Tariff refunds and debt cuts shape Kohl’s (NYSE: KSS) Q1 2026 results
Rhea-AI Filing Summary
Kohl’s Corporation reported a small net loss for the first quarter of 2026 as sales softened and operating income declined. Total revenue was $3.17 billion, down about 2% from a year ago, with net sales of $3.0 billion and comparable sales down 1.1%.
Gross margin held steady at 39.9% of net sales, while selling, general and administrative expenses fell 1.6% to $1.15 billion but deleveraged slightly as a percent of revenue. Operating income slipped to $46 million from $60 million, and net loss was $14 million, or ($0.13) per share, similar to last year.
Inventory was $2.9 billion, 8% lower year-over-year, and operating cash flow was a use of $74 million, an improvement over the prior year. Cash and cash equivalents rose to $429 million, with no borrowings outstanding on the $1.5 billion revolving credit facility and $50 million of long-term debt repurchased on the open market. Kohl’s has submitted claims for roughly $140 million of potential tariff refunds but has not recognized any gain. The company declared a quarterly dividend of $0.125 per share and continues to prioritize disciplined capital investment and debt reduction.
Positive
- None.
Negative
- None.
Insights
Results show modest top-line pressure, stable margins, stronger liquidity and optional upside from tariff refunds.
Kohl’s generated Q1 2026 revenue of $3.17 billion, with net sales down 1.7% and comparable sales down 1.1%. Category performance was mixed, and digital sales grew 4.0% to reach 26% of net sales. Gross margin stayed at 39.9% despite sales softness.
Operating income declined to $46 million from $60 million, reflecting deleverage in expenses even as SG&A dollars fell 1.6%. Net interest expense improved to $63 million, helped by a $9 million gain on extinguishment of debt and no revolver usage.
Liquidity and balance sheet quality improved: cash rose to $429 million, borrowings under the revolving facility fell to zero from $545 million a year earlier, and inventory declined 8% year-over-year to $2.9 billion. The company paid a $0.125 quarterly dividend and reduced long-term debt by $50 million. Kohl’s also paid about $190 million in IEEPA tariffs between 2025 and early 2026 and has filed claims for roughly $140 million of potential refunds, which are not yet recognized and depend on administrative outcomes.
Key Figures
Key Terms
comparable sales financial
digital penetration financial
International Emergency Economic Powers Act ("IEEPA") regulatory
supplier financing program financial
Rule 10b5-1 Trading Plan regulatory
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition period from ________ to _________
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Smaller Reporting Company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: May 29, 2026 Common Stock, Par Value $0.01 per Share,
KOHL’S CORPORATION
INDEX
PART I |
FINANCIAL INFORMATION |
3 |
Item 1. |
Financial Statements: |
3 |
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Consolidated Balance Sheets |
3 |
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Consolidated Statements of Operations |
4 |
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Consolidated Statements of Changes in Shareholders' Equity |
5 |
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Consolidated Statements of Cash Flows |
6 |
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Notes to Consolidated Financial Statements |
7 |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
14 |
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
21 |
Item 4. |
Controls and Procedures |
21 |
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PART II |
OTHER INFORMATION |
22 |
Item 1. |
Legal Proceedings |
22 |
Item 1A. |
Risk Factors |
22 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
22 |
Item 5. |
Other Information |
23 |
Item 6. |
Exhibits |
24 |
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Signatures |
25 |
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions) |
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
Assets |
(Unaudited) |
(Audited) |
(Unaudited) |
Current assets: |
|
|
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Cash and cash equivalents |
$ |
$ |
$ |
Merchandise inventories |
|||
Other |
|||
Total current assets |
|||
Property and equipment, net |
|||
Operating leases |
|||
Other assets |
|||
Total assets |
$ |
$ |
$ |
|
|
|
|
Liabilities and Shareholders’ Equity |
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Current liabilities: |
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|
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Accounts payable |
$ |
$ |
$ |
Accrued liabilities |
|||
Borrowings under revolving credit facility |
— |
— |
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Current portion of: |
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Long-term debt |
— |
— |
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Finance leases and financing obligations |
|||
Operating leases |
|||
Total current liabilities |
|||
Long-term debt |
|||
Finance leases and financing obligations |
|||
Operating leases |
|||
Deferred income taxes |
|||
Other long-term liabilities |
|||
Shareholders’ equity: |
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Common stock |
|||
Paid-in capital |
|||
Treasury stock, at cost |
( |
( |
( |
Retained earnings |
|||
Total shareholders’ equity |
$ |
$ |
$ |
Total liabilities and shareholders’ equity |
$ |
$ |
$ |
See accompanying Notes to Consolidated Financial Statements
3
Table of Contents
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
Quarter Ended |
|
(Dollars in Millions, Except per Share Data) |
May 2, 2026 |
May 3, 2025 |
Net sales |
$ |
$ |
Other revenue |
||
Total revenue |
||
Cost of merchandise sold |
||
Operating expenses: |
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Selling, general, and administrative |
||
Depreciation and amortization |
||
Operating income |
||
Interest expense, net |
||
Loss before income taxes |
( |
( |
Benefit for income taxes |
( |
( |
Net loss |
$( |
$( |
Net loss per share: |
|
|
Basic |
$( |
$( |
Diluted |
$( |
$( |
See accompanying Notes to Consolidated Financial Statements
4
Table of Contents
KOHL’S CORPORATION
(Unaudited)
