Kohl's Raises Guidance After Surprise Q3 Profit
Kohl's Raises Guidance after a surprise Q3 profit, citing margin gains and inventory discipline and prompting investor re-pricing and bigger holiday flows.
KEY TAKEAWAYS
- Surprise Q3 profit with revenue $3.4B and adjusted EPS $0.10 beating consensus.
- Free cash flow swung to $16M from negative $323M, supporting a firmer outlook.
- Company raised FY2025 adjusted EPS guidance to $1.25-$1.45 and narrowed sales decline.
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Kohl’s Corporation (KSS) raised its full-year guidance after reporting a surprise third-quarter profit, narrowing expected sales declines and citing margin improvement, inventory discipline, and new merchandising initiatives. The company named Michael J. Bender permanent CEO on November 24, 2025.
Quarter Results and Guidance
Kohl’s reported third-quarter net sales of $3.4 billion, down 2.8% year-over-year, with comparable sales falling 1.7%. Gross margin improved by 51 basis points to 39.6%. The company posted net income of $8 million, or $0.07 per diluted share, with adjusted diluted earnings per share (EPS) of $0.10. These results beat consensus estimates for both revenue and adjusted EPS. Free cash flow swung to $16 million from negative $323 million a year earlier, supporting the company’s firmer outlook.
The company raised its full-year 2025 adjusted EPS guidance to a range of $1.25 to $1.45, up from a prior range of $0.50 to $0.80. It narrowed its expected net-sales decline to 3.5%–4% from 5%–6%, and comparable sales decline to 2.5%–3% from 4%–5%. Adjusted operating margin is now forecast at 3.1%–3.2%. The outlook assumes continued merchandising initiatives, holiday promotions, and inventory discipline.
Turnaround Drivers and Leadership
Management attributed the improved results to margin expansion, tighter inventory control, and new merchandising efforts. These include launching new collections, expanding coupon-eligible products, and investing in proprietary brands to attract value-focused and younger shoppers. Partnerships such as expanded Sephora assortments and renewed emphasis on fine jewelry and accessories were highlighted as key strategies to boost loyalty and draw younger customers.
The board named Michael J. Bender permanent CEO effective November 24, aligning leadership with the company’s brand and partnership strategy. Bender said, “We are pleased with Kohl’s third quarter results.” The company reported no material regulatory approvals or disclosures during the period.
