US' Kohl's Q2 earnings rise despite sales decline

The net income in this period stood at $139 million, or $1.23 per diluted share, with adjusted net income of $50 million, or $0.44 per share. The selling, general and administrative (SG&A) expenses fell 4.7 per cent to $2.4 billion, though as a percentage of total revenue it inched up to 34.9 per cent, an increase of 2 basis points (bps).

The operating income of the company rose to $339 million from $209 million in the prior year, representing 5 per cent of total revenue, an improvement of 207 bps, while adjusted operating income stood at $221 million.

Meanwhile, for the second quarter (Q2) of FY25, Kohl’s net sales were $3.3 billion, a decrease of 5.1 per cent YoY, with comparable sales falling 4.2 per cent. The gross margin as a percentage of net sales improved to 39.9 per cent, up 28 bps. Selling, general and administrative (SG&A) expenses declined 4.1 per cent to $1.2 billion, though as a percentage of total revenue they rose to 33.8 per cent, an increase of 32 bps.

The operating income rose to $279 million, representing 7.9 per cent of total revenue, up 343 basis points YoY, while adjusted operating income was $161 million compared to $166 million, at 4.6 per cent of revenue.

The net income in Q2 reached $153 million, or $1.35 per diluted share, with adjusted net income at $64 million, or $0.56 per share, versus $66 million, or $0.59, in the prior year. Inventory fell 5 per cent to $3.0 billion, and operating cash flow surged to $598 million from $254 million a year ago.

The Q2 performance is a testament to the progress we are making against our 2025 initiatives. This resulted in sales performance that came in ahead of our expectations. While it is clear that these initiatives are beginning to resonate with our customers, our team remains focused on delivering progressive improvement throughout the remainder of the year against a challenging economic backdrop,” said Michael Bender, chief executive officer (CEO) at Kohl’s.

“In addition to our top line progress, we managed the business with great discipline in the quarter. We were able to expand our gross margins, reduce our inventory, and lower our expenses, leading to solid second quarter earnings. I continue to be impressed with our entire team at Kohl’s and am thankful for all their hard work,” added Bender.

For the full year 2025, Kohl’s expects net sales to decline between 5 and 6 per cent, with comparable sales projected to fall 4 to 5 per cent. The adjusted operating margin is forecast in the range of 2.5 to 2.7 per cent, while adjusted diluted earnings per share (EPS) are anticipated to be between $0.5 and $0.8. Capital expenditures are planned at around $400 million.

ALCHEMPro News Desk (SG)