2025 Earnings Summary