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Research Alert: Kohl's Posts Mixed Q1 Fy 26; Reaffirms Guidance

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CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:

KSS posted Q1 2026 net sales of $2.998B, down 1.7% Y/Y and $30M below estimates, with comp sales declining 1.1% though representing the company's best comp performance in over four years. Operating income fell 23% Y/Y to $46M as operating margin compressed 41 bps to 1.4% despite flat gross margin at 39.9% supported by higher proprietary brand penetration. In our opinion, we see little to get excited about in the Q1 report and believe the company is not deserving of a multiple above 10x. The company reaffirmed full-year guidance of net sales down 2% to flat, operating margin of 2.8%-3.4%, and EPS of $1.00-$1.60. Inventory management remains a bright spot with merchandise inventories declining 8% Y/Y to $2.897B, while the balance sheet improved meaningfully with cash increasing to $429M from $153M the prior year. We believe the company continues to underperform peers with margins remaining extremely depressed as KSS's market position is dominated by off-price retailers.

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