Aug 26, 2026 earnings call — Progress on assortment, inventory, and cash returns
Company raised annual guidance and expects adjusted EPS of $1.80 to $2.40, including a $0.65 tariff benefit.
Revenue $3.3B (est $3.3B) · EPS $1.28 (est $0.58)
Key quotes
"Our proprietary brands increased 3% in the second quarter."
"By maintaining this rigor around our expense and inventory management, we have substantially improved our balance sheet and cash flow generation."
"We expect the softer performance we've seen year-to-date to persist until we can reach full scale with new brands and cycle through the headwinds from expanded distribution from a few of the bigger brands."
Analyst Q&A 6
Kohl's Charge rebound and women's brands
Q (Charles Grom · Gordon Haskett): Analyst asked why Kohl's Charge comps improved and what that implies for proprietary brands and the women's business.
A: Management said the Kohl's Card customer never stopped shopping but went elsewhere for missing items. Bringing back proprietary brands, Jewelry and Petites drove trips and higher sell-throughs, and Juniors showed strong double-digit quarter-to-quarter gains.
"I think when we look at the Kohl's Charge Card, we know they never stopped shopping us." — Jill Timm (CFO)
Proprietary brands, EPS guide drivers
Q (Mark Altschwager · Baird): Analyst asked how much sales were lost from inventory constraints in proprietary brands and what drove the EPS guide raise beyond the tariff refund.
A: Management said proprietary brands were still up 3% and that Women's lagged mainly from lower in-store inventory, while Juniors remained strong. On the EPS guide, they said the tariff refund was $0.65 and credit revenue was the main remaining driver, with some reinvestment into price, media and store payroll.
"What I would say overall is credit revenue obviously was a standout for the quarter, and we expect that to get better." — Jill Timm (CFO)
Free cash flow and capital allocation
Q (Tracy Kogan · Citi): Analyst asked about free cash flow expectations, whether tariff benefit is included, cash at year-end, and preference for debt paydown versus buybacks; also asked if current trends match the back-half guidance.
A: Management gave an operating cash flow range around $950 million to $1 billion and CapEx of $350 million to $400 million, saying free cash flow estimates include the tariffs. They said they will be opportunistic and pursue both debt reduction and share buybacks, expect year-end cash roughly higher than $700 million and feel current trends support their guidance.
"So that's where I feel like we have a great positioning from a cash flow generation, which gave us the opportunity to reinstate the share buyback program, which we had mentioned on the call, first time since 2022." — Jill Timm (CFO)
Consumer health, inventory, home and jewelry
Q (Dana Telsey · Telsey Advisory Group): Analyst asked whether the consumer is healthier than last quarter, inventory plans for the back half, and how home, Jewelry and accessories are trending.
A: Management said the consumer is similar to Q1, a middle-to-lower income household focused on essentials, so the company is leaning into value and convenience. They plan to run inventory down low-single digits, highlighted improving small electrics and home decor, and said Jewelry and accessories are performing well with expansion into more stores.
"And then I think, Dana, from an inventory level perspective, as you called out, we're down 3%." — Jill Timm (CFO)
Sephora trends and store traffic
Q (Robert Drbul · BTIG): Analyst asked where Sephora is headed given market changes and also about traffic trends.
A: Management said Sephora is in a cycle where some major brands have expanded distribution and early-stage new brands haven't yet scaled, so they will focus on newness and gifting initiatives. On traffic, they said ATV and traffic were slightly down but called it the best traffic performance in a quarter since 2019, helped by more Kohl's Charge trips.
"We think in the back half of the year, in particular, that the gifting expansion that we have outlined for our stores will be helpful in terms of driving that business." — Michael Bender (CEO)
Margin reinvestment and traffic vs ticket
Q (Michael Binetti · Evercore): Analyst asked if management would reinvest if comps improve, how they expect traffic versus ticket to move, and whether they see deflation from competitors.
A: Management said they will reinvest tariff benefits into price, media and store payroll because testing shows a payback, and they will adjust if returns don't materialize. They said they are seeing customers trade into lower opening price points and proprietary brands (AUR down, UPT up), expect to drive more units per basket, and have not yet seen broad deflation from competitors but will react if needed.
"One of the things I did mention is we are going to invest though some of these tariffs into media and store payroll because we see the payback." — Jill Timm (CFO)