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Quarter Ended |
|
(Dollars in Millions, Except per Share Data) |
May 2, 2026 |
May 3, 2025 |
Common stock |
|
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Balance, beginning of period |
$ |
$ |
Stock-based awards |
— |
— |
Balance, end of period |
$ |
$ |
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|
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Paid-in capital |
|
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Balance, beginning of period |
$ |
$ |
Stock-based awards |
||
Balance, end of period |
$ |
$ |
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|
|
Treasury stock |
|
|
Balance, beginning of period |
$( |
$( |
Stock-based awards |
( |
( |
Dividends paid |
— |
— |
Balance, end of period |
$( |
$( |
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Retained earnings |
|
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Balance, beginning of period |
$ |
$ |
Net loss |
( |
( |
Dividends paid |
( |
( |
Balance, end of period |
$ |
$ |
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Total shareholders' equity, end of period |
$ |
$ |
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Common stock |
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Shares, beginning of period |
||
Stock-based awards |
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Shares, end of period |
||
Treasury stock |
|
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Shares, beginning of period |
( |
( |
Stock-based awards |
( |
— |
Shares, end of period |
( |
( |
Total shares outstanding, end of period |
||
|
|
|
Dividends paid per common share |
$ |
$ |
See accompanying Notes to Consolidated Financial Statements
5
Table of Contents
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Quarter Ended |
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(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Operating activities |
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Net loss |
$( |
$( |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
||
Share-based compensation |
||
Deferred income taxes |
( |
( |
Non-cash lease expense |
||
Other non-cash items |
( |
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Changes in operating assets and liabilities: |
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Merchandise inventories |
( |
( |
Other current and long-term assets |
( |
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Accounts payable |
( |
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Accrued and other long-term liabilities |
( |
( |
Operating lease liabilities |
( |
( |
Net cash used in operating activities |
( |
( |
Investing activities |
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Acquisition of property and equipment |
( |
( |
Proceeds from sale of property and equipment |
— |
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Net cash used in investing activities |
( |
( |
Financing activities |
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Net borrowings under revolving credit facility |
— |
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Shares withheld for taxes on vested restricted shares |
( |
( |
Dividends paid |
( |
( |
Repayment of long-term borrowings |
( |
— |
Discount on redemption of debt |
— |
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Finance lease and financing obligation payments |
( |
( |
Proceeds from financing obligations |
— |
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Net cash (used in) provided by financing activities |
( |
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Net (decrease) increase in cash and cash equivalents |
( |
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Cash and cash equivalents at beginning of period |
||
Cash and cash equivalents at end of period |
$ |
$ |
Supplemental information |
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Interest paid, net of capitalized interest |
$ |
$ |
See accompanying Notes to Consolidated Financial Statements
6
Table of Contents
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for fiscal year end Consolidated Financial Statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the Consolidated Financial Statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission ("SEC"). Certain amounts in the Consolidated Financial Statements and related footnotes may not foot or crossfoot due to rounding.
Due to the seasonality of the business of Kohl’s Corporation (the “Company,” “Kohl’s,” “we,” “our,” or “us”), results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
Reportable Segments
We are an omnichannel retailer that operates as a reportable segment. Our Chief Operating Decision Maker (“CODM”) is our . The net income (loss) presented in the Consolidated Statements of Operations is the financial information reviewed by the CODM.
Supplier Finance Programs
The Company has an agreement with a third-party financing provider to facilitate a supplier financing program. The program provides participating suppliers the option to receive outstanding payment obligations of the Company early at a discount. The Company’s obligations to its suppliers, including amounts due and scheduled payment terms, are not impacted by suppliers’ decisions to finance amounts under the program. All amounts payable to the financial institution relating to suppliers participating in the program are recorded in in the Consolidated Balance Sheets and were $
International Emergency Economic Powers Act ("IEEPA") Tariff Recovery
On February 20, 2026, the U.S. Supreme Court issued a ruling in Learning Resources, Inc. v. Trump invalidating certain tariffs previously imposed under the IEEPA. As a result of this ruling, the Company may be eligible for refunds of duties paid during fiscal 2025 and the first month of fiscal 2026. The Company paid approximately $
In accordance with ASC 450-30, “Gain Contingencies,” the Company has elected to use a gain contingency model to account for recoveries of previously paid IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. Tariff recoveries would be reflected as a reduction of Merchandise inventories to the extent the inventory remains on hand, or as a reduction of Cost of merchandise sold for inventory that has already been sold.
