Kohl’s Fourth-Quarter Turnaround Slows Amid Rising Costs, CEO Signals Long-Term Confidence

Kohl’s (KSS) reported a 2.3% drop in same-store sales during the fourth quarter of 2025, marking a reversal from the 3.1% growth recorded in the prior quarter. The decline was driven by weaker-than-expected performance in apparel and seasonal categories, alongside rising supply chain and logistics expenses. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined 7% year-over-year to $148 million, reflecting margin pressure from elevated operational costs. The company’s ongoing transformation, including a redesigned store footprint and enhanced digital commerce capabilities, has delivered mixed results. While online sales grew 9% year-over-year, they accounted for just 22% of total revenue, indicating persistent reliance on physical retail. Inventory turnover improved by 0.6 turns, signaling better supply chain coordination, but gross margins contracted by 120 basis points, underscoring cost headwinds. Despite the quarter’s challenges, Kohl’s leadership maintained a positive outlook. CEO Michelle Gass emphasized that the company remains on track with its multi-year restructuring plan, citing progress in reducing excess stock and increasing promotional efficiency. She noted that customer engagement metrics, including app usage and loyalty program enrollment, reached new highs. The results weighed on investor sentiment, with KSS shares falling 5.2% in after-hours trading. However, broader market indices, including the S&P 500’s consumer discretionary sector (XLP) and the Russell 2000 (^RUT), showed minimal movement, suggesting the stumble was viewed as company-specific rather than sector-wide. Analysts remain cautious, with some citing the need for sustained margin improvement to support long-term growth.