Financial Data and Key Metrics Changes - Net sales declined by 2.8% in Q3 and 4% year-to-date, with comparable sales down 1.7% in Q3 and 3.2% year-to-date [32] - Adjusted net income for Q3 was $11 million, equating to an adjusted diluted earnings per share of $0.10, while year-to-date adjusted net income is $61 million with adjusted diluted earnings per share of $0.54 [36][37] - Gross margin improved to 39.6%, an increase of 51 basis points year-over-year, driven by strong inventory management and product mix benefits [34] - SG&A expenses declined by 2.1% to $1.3 billion in Q3, with year-to-date SG&A expenses down 3.8% [35] Business Line Data and Key Metrics Changes - Digital sales grew by 2.4% versus last year, outperforming store sales, driven by increased traffic [33] - Women's business showed significant improvement, particularly in proprietary brands, contributing positively to overall performance [14] - Men's business also improved, with proprietary brands performing well and dress and tailored categories seeing strong sales [15] - Accessories, particularly jewelry, saw a 10% increase in Q3, while home categories showed improvement, especially in soft home products [17][18] Market Data and Key Metrics Changes - Comparable sales performance improved with a positive 1% in October, following a decline in September due to unseasonably warm weather [11] - Low-to-middle-income consumers are increasingly seeking value, impacting overall consumer behavior [12] Company Strategy and Development Direction - The company is focused on three key priorities for its 2025 initiatives: offering a curated assortment, reestablishing Kohl's as a leader in value and quality, and delivering a frictionless shopping experience [12][18] - There is a commitment to enhancing proprietary brands and optimizing the balance between national and proprietary brands to meet customer needs [19][21] - The company is leveraging artificial intelligence to improve efficiency and customer experience across digital platforms [25] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing pressure on discretionary income for low-to-middle-income consumers and anticipates this behavior to continue into Q4 [12][39] - The company is optimistic about its positioning for the holiday season, emphasizing exceptional value and exclusive offerings [27][30] - Management remains focused on restoring trip assurance and improving inventory allocation to enhance the shopping experience [26] Other Important Information - The company ended Q3 with $144 million in cash and cash equivalents, with inventory decreasing approximately 5% compared to last year [37] - Capital expenditures are projected to be around $400 million for the year, primarily for the completion of Sephora rollouts and other strategic initiatives [38] Q&A Session Summary Question: How is the company connecting with former and lapsed customers? - Management noted that core customers continued to shop, but some trips were lost. Marketing efforts are being ramped up to re-engage these customers, particularly through personalized coupons and inventory availability [42][43] Question: Can you break down the $1.3 billion of operating cash flow? - The majority of the cash flow is attributed to strong inventory management, with a focus on maintaining lower inventory levels while improving sales performance [50][51] Question: Which strategic initiatives are showing the most promise? - The focus on building a more balanced assortment and enhancing proprietary brands has shown significant progress, particularly in women's categories [58][60] Question: What is the outlook for gross margin in Q4? - Management expects continued benefits from inventory management and product mix, but anticipates some headwinds due to increased digital sales and promotional activities [76][77] Question: What is the current debt position and outlook? - The company has approximately $1.5 billion in debt, with plans to exit the revolver by the end of the year, positioning itself well for future liquidity [79][80]