7
Table of Contents
As of May 2, 2026, the Company has not received any refund payments. Accordingly, no gain has been recognized in the Consolidated Statement of Operations for the quarter ended May 2, 2026.
Recent Accounting Pronouncements
Accounting Standards Issued but not yet Effective
In 2024, the Financial Accounting Standards Board ("FASB") issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. For public entities, the provisions within ASU 2024-03 are effective for the first annual reporting period beginning after December 15, 2026, and for interim periods of fiscal years beginning after December 15, 2027. The provisions within ASU 2024-03 are required to be applied prospectively; however, they may be applied retrospectively for all comparative periods following the effective date. We are currently assessing the impact the adoption of ASU 2024-03 will have on our consolidated financial statement disclosures.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software ("ASU 2025-06"), which requires software capitalization to begin when both of the following occur: (1) management has authorized and committed to funding the software project; and (2) it is probable that the project will be completed and the software will be used to perform the function intended. For public entities, the provisions within ASU 2025-06 are effective for the first annual and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The provisions within ASU 2025-06 allow for a prospective, modified, or retrospective transition approach. We are currently assessing the impact the adoption of ASU 2025-06 will have on our consolidated financial statements and related disclosures.
2. Revenue Recognition
The following table summarizes net sales by line of business:
|
Quarter Ended |
|
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Women's |
$ |
$ |
Accessories (including Sephora) |
||
Men's |
||
Home |
||
Children's |
||
Footwear |
||
Net sales |
$ |
$ |
Unredeemed gift cards and merchandise return card liabilities totaled $
3. Debt
Borrowings under the $
8
Table of Contents
Long-term debt, which excludes borrowings on the revolving credit facility, consists of the following secured and unsecured debt:
|
|
|
Outstanding |
||
Maturity (Dollars in Millions) |
Effective Rate at Issuance |
Coupon Rate |
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
2025 |
|||||
2029 |
|||||
2030 |
|||||
2031 |
|||||
2033 |
|||||
2037 |
|||||
2045 |
|||||
Outstanding secured and unsecured senior debt |
|
|
|||
Unamortized debt discounts and deferred financing costs |
|
|
( |
( |
( |
Current portion of secured and unsecured senior debt |
|
|
( |
||
Long-term secured and unsecured senior debt |
|
|
$ |
$ |
$ |
Effective interest rate at issuance |
|
|
|||
Our estimated fair value of secured and unsecured senior long-term debt is determined using Level 1 inputs, using financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our secured and unsecured senior debt was $
The interest rate on our
In the first quarter of 2026, we reduced our outstanding debt by $
In the fourth quarter of 2025, we reduced our outstanding debt by $
In the second quarter of 2025, we issued $
Also in the second quarter of 2025, $
Our various debt agreements contain covenants including limitations on additional indebtedness and certain financial tests. As of May 2, 2026, we were in compliance with all covenants of the various debt agreements.
4. Leases
We lease certain property and equipment used in our operations. Our typical store lease has an initial term of
Lease assets represent our right to use an underlying asset for the lease term. Lease assets are recognized at commencement date based on the value of the lease liability and are adjusted for any lease payments made to the
9
Table of Contents
lessor at or before commencement date, minus any lease incentives received and any initial direct costs incurred by the lessee.
Lease liabilities represent our contractual obligation to make lease payments and include renewal options that are reasonably certain of being exercised. At the commencement date, the lease liabilities equal the present value of minimum lease payments over the accounting lease term. As the implicit interest rate is not readily identifiable in our leases, we estimate our collateralized incremental borrowing rate to calculate the present value of lease payments.
Leases with a term of 12 months or less are excluded from the balance; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and non-lease components for new and modified leases.
