TCF POST Report
MENOMONEE FALLS, Wis. — Kohl’s Corporation’s second-quarter performance offered a two-sided picture: net sales fell 0.9% to $3.32 billion, but stronger proprietary brands, a roughly 500-basis-point sequential improvement in footwear and tighter inventory management showed signs that its merchandising reset is beginning to gain traction. Comparable sales also declined 0.9%, highlighting that the retailer’s top-line recovery remains unfinished.
The improvement was most visible in categories and brands where Kohl’s has sharpened its assortment. Proprietary brands delivered 3% comparable-sales growth in Q2, outperforming the overall business, while footwear improved approximately 500 basis points from Q1, supported by fresher inventory and greater depth in core active brands such as Nike and Adidas.
Kohl’s said sales improved across nearly all lines of business, but it is continuing to reshape its apparel offer. The retailer is reducing apparel choice counts by a mid-teens percentage to create a more curated assortment while restoring inventory depth in core products. Key proprietary brands also outperformed in Juniors, Men’s and Kids.
Footwear is emerging as a particular recovery area. Alongside the sequential improvement, Kohl’s is reinvesting in women’s boots for fall after tariff constraints contributed to unfulfilled demand last year. The retailer is also increasing investment in proprietary-brand inventory where it sees strong demand.
The brand strategy extends across both proprietary and national labels. Kohl’s plans to deepen fall inventory and marketing for its “By Kohl’s” portfolio, including Sonoma, LC Lauren Conrad, FLX and SO, while investing in elevated in-store experiences for strategic partners Nike and Levi’s.
Sourcing economics also played a significant role in the quarter. Kohl’s received approximately $150 million in IEEPA tariff refunds, of which about $100 million benefited cost of merchandise sold. Part of the refund was recorded as an inventory reduction, while some was shared with vendor partners and some invested to provide greater value to customers. Kohl’s specifically cited tariff constraints as a factor behind last year’s unfulfilled demand for women’s boots.
The company did not disclose supplier-country exposure, sourcing volumes or the share of apparel and footwear sourced from individual Asian markets in its Q2 presentation. The available sourcing picture is therefore centered on tariff management, vendor collaboration, inventory economics and product availability, rather than a documented geographical shift in sourcing.
Inventory discipline is another pillar of the reset. Merchandise inventories fell 3% year over year to $2.91 billion, even as Kohl’s seeks greater depth in core products and better allocation across stores.
Profitability benefited from the tariff refunds and cost discipline. Gross margin expanded 305 basis points to 43.0%, while SG&A declined 0.9% year over year. Operating income was $261 million and net income was $151 million, or $1.28 per diluted share.
Kohl’s raised its full-year 2026 outlook, calling for net sales and comparable sales ranging from flat to down 1.5%, adjusted operating margin of 3.5%-4.0% and adjusted diluted EPS of $1.80-$2.40. The guidance includes the benefit of IEEPA tariff refunds received in the second quarter.
For Kohl’s apparel and footwear business, the quarter therefore points to early pockets of recovery rather than a broad sales turnaround. Proprietary brands and footwear are gaining momentum, but the 0.9% decline in total and comparable sales shows that the retailer still needs to convert those category-level improvements into sustained company-wide growth.
