Updated 5 p.m. ET March 10
Despite a decline in sales, Kohl’s Corp. improved its bottom line in the fourth quarter, largely due to inventory discipline and expense controls.
For the three months ended Jan. 31, operating income totaled $212 million compared to $126 million in the prior year. As a percentage of total revenue, operating income was 4.1 percent, an increase of 176 basis points year-over-year.
Related Articles
Adjusted operating income was $510 million compared to $509 million in the prior year.
Net income was $125 million, or $1.07 per diluted share, compared to net income of $48 million, or 43 cents per diluted share, and adjusted net income of $106 million, or 95 cents per adjusted diluted share, in the prior year.
You May Also Like
Net sales decreased 3.9 percent year-over-year, to $5 billion, from $5.2 billion in the year-ago period, with comparable sales down 2.8 percent.
Kohl’s beat Wall Street’s profit expectations but fell short on the sales side. The company’s stock closed down 1.5 percent to $14.58 on Tuesday.
“We managed our costs very effectively even with lower sales,” Michael J. Bender, Kohl’s chief executive officer, told WWD. “I don’t like talking about the weather, but it did play a role. Half of our stores closed during late January because of the storms.” He said the extreme weather reduce the comparable sales figure by 70 basis points. Two storms hit the country in the last week of January.
Bender also said the retailer has been “really addressing the product story” by narrowing choices so the offering is clearer and the shopping easier, while also serving up greater depth in bestselling items.
Turnaround efforts by the Menomonee Falls, Wisc.-based Kohl’s center on modernizing processes, amplifying private labels like LC Lauren Conrad, bolstering promotions, reviving coupons, providing more opening price points, greater value and making decisions for the long-term, rather than seeking short-term gains.
The retailer caters to low and middle income households, which are strained economically now and getting pinched further this season by rising fuel prices due to the war in Iran.
In some recent maneuvers, Kohl’s has been extending its toy assortment with “towers” stocking toys priced under $10. Also “deal bars” stocking seasonal and holiday items, under $10 as well, have been set up to encourage impulse buys. The company recently launched its “By Kohl’s” campaign notifying customers of proprietary products only found at Kohl’s, and strengthening its value messaging.
“We’re very mindful of the macro economy and where our customer is right now. They’re financially stressed,” Bender said. “We are still very positive about our ability to deliver a solid 2026 performance,” Bender said.
Later, during a conference call with retail analysts, Bender discussed the sales decline.
“First, we have an opportunity to better execute our fall seasonal business,” he said. “The softness in this category uncovered some operational opportunities for us with regard to our inventory, depth and allocation. We do not consistently have the right product in the right quantity, in the right places. This issue was outsized in our smaller format stores, which meant we were not consistently able to meet the demand in key moments. However, we continue to experience positive growth in our year-round businesses, including the emphasis on core basics and essentials, which were not impacted by inventory allocation issues.”
Bender said Kohl’s lost some ground during Black Friday, Cyber Monday and the week following Christmas. “We know consumers are more value conscious, and there is opportunity for us to regain share during these windows through strong promotional statements that better align to our customer needs and priorities,” he said. “Consistent and differentiated value statements across marketing, in stores and online will be a catalyst to improve our performance.”
On the positive side, juniors, petites, men’s and kids performed well in Kohl’s private label business last quarter. However, apparel overall was flat and home was down 3 percent.
Sephora at Kohl’s saw 2 percent net sales growth with comparable sales improving to flat, driven by expanded holiday gifting sets and continued strength in fragrance and hair care. The March roll out of MAC cosmetics to 850 stores is performing ahead of plan, Bender said.
Accessories increased low-single digits, led by the expansion of impulse areas to nearly all doors in the third quarter. Fashion and bridge jewelry also turned in strong performances, while footwear underperformed due to softness in active footwear and boots. This month, Kohl’s launched Sea and Skye, a teen and tween girls private label casual apparel line. Kohl’s has also been expanding its FLX athleisure private brand, rolling out Babies R Us gifting fixtures separate from the 200 Babies R Us shops, adding brands to its Sephora beauty shops, while also resetting store presentations.
Additionally, Bender said Kohl’s “will leverage key national brand partners who continue to deliver newness and innovation, including brands like Shark and Ninja.” Levi’s, Nike, Under Armour, Adidas, Carter’s and Tommy Hilfiger are among the key national brands carried by the retailer.
Kohl’s is taking “immediate action to recapture our seasonal decor business through offering greater customer choice and sharper price points on key items,” Bender said.
And on the digital front, he said: “We’re focused on delivering a better experience and deeper connections through advanced personalization and contextual relevance, making every interaction with Kohl’s more meaningful for the customer. We are enhancing our omnichannel capabilities across all digital touch points such as search findability and availability, as well as elevating our store-enabled services as key differentiators to maximize convenience and create the seamless integrated shopping experience. And last, we are actively modernizing our site structure and foundational data architecture. This ensures our digital ecosystem is discoverable, high performing and fully prepared for a future driven by AI and agent technology.”
For 2026, Kohl’s is forecasting net sales and comparable sales will range from a decline of 2 percent to flat. Adjusted diluted earnings per share is seen in the range of $1 to $1.60.
Bender became Kohl’s CEO in November 2025 after spending six months as interim CEO and a member of the board since 2019. He is a former Eyemart Express, Walmart, L Brands, Pepsi and Cardinal Health executive.
For all of 2025, net sales decreased 4 percent year-over-year, to $14.8 billion, from $15.4 billion, with comparable sales down 3.1 percent.
Operating income was $624 million compared to $433 million in the prior year. Adjusted operating income was $510 million compared to $509 million in the prior year.
There was a gain on a legal settlement of $129 million from a credit card interchange fee lawsuit.
Net income for the year was $272 million, or $2.38 per diluted share, up from $109 million, or 98 cants a diluted share.