The following tables summarize our operating and finance leases, which are predominately store related, and where they are presented in our Consolidated Financial Statements:
Consolidated Balance Sheets |
Quarter Ended |
|||
(Dollars in Millions) |
Classification |
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
Assets |
|
|
|
|
Operating leases |
Operating leases |
$ |
$ |
$ |
Finance leases |
||||
Total operating and finance leases |
$ |
$ |
$ |
|
Liabilities |
|
|
|
|
Current |
|
|
|
|
Operating leases |
Current portion of operating leases |
|||
Finance leases |
||||
Noncurrent |
|
|
|
|
Operating leases |
Operating leases |
|||
Finance leases |
||||
Total operating and finance leases |
$ |
$ |
$ |
|
Consolidated Statement of Operations |
Quarter Ended |
||
(Dollars in Millions) |
Classification |
May 2, 2026 |
May 3, 2025 |
Operating leases |
Selling, general, and administrative |
$ |
$ |
Finance leases |
|
|
|
Amortization of leased assets |
Depreciation and amortization |
||
Interest on leased assets |
Interest expense, net |
||
Total operating and finance leases |
|
$ |
$ |
Consolidated Statement of Cash Flows |
Quarter Ended |
|
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Cash paid for amounts included in the measurement of leased liabilities |
|
|
Operating cash flows from operating leases |
$ |
$ |
Operating cash flows from finance leases |
||
Financing cash flows from finance leases |
||
10
Table of Contents
The following table summarizes future lease payments by fiscal year:
|
May 2, 2026 |
||
(Dollars in Millions) |
Operating Leases |
Finance Leases |
Total |
2026 |
$ |
$ |
$ |
2027 |
|||
2028 |
|||
2029 |
|||
2030 |
|||
After 2030 |
|||
Total lease payments |
$ |
$ |
$ |
Amount representing interest |
( |
( |
( |
Lease liabilities |
$ |
$ |
$ |
Total lease payments include $
The following table summarizes weighted-average remaining lease term, weighted-average remaining contractually obligated lease term, and weighted-average discount rate:
|
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
Weighted-average remaining term (years) |
|
|
|
Operating leases |
|||
Finance leases |
|||
Weighted-average remaining contractually obligated term (years) |
|
|
|
Operating leases |
|||
Finance leases |
|||
Weighted-average discount rate |
|
|
|
Operating leases |
|||
Finance leases |
The remaining contractually obligated term represents only the remaining noncancelable portion of the leases.
Other lease information is as follows:
|
Quarter Ended |
|
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Property and equipment acquired (disposed) through exchange of: |
|
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Finance lease liabilities |
$ |
($ |
Operating lease liabilities |
||
Financing Obligations
Historical failed sale-leasebacks that did not qualify for sale-leaseback accounting upon adoption of ASC 842 continue to be accounted for as financing obligations.
11
Table of Contents
The following tables summarize our financing obligations, which are all store related, and where they are presented in our Consolidated Financial Statements:
Consolidated Balance Sheets |
|
|
|
|
(Dollars in Millions) |
Classification |
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
Assets |
|
|
|
|
Financing obligations |
Property and equipment, net |
$ |
$ |
$ |
Liabilities |
|
|
|
|
Current |
Current portion of finance leases and financing obligations |
|||
Noncurrent |
Finance leases and financing obligations |
|||
Total financing obligations |
$ |
$ |
$ |
|
Consolidated Statement of Operations |
Quarter Ended |
||
(Dollars in Millions) |
Classification |
May 2, 2026 |
May 3, 2025 |
Amortization of financing obligation assets |
Depreciation and amortization |
$ |
$ |
Interest on financing obligations |
Interest expense, net |
||
Total financing obligations |
|
$ |
$ |
Consolidated Statement of Cash Flows |
Quarter Ended |
|
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Cash paid for and proceeds from amounts included in the measurement of financing obligations |
|
|
Operating cash flows from financing obligations |
$ |
$ |
Financing cash flows from financing obligations |
||
Proceeds from financing obligations |
||
The following table summarizes future financing obligation payments by fiscal year:
|
May 2, 2026 |
(Dollars in Millions) |
Financing Obligations |
2026 |
$ |
2027 |
|
2028 |
|
2029 |
|
2030 |
|
After 2030 |
|
Total financing obligation payments |
$ |
Non-cash gain on future sale of property |
|
Amount representing interest |
( |
Financing obligation liability |
$ |
Total financing obligation payments include $
The following table summarizes the weighted-average remaining term, weighted-average remaining contractually obligated term, and weighted-average discount rate for financing obligations:
|
May 2, 2026 |
January 31, 2026 |
May 3, 2025 |
Weighted-average remaining term (years) |
|||
Weighted-average remaining contractually obligated term (years) |
|||
Weighted-average discount rate |
12
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The remaining contractually obligated term represents only the remaining noncancelable portion of the financing obligations.
5. Share-Based Awards
In 2019, we issued
6. Contingencies
We are subject to certain legal proceedings and claims arising out of the ordinary conduct of our business. In the opinion of management, the outcome of these proceedings and claims will not have a material adverse effect on our Consolidated Financial Statements.
7. Income Taxes
The effective tax rate for the first quarter of 2026 was
8. Net Loss Per Share
Basic net loss per share is net loss divided by the number of common shares outstanding during the period. Potentially dilutive shares outstanding were excluded from the calculations as their effect would be anti-dilutive. Potentially dilutive shares include unvested restricted stock units, unvested restricted stock awards, and warrants, which utilize the treasury stock method, as well as unvested performance share units that utilize the contingently issuable share method.
The information required to compute basic and diluted net loss per share is as follows:
|
Quarter Ended |
|
(Dollars and Shares in Millions, Except per Share Data) |
May 2, 2026 |
May 3, 2025 |
Numerator—Net loss |
$( |
$( |
Denominator—Weighted-average shares: |
|
|
Basic/Diluted |
||
Net loss per share: |
|
|
Basic/Diluted |
$( |
$( |
The following potential shares of common stock were excluded from the diluted net loss per share calculation because their effect would have been anti-dilutive:
|
Quarter Ended |
|
(Shares in Millions) |
May 2, 2026 |
May 3, 2025 |
Anti-dilutive shares |
||
9. Subsequent Events
On
13
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For purposes of the following discussion, unless noted, all references to "the quarter” and “the first quarter” are for the three fiscal months (13 weeks) ended May 2, 2026 or May 3, 2025.
This Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "anticipates," "plans," "may," "intends," "will," "should," "expects," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include certain statements under Management's Discussion and Analysis and may include comments about our future sales or financial performance and our plans, performance and other objectives, expectations or intentions, such as statements regarding our liquidity, debt service requirements, planned capital expenditures, future store initiatives, adequacy of capital resources and reserves, and the impact of macroeconomic events, including inflation, consumer behavior, and changes in global trade policies, such as tariffs, and our response to such events. Forward-looking statements are based on management’s then-current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Part I Item 1A of our 2025 Form 10-K and in Part II Item 1A of this Form 10-Q, or disclosed from time to time in our filings with the SEC, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made, and we undertake no obligation to update them. Certain amounts set forth below may not foot or crossfoot due to rounding.
Executive Summary
Kohl's is a leading omnichannel retailer operating 1,151 stores and a website (www.Kohls.com) as of May 2, 2026. Our Kohl's stores and website sell moderately-priced proprietary and national brand apparel, footwear, accessories, beauty, and home products. Our Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences and store size. Our website includes merchandise which is available in our stores, as well as merchandise that is available only online.
Key financial results for the first quarter include:
Our Strategy
Kohl's remains committed to driving long-term shareholder value by providing our customers with great product, great value, and a great experience. We have three key initiatives to achieve this: we offer a curated, balanced assortment that fulfills needs across all customers, we are reestablishing Kohl’s as a leader in value and quality, and we are delivering a frictionless experience to customers across our omnichannel platforms.
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Results of Operations
Total Revenue
|
Quarter Ended |
||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
Net sales |
$2,998 |
$3,049 |
$(51) |
Other revenue |
169 |
184 |
(15) |
Total revenue |
$3,167 |
$3,233 |
$(66) |
Net sales includes revenue from the sale of merchandise, net of expected returns and deferrals due to future performance obligations, and shipping revenue.
Net sales decreased 1.7% in the first quarter of 2026 compared to the first quarter of 2025.
|
Quarter Ended |
||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
Women's |
$849 |
$851 |
(0.2%) |
Accessories (including Sephora) |
642 |
646 |
(0.6%) |
Men's |
567 |
584 |
(2.9%) |
Home |
369 |
370 |
(0.3%) |
Children's |
309 |
312 |
(1.0%) |
Footwear |
262 |
286 |
(8.4%) |
Net sales |
$2,998 |
$3,049 |
(1.7%) |
Comparable sales decreased 1.1%. Comparable sales is a measure that highlights the performance of our stores and digital channel by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales includes all store and digital sales, except sales from stores open less than twelve months, stores that have been closed, and stores that have been relocated where square footage has changed by more than 10%.
Digital sales increased 4.0% and digital penetration represented 26% of net sales compared to 24% in the first quarter of 2025. We measure the change in digital sales by including all sales initiated online or through mobile applications, including omnichannel transactions which are fulfilled through our stores. We measure digital penetration as digital sales over net sales. These amounts do not take into consideration fulfillment node, digital returns processed in stores, and coupon behaviors.
Comparable sales and digital penetration measures vary across the retail industry. As a result, our comparable sales calculation and digital penetration may not be consistent with the similarly titled measures reported by other companies.
Other revenue includes revenue from credit card operations, third-party advertising on our website, unused gift cards and merchandise return cards (breakage), and other non-merchandise revenue.
Other revenue decreased $15 million due to lower revenue from our credit card operations. This was driven by lower late fees and finance charges partially offset by lower write-off activity.
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Cost of Merchandise Sold and Gross Margin
|
Quarter Ended |
|||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
|
Net sales |
$2,998 |
$3,049 |
$(51) |
|
Cost of merchandise sold |
1,802 |
1,834 |
(32) |
|
Gross margin |
$1,196 |
$1,215 |
$(19) |
|
Gross margin as a percent of net sales |
39.9% |
39.9% |
4 |
bps |
Cost of merchandise sold includes the total cost of products sold, including product development costs, net of vendor payments other than reimbursement of specific, incremental, and identifiable costs; inventory shrink; markdowns; freight expenses associated with moving merchandise from our vendors to our distribution centers; shipping expenses for digital sales; terms cash discount; and amounts due to Sephora for their share of operating profits under the Sephora arrangement. Our cost of merchandise sold may not be comparable with that of other retailers because we include distribution center and buying costs in selling, general, and administrative expenses while other retailers may include these expenses in cost of merchandise sold.