Financial Data and Key Metrics Changes - Net sales declined by 2.8% in Q3 and 4% year-to-date, with comparable sales down 1.7% in Q3 and 3.2% year-to-date [32] - Adjusted net income for Q3 was $11 million, equating to an adjusted diluted earnings per share of $0.10, while year-to-date adjusted net income is $61 million with adjusted diluted earnings per share of $0.54 [36][37] - Gross margin improved to 39.6%, an increase of 51 basis points year-over-year, driven by strong inventory management and product mix benefits [34] - SG&A expenses declined by 2.1% to $1.3 billion in Q3, with year-to-date SG&A expenses down 3.8% [35] Business Line Data and Key Metrics Changes - Digital sales grew by 2.4% versus last year, outperforming store sales, driven by increased traffic [33] - Women's business showed significant improvement, particularly in proprietary brands, while men's business also ran in line with company performance [12][15] - Accessories, including Sephora and jewelry, contributed positively, with Sephora running up 2% in the quarter [16][17] Market Data and Key Metrics Changes - Comparable sales performance improved with a positive 1% in October, following a decline in September due to unseasonably warm weather [10] - Low-to-middle-income consumers are increasingly seeking value, impacting overall sales performance [11] Company Strategy and Development Direction - The company is focused on three key priorities: offering a curated assortment, reestablishing Kohl's as a leader in value and quality, and delivering a frictionless shopping experience [11][18] - Strategic initiatives include enhancing proprietary brands and optimizing store layouts to improve customer experience [23][24] - The company aims to leverage AI to improve efficiency and customer engagement [25] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing pressure on discretionary income for low-to-middle-income consumers and anticipates this behavior to continue into Q4 [11] - The company is optimistic about its positioning for the holiday season, emphasizing exceptional value and exclusive offerings [27][30] - Management remains committed to executing the 2025 initiatives and recognizes the need for further improvements [39] Other Important Information - The company ended Q3 with $144 million in cash and cash equivalents, with inventory decreasing approximately 5% compared to last year [37] - Capital expenditures are projected to be approximately $400 million for the year, focusing on Sephora rollout and e-commerce fulfillment [38] Q&A Session Summary Question: How is the company connecting with former and lapsed customers? - Management noted that core customers were still shopping, but some trips were lost. Marketing efforts are being ramped up to re-engage these customers [42][43] Question: Can you break down the $1.3 billion of operating cash flow? - The majority of cash flow is attributed to strong inventory management, with a focus on maintaining low inventory levels [50][51] Question: Which strategic initiatives are showing the most promise? - The focus on building a more balanced assortment and enhancing proprietary brands has shown significant progress [58][60] Question: What is the outlook for gross margin in Q4? - Management expects continued benefits from inventory management and product mix, but anticipates some headwinds due to increased digital sales and promotional activities [76][77] Question: What is the current debt position and outlook? - The company has approximately $1.5 billion in debt, with plans to exit the revolver by the end of the year, positioning itself well for future liquidity [79][80]

Q3 2025 Performance - Net sales decreased by (2.8%) compared to Q3 2024[53] - Comparable sales decreased by (1.7%)[53] - Gross margin increased by 51 bps compared to Q3 2024, reaching 39.6%[53, 57] - SG&A expense decreased by (2.1%) compared to Q3 2024[53] - Adjusted operating income was $77 million[53] - Adjusted net income was $11 million, or $0.10 of adjusted earnings per diluted share[53] Balance Sheet and Leverage - Net debt + leases to adjusted EBITDAR leverage ratio is 2.6x when adjusting for actual lease periods exercised, compared to an unadjusted ratio of 4.5x[62, 64] 2025 Outlook - Net sales are expected to decline by (3.5%) to (4%) compared to 2024[81] - Comparable sales are expected to decline by (2.5%) to (3%)[81] - Adjusted operating margin is projected to be 3.1% to 3.2%[81] - Adjusted diluted EPS is expected to be $1.25 to $1.45[81]

Updated 4:09 p.m. ET Nov. 25 Kohl’s Corp.’s top- and bottom-line results for the third quarter came out ahead of expectations, motivating the company to raise its full-year guidance. More from WWD The third-quarter report and the elevated guidance catapulted Kohl’s stock price up 42 percent to $22.41 on Tuesday. The Menomonee Falls, Wis.-based, value-oriented family chain said the results reflected progress in turnaround initiatives. Private brands, petites, fashion and fine jewelry, Sephora, opening pr ...

