Kohl’s missed analysts’ estimates for second-quarter sales as consumers pulled back on discretionary purchases, outweighing progress from the company’s turnaround efforts. The stock reacted sharply, dropping about 5% before the open.
Management raised its full-year profit guidance after the company benefited from $150 million in tariff refunds during the quarter. Kohl’s also announced plans to resume roughly $100 million of share repurchases this year.
Quarterly revenue declined 0.9% to $3.32 billion compared with the year-ago period. That result came in below analyst expectations, which suggested a milder fall of about 0.1% to $3.35 billion, according to data compiled by LSEG.
The company updated its outlook for fiscal 2026 adjusted earnings to a range of $1.80 to $2.40 per share, up from a prior forecast of $1.00 to $1.60 per share.
Broader measures of consumer behavior during the period point to growing caution. U.S. consumer sentiment deteriorated in August, and retail sales fell in July for the first time in nine months. Together, those trends underscored a pattern of more selective buying among middle- and lower-income households, while higher-income shoppers remained largely resilient.
That selectivity has translated into softer demand for so-called nice-to-have categories, including apparel and home goods. The resulting pressure on discretionary spending has been felt across retail formats, from higher-end department stores such as Kohl’s to off-price chains like TJX.
Market reaction and context
Kohl’s stock traded lower in pre-market activity following the sales miss, even as management pointed to the tariff refunds and resumed buybacks as positives for earnings per share. The revenue shortfall, however, highlighted continuing headwinds facing retailers dependent on discretionary spending.
What management emphasized
- Kohl’s attributed part of the improved profit outlook to $150 million in tariff refunds recognized in the quarter.
- The retailer confirmed plans to restart approximately $100 million in share repurchases this year.
- Management adjusted fiscal 2026 adjusted earnings guidance upward to $1.80-$2.40 per share from a previous $1.00-$1.60 range.
As retailers monitor consumer patterns, the mix of cautious spending among lower- and middle-income households and continued resilience among wealthier shoppers will remain a key factor for sales and margin outcomes in the months ahead.