Gross margin is calculated as net sales less cost of merchandise sold. For the first quarter of 2026, gross margin was 39.9% of net sales, an increase of 4 basis points to last year. The increase was caused by merchandise mix with increased proprietary brand penetration, partially offset by elevated shipping costs driven by our digital sales increase of 4% year over year.
Selling, General, and Administrative Expense
|
Quarter Ended |
|||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
|
SG&A |
$1,145 |
$1,164 |
$(19) |
|
As a percent of total revenue |
36.2% |
36.0% |
15 |
bps |
SG&A includes compensation and benefit costs (including stores, corporate, buying, and distribution centers); occupancy and operating costs of our retail, distribution, and corporate facilities; freight expenses associated with moving merchandise from our distribution centers to our retail stores and among distribution and retail facilities other than expenses to fulfill digital sales; marketing expenses, offset by vendor payments for reimbursement of specific, incremental, and identifiable costs; expenses related to our credit card operations; and other administrative revenues and expenses. We do not include depreciation and amortization in SG&A. The classification of these expenses varies across the retail industry.
Many of our expenses, including store payroll and distribution costs, are variable in nature. These costs generally increase as sales increase and decrease as sales decrease. We measure our expenses as a percentage of revenue and changes in this percentage compared to the prior year. If the expense as a percent of revenue decreased from the prior year, the expense "leveraged." If the expense as a percent of revenue increased over the prior year, the expense "deleveraged."
The following table summarizes the changes in SG&A by expense type:
|
Quarter Ended |
(Dollars in Millions) |
May 2, 2026 |
Corporate and other |
$(17) |
Distribution |
(1) |
Store expenses |
(1) |
Total decrease |
$(19) |
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SG&A expenses decreased $19 million, or 1.6%, to $1.1 billion. As a percentage of revenue, SG&A deleveraged by 15 basis points. The decrease in SG&A expenses was driven by lower corporate and other costs, primarily from reduced credit expenses.
Other Expenses
|
Quarter Ended |
||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
Depreciation and amortization |
$174 |
$175 |
$(1) |
Interest expense, net |
63 |
76 |
(13) |
Depreciation and amortization was $174 million, relatively flat to the first quarter of 2025.
Net interest expense decreased due to a gain on extinguishment of debt related to the open market repurchases of long term debt completed in the first quarter of 2026 and no outstanding balance on the revolving credit facility. The reductions were partially offset by interest on our 2030 notes, issued in the second quarter of 2025.
Income Taxes
|
Quarter Ended |
||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
Benefit for income taxes |
$(3) |
$(1) |
$(2) |
Effective tax rate |
14.8% |
10.4% |
|
In both periods, the effective tax rate results in a net benefit for income taxes on a pre-tax loss. The impact of the 2026 and 2025 net unfavorable tax items, when compared to a pre-tax loss, results in decreasing the tax rate from the statutory rate.
Inflation, Global Economic Conditions, and Trade Policies
We expect that our operations will continue to be influenced by general economic conditions, including food, fuel and energy prices, higher unemployment, wage inflation, and costs to source our merchandise, including tariffs. During 2025, the U.S. government utilized the IEEPA to impose additional tariffs on a broad range of imports, including certain consumer goods. While these actions did not have a material impact on our 2025 and year-to-date 2026 results, the global trade environment remains fluid. On February 20, 2026, the U.S. Supreme Court issued a ruling in Learning Resources, Inc. v. Trump striking down certain tariffs previously imposed under IEEPA. While this ruling may lead to potential refunds for duties paid during 2025 and the first quarter of 2026, the availability, timing, and amount of such refunds remain uncertain and subject to further legal and administrative developments. Following this decision, the U.S. administration invoked Section 122 of the Trade Act of 1974 to impose new tariffs on imports, effective February 24, 2026. These Section 122 tariffs are currently subject to legal challenge; in May 2026, the U.S. Court of International Trade issued a ruling finding the tariffs unlawful, although this ruling is currently stayed pending appeal. We continue to pay these duties while monitoring the legal developments. Further tariff-related actions may increase merchandise costs, affect merchandise availability, and impact our operational results.
The Company paid approximately $190 million in IEEPA tariffs between February 2025 and February 2026. We submitted claims seeking approximately $140 million in refunds of previously paid IEEPA tariffs as part of the Phase 1 CAPE tariff refunds. We continue to monitor developments regarding subsequent administrative phases for our remaining entries.
To mitigate the impact of these tariffs, the Company took proactive measures to reduce our exposure to tariffs by leveraging our diverse factory network to move production, adjusting orders based on pricing elasticity analyses, and working closely with our supplier and vendor base to proactively manage any impacts, with the goal of continuing to drive value to our customers. There can be no assurances that such factors will not impact our business in the future.