Financial Data and Key Metrics Changes - Comparable sales decreased by 4.2% in Q2 2025, with adjusted earnings per diluted share at $0.56, both exceeding expectations [6][32] - Net sales declined by 5.1% in Q2 and 4.6% year-to-date, primarily due to fewer transactions in stores [32] - Gross margin increased by 28 basis points to 39.9% in Q2, driven by category mix benefits and strong inventory management [35][36] - SG&A expenses decreased by 4.1% to $1.2 billion in Q2, benefiting from lower spending in stores and marketing [36] Business Line Data and Key Metrics Changes - Women's business showed improvement, particularly in proprietary brands, with a flat comp performance in July [12][21] - Jewelry business outperformed with a 12% increase compared to last year, driven by investments in fashion jewelry [14][15] - Men's and kids' categories were the weakest performers, with declines in spring seasonal assortments [19] Market Data and Key Metrics Changes - Digital sales outpaced store sales, driven by strong conversion rates and improved coupon offerings [33] - Kohl's card customer segment underperformed, with sales down in the low teens for the quarter [33] Company Strategy and Development Direction - The company is focused on three strategic priorities: offering a curated assortment, reestablishing Kohl's as a leader in value and quality, and delivering a frictionless omnichannel experience [10][20][25] - There is an emphasis on proprietary brands to enhance value and customer loyalty, with plans to introduce new proprietary brands [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing macroeconomic challenges and consumer pressure, particularly among lower to middle-income customers [8][41] - The outlook for the remainder of the year anticipates a net sales decline of 5% to 6%, with comparable sales expected to decline by 4% to 5% [41][42] Other Important Information - The company ended the quarter with $174 million in cash and cash equivalents, and inventory levels declined by 5% [38][39] - Capital expenditures for the year are expected to be around $400 million, focusing on Sephora rollout and other initiatives [40] Q&A Session Summary Question: What initiatives are having the greatest impact on the top line? - Management highlighted the focus on proprietary brands and their alignment with consumer value preferences as key drivers for improvement [44][45] Question: How do you see the cadence of comps for Q3 and Q4? - Management expects a similar cadence to Q2, with some potential upsides in both quarters due to improved traffic and digital performance [50][51] Question: Can you provide an update on adding brands back to coupon eligibility? - Management confirmed that they have added about 50 brands back to coupon eligibility, which has positively impacted digital sales [57][58] Question: What are the key drivers of comp metrics? - The primary driver of improvement has been traffic, with efforts focused on regaining customer trips and engagement [67][70] Question: How is the company addressing tariff impacts? - Management is actively negotiating with suppliers and adjusting buying strategies to mitigate tariff impacts while maintaining competitive pricing [72][74]

Financial Data and Key Metrics Changes - Comparable sales decreased by 4.2% in Q2 2025, with adjusted earnings per diluted share at $0.56, both exceeding expectations [6][32] - Net sales declined by 5.1% in Q2 and 4.6% year-to-date, primarily due to fewer transactions, especially in stores [32] - Gross margin increased by 28 basis points to 39.9% in Q2, driven by category mix benefits and strong inventory management [35][36] - SG&A expenses decreased by 4.1% to $1.2 billion in Q2, benefiting from lower spending in stores and marketing [36] - Adjusted net income for the quarter was $64 million, with a one-time pretax gain of $129 million from a credit card interchange fee lawsuit [38] Business Line Data and Key Metrics Changes - Women's business showed improvement, particularly in proprietary brands, with a nearly 40% increase in the petites category [12][14] - Jewelry business grew by 12% year-over-year, driven by investments in fashion jewelry and establishing a destination for accessories [14][15] - Men's and kids' categories were the weakest performers, with declines in spring seasonal assortments [19] - Digital sales outpaced store sales, driven by strong conversion rates and improved coupon offerings [33] Market Data and Key Metrics Changes - Lower to middle-income customers remain pressured, prioritizing value and trading down to lower price point products [8][10] - Higher-income customers have shown more resilience in spending [8] - The digital channel has seen strong performance, particularly from new and non-Kohl's card customers [33] Company Strategy and Development Direction - The company is focused on three strategic priorities: offering a curated assortment, reestablishing Kohl's as a leader in value and quality, and delivering a frictionless omnichannel shopping experience [10][20] - There is an emphasis on investing in proprietary brands to enhance customer trust and loyalty [21][23] - The company aims to improve promotional strategies by making more brands coupon eligible, which has already shown positive results [24][25] Management's Comments on Operating Environment and Future Outlook - The management acknowledges ongoing macroeconomic challenges and consumer pressure, particularly among lower-income customers [10][41] - The outlook for the remainder of the year anticipates a net sales decline of 5% to 6%, with comparable