Kohl's Raises Outlook After Sephora Rollout

Kohl’s Corporation KSS shares are trading higher in the premarket session on Wednesday.

The company reported second-quarter adjusted earnings per share of 56 cents, beating the analyst consensus estimate of 29 cents.

Quarterly sales of $3.546 billion (down 5.1%) outpaced the street view of $3.310 billion, with comparable sales down 4.2%.

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The company completed its Sephora at Kohl’s full chain rollout in Spring 2025, putting the company on track to deliver a $2 billion beauty business, and expanded impulse queue lines to over 300 additional stores in the second quarter, with the impulse category driving units per transaction and delivering 30% sales growth in the quarter.

The company reported a gain of $129 million from a credit card interchange fee lawsuit settlement.

Gross margin as a percentage of net sales was 39.9%, an increase of 28 basis points.

Adjusted operating income was $161 million compared to $166 million in the prior year. Adjusted operating margin was 4.6%.

“We were able to expand our gross margins, reduce our inventory, and lower our expenses, leading to solid second quarter earnings,” said Michael Bender, Kohl’s interim chief executive officer.

The company exited the quarter with cash and equivalents worth $174 million, lower than $231 million in the year-ago period.

In the quarter under review, long-term debt increased $347 million due to the issuance of $360 million of 10.000% senior secured notes due 2030. Current portion of long-term debt was reduced by $353 million through repayment of the 4.25% notes due July 2025 at maturity.

Outlook

Kohl’s announced that it expects fiscal year 2025 adjusted earnings per share to be between 50 cents and 80 cents, compared to the 45 cents estimate.

The company raised its fiscal year 2025 sales guidance from a range of $14.308 billion to $14.616 billion to a range of $14.460 billion to $14.620 billion, versus the $14.562 billion estimate.

According to the data from Benzinga Pro, the short interest in Kohl’s stock was 43.50% as of August 26, 2025. The big upmove in stock is the result of short covering due to the earnings surprise.

Price Action: KSS shares are trading higher by 23.08% to $16.05 premarket at last check Wednesday.

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