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Liquidity and Capital Resources
Capital Allocation
Our capital allocation strategy is to invest to maximize our overall long-term return and maintain a strong balance sheet. We follow a disciplined approach to capital allocation based on the following priorities: first, we invest in our business to drive long-term profitable growth; second, we pay a quarterly dividend; third, we will capitalize on opportunities to further reduce our debt and overall leverage when appropriate; and fourth, we return excess cash to shareholders through our share repurchase program.
We will continue to invest in the business, as we plan to invest approximately $350 to $400 million in capital expenditures in 2026 towards our strategic priorities. On May 20, 2026, our Board of Directors declared a quarterly cash dividend of $0.125 per share. The dividend will be paid on June 24, 2026 to all shareholders of record at the close of business on June 10, 2026. During the first quarter of 2026, we reduced our outstanding debt by $50 million aggregate principal through repurchases of various notes on the open market. We are not currently planning any share repurchases.
Our period-end Cash and cash equivalents balance increased to $429 million from $153 million in the first quarter of 2025. Our Cash and cash equivalents balance includes short-term investments of $273 million and $7 million as of May 2, 2026 and May 3, 2025, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments. We also place dollar limits on our investments in individual funds or instruments.
The following table presents our primary uses and sources of cash:
Cash Uses |
|
Cash Sources |
• Operational needs, including compensation and benefit costs, rent, taxes, and other operating costs • Inventory • Capital expenditures • Dividend payments • Debt repayments and repurchases • Share repurchases |
|
• Cash flow from operations • Line of credit under our revolving credit facility • Issuance of debt
|
|
Quarter Ended |
||
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Change |
Net cash (used in) provided by: |
|
|
|
Operating activities |
$(74) |
$(92) |
$18 |
Investing activities |
(84) |
(108) |
24 |
Financing activities |
(87) |
219 |
(306) |
Operating Activities
Our operating cash outflows generally consist of payments to our employees for wages, salaries and other employee benefits, payments to our merchandise vendors for inventory (net of vendor allowances), payments to our shipping carriers, and payments to our landlords for rent. Operating cash outflows also include payments for income taxes and interest payments on our debt borrowings.
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Operating activities used $74 million of cash in the first quarter of 2026 compared to $92 million in the first quarter of 2025. The decrease in cash used in operating activities is due to the timing of payments and inventory receipts year over year.
Investing Activities
Our investing cash outflows include payments for capital expenditures, including investments in new and existing stores, improvements to supply chain, and technology costs. Our investing cash inflows are generally from proceeds from sales of property and real estate.
Investing activities used $84 million in the first quarter of 2026 compared to $108 million in the first quarter of 2025. The decrease in cash used in investing activities was primarily driven by our reduced capital expenditure plans for fiscal 2026.
In 2026, we anticipate capital expenditures of approximately $350 to $400 million as we continue to invest in our business, including enhancing omnichannel capabilities.
Financing Activities
Our financing strategy is to ensure adequate liquidity and access to capital markets. We also strive to maintain a balanced portfolio of debt maturities, while minimizing our borrowing costs. Our ability to access the public debt market has provided us with adequate sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and our credit ratings.
During the first quarter of 2026, Moody's revised their outlook to positive.
As of May 2, 2026, our corporate credit ratings and outlook were as follows:
|
Moody’s |
S&P |
Fitch |
Corporate credit |
B2 |
B+ |
BB- |
Outlook |
Positive |
Negative |
Negative |
The interest rate on our 3.375% notes due May 2031 is subject to a coupon adjustment provision within the notes that can cause the interest rate to step up if our long-term debt is downgraded to below a BBB- credit rating by S&P Global Ratings or Baa3 by Moody’s Investor Service, Inc., which has occurred in recent years. In total, the interest rate on the notes due May 2031 has increased 175 basis points since their issuance due to the coupon adjustment provision within the notes.
The majority of our financing activities generally include proceeds from and/or repayments of borrowings under our revolving credit facility and long-term debt, dividend payments, and repurchases of common stock. Financing cash outflows also include payments to our landlords for leases classified as finance leases and financing obligations.
Financing activities used $87 million of cash in the first quarter of 2026 and generated $219 million of cash in the first quarter of 2025.
Cash dividend payments were $14 million ($0.125 per share) in both the first quarter of 2026 and the first quarter of 2025.
In the first quarter of 2026, we had no net activity on our $1.5 billion credit facility, compared to net borrowings of $255 million in the first quarter of 2025. Borrowings outstanding under the revolving credit facility, recorded as short-term debt, were $0 as of May 2, 2026, and $545 million as of May 3, 2025.
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Also in the first quarter of 2026, we reduced our outstanding debt by $50 million aggregate principal through repurchases of various notes on the open market.
There was no cash used for treasury stock purchases in the first quarter of 2026 or 2025. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors. As we continue to solidify our balance sheet and improve our business results we will look at resuming share repurchases in the future.
