Kohl's Q2: tariff refunds boost gross margin, outlook raised

US department store operator Kohl’s Corporation (Kohl’s) has reported its financial results for the second quarter ended August 1, 2026, delivering expanded gross margins and prompting an update to its full-year guidance.

For the second quarter, net sales decreased 0.9 percent year-over-year (YoY) to 3.3 billion dollars, with comparable sales also down 0.9 percent. Gross margin as a percentage of net sales expanded by 305 basis points YoY to 43 percent, supported by the receipt of approximately 150 million dollars in tariff refunds during the quarter, of which roughly 100 million dollars flowed through gross margin.

Operating income for the quarter stood at 261 million dollars compared to 279 million dollars in the prior-year period. Net income reached 151 million dollars, or 1.28 dollars per diluted share, compared to net income of 153 million dollars, or 1.35 dollars per diluted share, in the prior year. Adjusted net income in the prior-year period was 64 million dollars, or 0.56 dollars per adjusted diluted share.

Kohl’s chief executive officer, Michael Bender, said: “We are confident that the work we are executing is leading us in the right direction. Our second quarter results reflect the ongoing progress against our initiatives, leading to another improvement in our comparable sales trend.”

Bender added: “Importantly, we have made significant strides in building a strong balance sheet through diligent operational focus across the organization. This provides us a critical foundation as we invest in the business, lead with value for our customers, and return capital to our shareholders.”

Full-year outlook raised

Reflecting the benefit of the tariff refunds received in the second quarter, Kohl’s has raised its full-year 2026 financial outlook. Net sales and comparable sales are now expected to range from a decrease of 1.5 percent to flat.

Adjusted operating margin is projected to be between 3.5 percent and 4 percent, while adjusted diluted earnings per share are forecasted in the range of 1.80 dollars to 2.40 dollars. Capital expenditures for the full year are expected to be between 350 million dollars and 400 million dollars.

On August 18, 2026, the board of directors declared a quarterly cash dividend of 0.125 dollars per share, payable on September 23, 2026, to shareholders of record on September 9, 2026. The company is also restarting its share repurchase program, planning up to 100 million dollars in buybacks in 2026 under an existing three billion dollar authorization.