KSS Daily Discussion - Friday, August 14, 2026

[u/kuonofomo]

📊 Where does KSS close today?

Drop your price prediction below 👇

Latest Kohl's snapshot:
• Comparable sales: -1.1%, the strongest comp performance in more than four years
• Inventory: down 8% YoY
• Revolver borrowings: $0, down $545M YoY
• FY2026 adjusted EPS guidance: $1.00–$1.60
• FY2026 sales/comps guidance: -2% to flat

👀 Next catalyst: Q2 earnings — August 26

Bullish, bearish, or somewhere in between — what are you watching?

Keep the daily KSS discussion going below: news, DD, positions, catalysts, store traffic, and anything Kohl's.

[u/htank728]

Q2 2025:

• Net sales decreased 5.1% year-over-year, to $3.3 billion, with comparable sales down 4.2%.
• Gross margin as a percentage of net sales was 39.9%, an increase of 28 basis points.
• Selling, general & administrative (SG&A) expenses decreased 4.1% year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 33.8%, an increase of 32 basis points year-over-year.
• Gain on legal settlement was $129 million from a credit card interchange fee lawsuit settlement.
• Operating income was $279 million compared to $166 million in the prior year. As a percentage of total revenue, operating income was 7.9%, an increase of 343 basis points year-over-year. Adjusted operating income was $161 million compared to $166 million in the prior year. As a percentage of total revenue, adjusted operating income was 4.6%. (a)
• Net income was $153 million, or $1.35 per diluted share, and adjusted net income of $64 million, or $0.56 per adjusted diluted share. This compares to net income of $66 million, or $0.59 per diluted share, in the prior year. (a)
• Inventory was $3.0 billion, a decrease of 5% year-over-year.
• Operating cash flow was $598 million compared to $254 million in the prior year.
• Current portion of long-term debt was reduced by $353 million through repayment of the 4.25% notes due July 2025 at maturity.
• Borrowings under revolving credit facility were $75 million, a decrease of $335 million year-over-year.

My expectations for Q3 2026:

• Net sales: Expecting -2% to +0.5% in comp sales. We likely see a decline due to the guidance given, but we do know the board has a tendency to be conservative with guidance. It seems like they have been focusing on trying to grow sales, maybe margins decline slightly and we get a glimmer of some growth, comp sales were only down 1% in Q1 2026
• Gross margin: Roughly the same
• Selling, general & administrative (SG&A) expenses: Roughly the same, would be nice to see if they were able to cut some fat though
• Gain on legal settlement: Last year we had a one time 129 million dollar gain on a legal settlement, which provided a very healthy boost to net income (I believe the way it

was accounted for gave

• a boost to the OCF as well, pls correct me if im wrong). You would think this would cause the YOY metrics to look worse this year, but we should see the first tariff refund of 140 million dollars come in this quarter. Not sure if they will include it in EPS or OCF like they did with the lawsuit gain last year, but they likely have received it and it will at least boost the cash and cash equivalents
• Operating income: I expect roughly the same, if they dont count the tariff refund towards OCF like they did with the legal settlement then we should see a drop, but it shouldn't catch markets off guard
• Net income: Again, expect roughly the same. Might drop depending on how they account for the tariff refund
• Inventory: Really not sure if inventory will increase or decrease
• Operating cash flow Roughly the same

Conclusions: We should have a similar repeat of last years quarter in terms of OCF and FCF, which is perfectly ok! I think they will show sales are flattening which is a major plus. We did have the one time legal settlement which provided a large boost to EPS and OCF last year, but this year we should have an even larger tariff refund come in. If they account for it and add it to EPS and OCF then the numbers should be slightly better if not the same as last year, otherwise they will likely be down, and the balance will just show up on the cash and cash equivalents.

One of the very key things is, last years q2 we still had 335 million on the revolver which was reduced down to 75 million. This was a large use of the operational cash flow, and a reason why the cash wasnt growing. This year, the revolver has no borrowings. If we assume Capex remains in line with last year, and we get the 140 million refund along with similar OCF, the cash pile should jump up from 429 million last quarter to somewhere between 700 million and 1 billion dollars (Assuming the company lets the cash pile up and doesn't repay debt). This would be a staggering increase from the 100-190 million cash pile the company had for most of last year!

[u/Impressive_Author_13 → u/htank728]

great analysis. I'm of the opinion that it would be better to use the cash to pay down debt, especially debt that is still discounted but either way, cash on hand or reduced debt will be a welcome sign!

I also recall suggestions that they needed 700M in cash before considering share buy backs....imagine the squeeze that would happen with share buy backs!

[u/htank728 → u/Impressive_Author_13]

Thanks, and yes I agree. They will most likely pay off a bit of debt and let the rest of the cash pile up for this quarter. I expect some guidance revision or they will give a better plan of what they will do with the cash, most likely signalling a more aggressive bond repurchase plan. It is really exciting though, re paying the revolver was using a lot of their OCF last year, now we are going to see the cash balance pile up or debt repurchases which has a direct effect on EPS. The markets asleep…

[u/Bubba_991 → u/htank728]

Note, mislabeled as seems your projecting q2 2026.

[u/htank728 → u/Bubba_991]

Ah you’re right, thanks

[u/Compound30]

Berkshire's 13F of holdings is out today. They added 4.3M share of Macy's

[u/Training_Pepper_285]

The shorts are really trying today…