Key Financial Ratios
Key financial ratios that provide certain measures of our liquidity are as follows:
(Dollars in Millions) |
May 2, 2026 |
May 3, 2025 |
Working capital |
$1,187 |
$300 |
Current ratio |
1.48 |
1.09 |
Our working capital and inventory levels typically build throughout the fall, peaking during the November and December holiday selling season.
The increases in our working capital and current ratio are driven by decreased borrowings under the revolving credit facility, the repayment of $353 million of our 4.25% notes that matured following the first quarter of 2025, and an increase in cash and cash equivalents.
Debt Covenant Compliance
Our senior secured, asset based revolving credit facility contains customary events of default and financial, affirmative and negative covenants, including but not limited to, a springing financial covenant relating to our fixed charge coverage ratio and restrictions on indebtedness, liens, investments, asset dispositions, and restricted payments. As of May 2, 2026, we were in compliance with all covenants.
Contractual Obligations
There have been no significant changes in the contractual obligations disclosed in our 2025 Form 10-K.
Off-Balance Sheet Arrangements
We have not provided any financial guarantees arising from arrangements with unconsolidated entities or persons as of May 2, 2026.
We have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt, or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our financial condition, liquidity, results of operations, or capital resources.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts. Management has discussed the development, selection, and disclosure of its estimates and assumptions with the Audit Committee of our Board of Directors. There have been no significant changes in the critical accounting policies and estimates discussed in our 2025 Form 10-K.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
There have been no significant changes in the market risks described in our 2025 Form 10-K.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (the “Evaluation”) at a reasonable assurance level as of the last day of the period covered by this report.
Based upon the Evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. Disclosure controls and procedures are defined by Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act") as controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended May 2, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently party to any material legal proceedings; however, we are subject to certain legal proceedings and claims arising out of the ordinary conduct of our business. In the opinion of management, the outcome of these proceedings and claims will not have a material adverse effect on our Consolidated Financial Statements.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, careful consideration should be taken of the risk factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026. These risk factors could materially and adversely affect our business, financial condition, results of operations, and liquidity. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also have a material adverse effect on our business operations.
There have been no significant changes in the Risk Factors described in our 2025 Form 10-K, except as follows:
Changes in global trade policies and the imposition of tariffs could increase our costs and disrupt our supply chain.
The majority of goods we source are manufactured outside of the United States, primarily in Asia. Consequently, our business is subject to risks associated with foreign trade, including changes in trade policy. Recent or potential impositions of new or increased tariffs on imported products, or the removal of de minimis thresholds for direct-to-consumer imports, could increase our merchandise costs and have a material adverse effect on our business, results of operations, and liquidity. On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the IEEPA. While this ruling has initiated a refund process, the availability, timing, and amount of such refunds remain uncertain and subject to further legal and administrative developments. Following this decision, the U.S. presidential administration invoked alternative authorities, including Section 122 of the Trade Act of 1974, to impose new tariffs on imports from various countries. These and other trade and tariff-related actions may be subject to legal challenge, judicial reviews, stays, or appeals, which could result in further volatility in our merchandise costs and supply chain. If we are unable to diversify our sourcing, divert production or sourcing away from specific countries to avoid tariffs, or otherwise successfully mitigate the impact of these trade policies, our gross margins, costs of merchandise sold, results of operations, and competitive position could be adversely affected. Furthermore, retaliatory trade measures by other countries could increase the costs of our operations or limit our access to critical raw materials or merchandise.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
In February 2022, our Board of Directors increased the remaining share repurchase authorization under our existing share repurchase program to $3.0 billion. Purchases under the repurchase program may be made in the open market, through block trades, and other negotiated transactions. We expect to execute the share repurchase program primarily in open market transactions, subject to market conditions. There is no fixed termination date for the repurchase program, and the program may be suspended, discontinued, or accelerated at any time.
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The following table contains information for shares of common stock repurchased and shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ stock-based compensation during the three fiscal months ended May 2, 2026:
(Dollars in Millions, Except Share and per Share Data) |
Total Number |
Average |
Total Number |
Approximate |
February 1 - February 28, 2026 |
4,220 |
$18.69 |
— |
$2,476 |
March 1 - April 4, 2026 |
438,012 |
$12.40 |
— |
$2,476 |
April 5 - May 2, 2026 |
14,329 |
$13.85 |
— |
$2,476 |
Total |
456,561 |
$12.50 |
— |
|
Item 5. Other Information
Securities Trading Arrangements of Directors and Officers
Except as noted below, during the three months ended May 2, 2026, no
On
On
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Item 6. Exhibits
Exhibit |
|
Description |
10.1 |
|
Amended and Restated Executive Compensation Agreement between Kohl's Inc. and Mari Steinmetz dated as of February 27, 2026 |
31.1 |
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2 |
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2 |
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
|
Inline XBRL Instance Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Kohl’s Corporation (Registrant) |
|
|
Date: June 4, 2026 |
/s/ Jill Timm |
|
Jill Timm On behalf of the Registrant and as Chief Financial Officer (Principal Financial Officer) |
25