Kohl’s third quarter results were well received by the market, underpinned by improved performance in proprietary brands and progress on digital initiatives. Management highlighted a more balanced product assortment and increased engagement with Kohl’s core customer base, especially through targeted marketing and changes to coupon eligibility. CEO Michael Bender noted that digital sales grew and that proprietary brands, such as Lauren Conrad and FLX, contributed to an uptick in transactions, particularly among Kohl’s cardholders. While same-store sales and total revenue declined year over year, management emphasized that operational changes and a customer-centric strategy were beginning to yield benefits.
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Kohl's (KSS) Q3 CY2025 Highlights:
- Revenue: $3.58 billion vs analyst estimates of $3.49 billion (3.6% year-on-year decline, 2.5% beat)
- Adjusted EPS: $0.10 vs analyst estimates of -$0.17 (significant beat)
- Adjusted EBITDA: $253 million vs analyst estimates of $223.7 million (7.1% margin, 13.1% beat)
- Management raised its full-year Adjusted EPS guidance to $1.35 at the midpoint, a 108% increase
- Operating Margin: 2%, in line with the same quarter last year
- Locations: 1,153 at quarter end, down from 1,178 in the same quarter last year
- Same-Store Sales fell 1.7% year on year (-9.3% in the same quarter last year)
- Market Capitalization: $2.70 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kohl's’s Q3 Earnings Call
- Charles Grom (Gordon Haskett) asked about reconnecting with lapsed customers and the effectiveness of promotional changes. CFO Jill Timm explained data-driven marketing and in-store signage are helping, but noted progress is ongoing, especially in stores versus digital.
- Paul Lejuez (Citigroup) inquired about the drivers behind operating cash flow, CapEx expectations, and the balance between traffic and ticket growth. Timm emphasized inventory management as the main unlock and indicated future CapEx will focus on successful projects like the Impulse lines.
- Mark Altschwager (Baird) questioned which strategic initiatives are most promising for stable comps and SG&A savings sustainability. CEO Michael Bender highlighted balanced assortment and proprietary brand growth, while Timm detailed ongoing cost discipline aided by technology investments.
- Robert Drbul (BTIG) asked for detail on margin outlook, especially regarding promotional cadence and private brands' impact. Timm cited inventory flow, positive proprietary brand mix, and digital sales' cost structure as drivers, with Q4 expected to be more promotional due to customer demand.
- Oliver Chen (TD Cowen) pressed for rank ordering progress in initiatives, credit card income trends, and updates on the iconic Kohl’s Cash program. Bender and Timm emphasized proprietary brand focus, digital modernization, and highlighted the ongoing appeal and usage of Kohl’s Cash in customer engagement.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will focus on (1) execution of proprietary brand expansions, particularly the rollout of FLX into additional categories and stores; (2) progress in digital platform enhancements and measurable impacts from AI-driven personalization and marketing; and (3) stability in gross margin and SG&A cost control as competitive and macroeconomic pressures persist. Additional attention will be given to inventory management and promotional strategies as key indicators of operational effectiveness.
Kohl's currently trades at $24.25, up from $16.06 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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