sales expected to decline by 4% to 5% [41][42] - Management remains optimistic about the progress made against strategic initiatives, although they recognize that these efforts will take time to yield results [31][41] Other Important Information - The company ended the quarter with $174 million in cash and cash equivalents, and inventory levels declined by 5% [39] - Capital expenditures for the year are expected to be around $400 million, focusing on Sephora rollout and other strategic initiatives [40] Q&A Session Summary Question: What initiatives are having the greatest impact on the top line? - Management highlighted the focus on proprietary brands and their alignment with consumer value preferences as key drivers for improvement [44][45] Question: How do you see the cadence of comps in Q3 and Q4? - Management expects a similar cadence, with some potential upsides in both quarters, driven by strong inventory management and proprietary brand performance [50][52] Question: Can you provide an update on adding brands to coupon eligibility? - Management confirmed that they have added about 50 brands recently, with immediate positive impacts seen in the digital channel [57][58] Question: What are the key drivers of comp metrics? - The primary driver of improvement has been traffic, with a focus on regaining trips from core customers [67][70] Question: How is the company addressing tariff impacts? - Management is actively negotiating with suppliers and adjusting buying strategies to mitigate tariff impacts while maintaining competitive pricing [72][74]

Financial Data and Key Metrics Changes - Net sales declined by 4.1% and comparable sales decreased by 3.9% in the quarter, attributed to the closure of 24 stores [26][27] - Gross margin increased to 39.9%, up 37 basis points year-over-year, driven by category mix benefits and inventory management [30] - SG&A expenses decreased by 5.2% to $1.2 billion, leveraging approximately 32 basis points compared to last year [30] - The company reported a net loss of $15 million, with earnings per diluted share of negative $0.13, a 46% improvement from the previous year [31] Business Line Data and Key Metrics Changes - Jewelry sales increased by 10% in Q1, primarily driven by Kohl's card customers, following the reintroduction of jewelry into stores [15][16] - Women's apparel is being rebalanced to improve performance, focusing on essentials and proprietary brands [17][19] - Sephora's net sales were up 6% and comparable sales increased by 1% in Q1, contributing to a nearly $2 billion beauty business [18] - The impulse queue line rollout is expected to enhance sales, with plans to expand to nearly all stores by Q3 [18] Market Data and Key Metrics Changes - The digital business saw a sales decline of 7.7% in the quarter, underperforming compared to store sales, which declined by 2.6% [27][28] - The middle and low-income customers are under pressure, prioritizing value and trading down to lower-priced products [28] Company Strategy and Development Direction - The company is focused on three key areas: offering a curated assortment, reestablishing value and quality, and enhancing the omnichannel shopping experience [12][19][23] - Plans for 2025 include improving product assortment clarity and investing in proprietary brands to better serve customer needs [13][19] - The company aims to enhance promotions by including more brands in coupon eligibility, responding positively to customer feedback [21][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing transformation and the need to align the business with customer needs, particularly focusing on value [40][41] - The company is navigating a fluid environment with uncertainties, particularly affecting middle-income customers [43][44] - Despite challenges, management remains optimistic about achieving financial guidance for the year, with expectations of comparable sales down 4% to 6% [36] Other Important Information - The company completed a private offering of $360 million in senior secured notes, expected to close on May 30, to refinance upcoming debt maturities [34][35] - Inventory strategies are being implemented to manage tariff pressures, with expectations of inventory down high single digits by year-end [32][36] Q&A Session Summary Question: Any adjustments to strategic priorities and what will it take to return to comp growth? - Management does not foresee major changes to the strategy and emphasizes understanding customer needs to restore growth [39][40] Question: Insights on quarter-to-date trends and tariff impacts? - Management holds the full-year guidance due to uncertainties and notes consistent performance with some weather-related impacts [42][44][46] Question: Breakdown of gross margin increase and private label performance? - The increase in gross margin is attributed to a favorable category mix and improved inventory management, with proprietary brands expected to enhance margins [50][52] Question: Assessment of store footprint and potential closures? - The company has a healthy store base and will continue to evaluate store performance, with closures being part of regular hygiene [60][62] Question: Update on Sephora collaboration and operating environment? - Sephora is now present in all stores, and while comp growth has moderated, the company is pleased with market share gains in beauty [73][75] Question: E-commerce performance and profitability outlook? - Digital sales declined but are expected to improve as core customers return, with profitability being lower than stores due to shipping costs [80][84]