Financial Data and Key Metrics Changes - Net sales declined 3.9% in Q4 and 4% for the year, with comparable sales down 2.8% in Q4 and 3.1% for the year [28] - Diluted earnings per share for Q4 were $1.07, an improvement from the previous year [7] - Gross margin in Q4 expanded by 25 basis points to 33.1% of sales, driven by strong inventory management [30] - SG&A expenses decreased by $76 million, or 4.9% in Q4, reflecting lower store, marketing, and fulfillment-related expenses [30] Business Line Data and Key Metrics Changes - Proprietary apparel was flat in Q4, while juniors business grew 8%, indicating strong performance in this category [10][11] - The home business underperformed due to softness in seasonal decor, with inventory depth issues impacting sales [11] - Accessories business increased low single digits, driven by the expansion of Impulse, which helped deliver over a 40% comparable sales increase [11] Market Data and Key Metrics Changes - Digital sales grew low single digits in Q4 but were flat for the year, indicating challenges in conversion despite higher traffic [28] - Store sales declined mid-single digits for both Q4 and the full year, primarily due to a decrease in transactions [28] Company Strategy and Development Direction - The company is focused on stabilizing the business and strengthening operational capabilities for future growth [5] - Key initiatives for 2026 include offering a curated assortment, enhancing proprietary brands, and improving inventory management [14][19] - The company aims to reestablish itself as a leader in value and quality, particularly for low to middle-income customers [20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of severe weather on Q4 sales and identified operational opportunities to improve inventory allocation [7][8] - The company remains cautious about the macroeconomic environment, particularly regarding the spending behavior of core customers [34] - For 2026, the company expects net sales and comparable sales to be in the range of a 2% decrease to flat versus 2025 [35] Other Important Information - The company ended the year with $674 million in cash and cash equivalents, an increase of $540 million from the previous year [32] - Inventory decreased approximately 7% compared to last year, indicating disciplined inventory management [33] - The company plans to invest in proprietary brands and enhance marketing efforts to drive sales [21][23] Q&A Session Summary Question: Can you talk about the By Kohl's campaign and expectations for Kohl's cardholder comps in 2026? - The By Kohl's campaign aims to showcase proprietary brands and enhance customer engagement, particularly for Kohl's Card members [39][40] - Expectations for Kohl's cardholder comps are optimistic, with improvements anticipated in the back half of 2026 as new initiatives take effect [41][43] Question: What are the immediate catalysts for recapturing market share in 2026? - The focus on proprietary brands and offering value through lower price points are seen as significant catalysts for market share recovery [51][52] Question: What are the expected headwinds for EBIT margin guidance? - The guidance reflects challenges in leveraging SG&A costs and managing tariff impacts, with a focus on maintaining expense discipline [54][56] Question: What are the biggest opportunities in the women's and home categories? - The women's business is expected to benefit from the juniors category and a curated assortment, while the home category will focus on providing more choices and sharp price points [62][64]

Q4 Results Presentation March 10, 2026 1 Cautionary Statement Regarding Forward-Looking Information This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company intends forward-looking terminology such as "believes," "expects," "may," "will," "should," "anticipates," "plans," or similar expressions to identify forward-looking statements. Forward-looking statements include, but are not limited to, the information under "2026 O ...

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]

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]

Core Insights - Kohl's Corp. reported third-quarter results that exceeded expectations, prompting an increase in full-year guidance [1][2] Financial Performance - Net sales for the third quarter decreased by 2.8% year-over-year to $3.4 billion, down from $3.5 billion, with comparable sales declining by 1.7% [3] - Net income was $8 million, or 7 cents per diluted share, compared to $22 million, or 20 cents per diluted share, in the prior year [3] - Operating income fell to $73 million from $98 million in the previous year, representing 2.1% of total revenue, a decrease of 61 basis points [4] - Adjusted operating income was $77 million, or 2.2% of total revenue, down from $98 million in the prior year [4] - Gross margin increased to 39.6%, up by 51 basis points [11] - Cash flow from operating activities was $124 million, down from $195 million a year earlier [11] Strategic Initiatives - The company is focusing on improving its product mix, particularly in proprietary brands and categories such as fine jewelry and home decor [6][8] - CEO Michael Bender emphasized the importance of customer feedback in shaping product offerings and store experiences [6] - Proprietary brands saw a collective growth of 1% last quarter, with investments in key brands like Lauren Conrad and Simply Vera Vera Wang [7] Guidance Update - Kohl's raised its full-year guidance, now expecting net sales to decline by 3.5% to 4% and comparable sales to decline by 2.5% to 3% [12] - Adjusted operating margin is now projected to be between 3.1% and 3.2%, an increase from the previous range of 2.5% to 2.7% [13] - Adjusted diluted earnings per share are now expected to be between $1.25 and $1.45, up from the previous range of 50 cents to 80 cents [13] Company Overview - Kohl's operates over 1,100 stores across 49 states, along with its online platform and mobile app [14]