Kohl's (KSS) Financials

Kohl’s (NYSE: KSS) is showing a sharp year-over-year recovery in profitability, but the latest quarter also highlights how fragile that improvement remains. In Q1 2026, revenue fell to $3.17 billion from $3.23 billion a year earlier, and the company posted a net loss of $14 million versus a $15 million loss in Q1 2025. That’s an improvement on the bottom line, but operating income collapsed to just $46 million, and interest expense again pushed pre-tax results into the red.

Looking at the last four years, Kohl’s business has been volatile: sales have generally trended lower from 2023 into 2026, while margins have swung between profits and losses depending on inventory and expense control. The encouraging part is that operating cash flow improved materially in late 2024 and remained positive in several periods before weakening again in Q1 2026. The concern is that leverage remains high, and the balance sheet still carries a heavy burden of debt and lease obligations.

• Q1 2026 gross profit was $1.37 billion, which kept the company above breakeven at the operating level despite softer revenue.
• Net loss narrowed to $14 million in Q1 2026 from $15 million in Q1 2025, showing modest improvement year over year.
• Q4 2025 was a strong seasonal rebound, with revenue of $5.17 billion and net income of $126 million.
• Operating cash flow in Q4 2025 was $750 million, a healthy level that suggests the business can still generate cash when sales and working capital cooperate.
• Inventory fell to $2.90 billion in Q1 2026 from $3.90 billion in Q3 2025, which may indicate better stock control and less merchandise overhang.
• Gross margin in Q1 2026 was about 43.1%, slightly better than Q1 2025 and reasonably stable versus the recent trend.
• The company continued paying dividends at $0.125 per share in Q1 2026, but dividend coverage remains something investors should watch closely.
• Revenue declined to $3.17 billion in Q1 2026 from $3.23 billion in Q1 2025, and sales are still below levels seen in 2023 and 2024.
• Operating income in Q1 2026 was only $46 million, down sharply from $60 million in Q1 2025 and well below stronger periods in 2024.
• Kohl’s remains highly leveraged: total liabilities were $9.14 billion in Q1 2026 versus $4.02 billion in equity, and long-term lease obligations are substantial.

Bottom line: Kohl’s has shown that it can produce periods of solid cash flow and profitability, especially in stronger holiday quarters, but the latest results still point to a challenged retailer with thin margins, declining revenue, and a heavy debt/lease load. For investors, the key question is whether the recent operational stabilization can continue long enough to meaningfully improve the balance sheet.