Kohl’s narrows Q1 net loss driven by inventory and expense reductions

US retail group Kohl’s Corporation (Kohl’s) has announced its financial results for the first quarter of fiscal year 2026, revealing a slight decline in top-line revenue alongside improved inventory management and lower operating expenses.

Net sales for the US company decreased 1.7 percent year-over-year (YoY) to 3 billion dollars for the 13-week period ended May 2, 2026, while comparable sales for the quarter fell 1.1 percent YoY.

Despite the revenue contraction, the gross margin of the department store operator rose by 4 basis points YoY to reach 39.9 percent of net sales.

Performance driven by expense control

Operating income reached 46 million dollars for the quarter, representing a drop from the 60 million dollars posted in the first quarter of the prior year. This brought the operating income margin to 1.4 percent of total revenue, representing a decrease of 41 basis points YoY.

The retailer posted a net loss of 14 million dollars, or a loss of 0.13 dollar per diluted share. This marks a marginal improvement from the net loss of 15 million dollars, or 0.13 dollar per diluted share, recorded in the same period last year.

Strengthened balance sheet, affirms outlook

Kohl’s chief executive officer, Michael Bender, expressed satisfaction with the start of the year, noting that key strategies are delivering consistent operational gains.

“Our key initiatives continue to drive progressive improvements to the business, resulting in our best comparable sales performance in over four years,” Bender said in a press statement. “In addition, we continue to manage the business with great discipline leading to strong expense management, cleaner inventories, and an improved balance sheet.”

The company reduced its inventory by 8 percent YoY to $2.9 billion. Operating cash flow resulted in a use of 74 million dollars, while borrowings under the revolving credit facility were eliminated entirely, down by 545 million dollars compared to the prior year.

Kohl’s affirmed its full year outlook for fiscal 2026. The firm forecasts net sales and comparable sales to range between a decrease of 2 percent and flat. Adjusted operating margin is projected to fall between 2.8 percent and 3.4 percent; adjusted diluted earnings per share (EPS) are expected to be between 1 dollar and 1.60 dollars.

The board of directors declared a quarterly cash dividend of 0.125 dollars per share on May 20, 2026. The dividend will be paid on June 24, 2026 to shareholders registered by the close of business on June 10, 2026.