Kohl's (NYSE: KSS) Navigates Mixed Q2: Strong Earnings Amidst Sales Challenges

Font: Financial Modeling Prep  • Aug 27, 2026

• Kohl's (NYSE: KSS) reported strong adjusted earnings per share (EPS) of $1.28, significantly beating analyst estimates, primarily due to an expanded gross margin.
• The gross margin improvement was largely attributed to one-time tariff refunds, highlighting a non-recurring boost to profitability.
• Despite positive earnings, the retailer continues to face sales challenges, with total revenues and comparable sales declining for the eighteenth consecutive quarter.

Kohl's (NYSE: KSS) is a large department store chain that sells a variety of goods, including clothing, footwear, and home products. Telsey Advisory recently reiterated its Market Perform grade for Kohl's. This stock rating is a neutral signal, suggesting investors should hold their existing shares rather than buying or selling them at this time, reflecting current investor guidance.

The hold rating reflects the company's mixed second-quarter performance. On one hand, Kohl's reported strong adjusted earnings per share (EPS) of $1.28. This figure more than doubled from the previous year and significantly beat analyst estimates of $0.55. EPS represents the company's profit allocated to each outstanding share of stock, a key profitability metric.

This profit boost was driven by an expanded gross margin, which grew by 305 basis points to 43%. Gross margin is the percentage of revenue left after subtracting the cost of goods sold. However, this improvement was largely due to one-time tariff refunds of approximately $100 million to $150 million, impacting the overall financial performance.

Despite the strong earnings, the company faces ongoing sales challenges. Total revenues for the quarter declined by 0.9% to $3.515 billion. Similarly, comparable sales, which measure sales at stores open for more than a year, also fell by 0.9%. This marks the eighteenth consecutive quarter of negative comparable sales for the retailer, highlighting persistent retail sales trends.

In line with the neutral rating, Telsey Advisory raised its price target on Kohl's to $18 from $17, which was near the stock's price of $18.25 at the time. Following the results, Kohl's increased its own full-year adjusted EPS outlook to a range of $1.80 to $2.40, showing some optimism regarding future investor sentiment.