Kohl’s posted third-quarter comparable sales and earnings declines, but the company beat Wall Street estimates and pointed to improvements in the home business as among the positives during the period.
Net income was $8 million, or seven cents per diluted share, while net income adjusted for one-time events was $11 million, or 10 cents per diluted share, the company reported. Both figures compare to net income of $22 million, or 20 cents per diluted share, in the prior-year period when no adjustment was taken.
A Zacks Investment Research analyst consensus estimate called for a loss of 19 cents per adjusted diluted share in the quarter and revenues of $3.49 billion.
Net sales were $3.41 billion and total revenue was $3.58 billion, Kohl’s maintained, versus $3.51 billion and $3.71 billion in the year-before quarter, with comparable sales down 1.7%.
Operating income was $73 million and adjusted operating income was $77 million versus $98 million in the year-previous period when no adjustment was taken.
In providing guidance for the fiscal year, Kohl’s reported it expects a net sales decrease of 3.5% to 4%, a comps decrease of 2.5% to 3% and adjusted diluted earnings per share to come in the range of $1.25 to $1.45. Previously, Kohl’s outlook was for a net sales decrease of 5% to 6%, a comp decrease of 4% to 5% and adjusted diluted EPS to come in the range of 50 cents to 80 cents.
In a conference call, Michael Bender, Kohl’s CEO, said the third quarter started with a better-than-expected August and back-to-school season, then sales slowed in September in the face of unseasonably warm weather. October was the strongest month in the quarter for Kohl’s, which delivered a 1% comp gain. Digital performance was up 2% versus the year-past quarter. Bender said customers have become increasingly selective in spending discretionary income, especially those in low- and middle-income households and younger shoppers. Consumers who find their incomes challenged by macroeconomic pressures are becoming more value-oriented, he said.
All the same, Bender said Kohl’s is making progress against the company’s 2025 initiatives centered on three key priorities: offering a curated, more balanced assortment; reestablishing Kohl’s as a leader in value and quality; and delivering a frictionless shopping experience across the company’s omnichannel platforms.
Third-quarter bright spots included gains in the home department.
“Our home business showed the largest improvement in the quarter, running in line with company performance,” Bender said. “Soft home categories like bedding and bath outperformed, with strength from new, proprietary brands like Hotelier and Miryana. Small electrics continue to underperform as expected, given the impact of price increases and buying quantities down based on our elasticity analyses.”
During the holidays, Bender said, Kohl’s is expanding Sephora holiday gifting sets and offering new home items in the case of GreenPan by Bobby Flay. It is also promoting brands such as Ninja and Shark.
Jill Timm, Kohl’s CFO, said tariffs had less of an impact in the quarter than was previously anticipated, but the company expects more pressure from duties in the fourth quarter. She added the company’s merchant and sourcing team have been doing a good job in mitigating tariff effects.
Bender, in announcing the financial results, said, “We are pleased with Kohl’s third-quarter results, marking a third consecutive quarter of delivering top-line and bottom-line performance ahead of our expectations. These results are a direct reflection of the progress we are making against our 2025 initiatives, reinforcing our confidence as we continue to move in the right direction. We are focused on building on this momentum, as we remain committed to delivering quality products, great value and a frictionless experience to our customers in an uncertain macroeconomic environment. I am very proud of the work our team has accomplished to date, as we continue to operate our company with strong discipline, deliver solid cash flow generation, and maintain a healthy balance sheet. This will serve as a strong foundation as we reposition Kohl’s for future growth.”
