Kohl's Q2 Earnings Coming Up: Factors Investors Need to Understand

KSS heads into Q2 with sales expected to slip as pressured shoppers curb spending, while promotions, shipping costs and category weakness weigh on margins.

Zacks Equity Research

3 min read

Kohl's Corporation KSS is likely to witness a top-line decline when it reports second-quarter fiscal 2026 earnings on Aug. 26. The Zacks Consensus Estimate for revenues is pegged at $3.52 billion, indicating a 0.9% decrease from the prior-year quarter’s reported figure.

The consensus mark for earnings has remained unchanged in the past 30 days at 56 cents per share, indicating flat year-over-year growth. KSS has a trailing four-quarter earnings surprise of 69%, on average.

Kohl's Corporation Price, Consensus and EPS Surprise

Kohl's Corporation price-consensus-eps-surprise-chart | Kohl's Corporation Quote

Factors Likely to Influence KSS’ Q2 Results

Kohl’s has been navigating a difficult consumer backdrop, particularly among its core middle and lower-income shoppers, who remain pressured by a challenging macroeconomic environment. Discretionary spending remains tight and customers are increasingly value-focused and selective, which is likely to have weighed on overall sales in the quarter under review.

Category-specific softness is also likely to have weighed on Kohl’s second-quarter performance. Sephora’s mixed performance might have remained a headwind, as the business declined low single digits in the fiscal first quarter, with weakness in makeup and skincare partly offset by strength in fragrance and hair care. Although new products and brands were being introduced and rolled out, their contribution could take time to build, limiting the benefit to sales during the quarter.

Margins are likely to have remained under pressure from Kohl’s emphasis on delivering sharper value and supporting customer engagement through promotions and coupons. Management has noted that investments in value could offset benefits from cleaner inventories and a stronger proprietary-brand mix. Higher digital penetration has also carried incremental shipping costs, while transportation expenses might have added pressure. We expect gross profit to decline 2.1% year over year and gross margin to decrease 40 basis points in the second quarter.

Despite these headwinds, Kohl’s is likely to have benefited from improving execution, proprietary-brand momentum and omnichannel initiatives. The company entered the quarter with cleaner inventories, stronger apparel depth and improved in-stock positioning, while its proprietary brands had been resonating well with value-conscious shoppers. Digital enhancements, including improved product discovery and AI-powered shopping tools, alongside improving trends among Kohl’s Card customers, are also likely to have provided some support.

Earnings Whispers for KSS Stock

Our proven model doesn’t conclusively predict an earnings beat for Kohl's this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here.

Kohl's currently carries a Zacks Rank #2 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.

Burlington Stores, Inc. BURL currently has an Earnings ESP of +1.84% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Burlington's upcoming quarter’s earnings per share is pegged at $2.18, which implies 37.1% growth year over year. The consensus estimate for the quarterly revenues is pinned at $3.02 billion, which indicates 11.8% growth from the figure reported in the prior-year quarter. BURL delivered a trailing four-quarter earnings surprise of 14%, on average.

Five Below, Inc. FIVE currently has an Earnings ESP of +20.80% and a Zacks Rank #2. The consensus estimate for quarterly revenues is pegged at $1.21 billion, which indicates an increase of 17.9% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Five Below’s upcoming quarter’s earnings per share is pegged at $1.28, implying 58% year-over-year growth. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.

Costco Wholesale Corporation COST currently has an Earnings ESP of +1.45% and a Zacks Rank of 3. The Zacks Consensus Estimate for its upcoming quarter’s revenues is pegged at $94.46 billion, indicating a 9.6% rise from the figure reported in the prior-year quarter.

The consensus estimate for Costco’s earnings is pegged at $6.51 per share, implying 10.9% growth from the year-ago quarter. COST delivered a trailing four-quarter earnings surprise of 1%, on average.

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