Kohl’s managed to beat analyst expectations, which is good, but the retailer isn’t out of the woods just yet.
Shares of retailer Kohl’s (KSS -1.72%) rose a dramatic 24% in a single day on Aug. 27. The reason for that spike was the company’s second-quarter 2025 earnings update.
Based on the stock’s advance, it is pretty obvious that it contained some good news, which is true. But there was also some bad news. Here’s what you need to know beyond the fact that Kohl’s crushed earnings expectations.
What did Kohl’s achieve in the second quarter?
Heading into the quarter, Wall Street analysts were projecting Kohl’s to earn an adjusted $0.29 per share. The final tally, however, came in at $0.56 per share, nearly twice as much.
On the top line, revenue totaled $3.35 billion versus an expectation of $3.32 billion. Investors like it when a company beats on both the top and bottom lines, and they particularly appreciate when the bottom-line beat is so dramatic.
Image source: Getty Images.
Given that backdrop, it shouldn’t be too surprising that Kohl’s stock rose. But there’s another factor here to consider, because the retailer has been struggling of late.
Without getting too deep into the details, the board of directors chose to part ways with the previous CEO without having found a replacement. That’s a troubling sign and, roughly three months on, the board has yet to find a permanent replacement.
The company’s income statement has been an eyesore for a while, too. Revenue and earnings have both been fairly weak since their post-pandemic bounce back. And that’s a problem that a single good quarter can’t paper over.
KSS data by YCharts; TTM = trailing 12 months.
Kohl’s turnaround is still a work in progress
First off, until there’s a new permanent CEO in place, Kohl’s corporate direction can’t be counted on. A new CEO could come in to change course, as would be a rightful prerogative. So whatever internal changes may have led to the strong showing in the second quarter can’t exactly be extrapolated into the future with too much confidence.
But that strong showing also needs to be taken with a grain of salt. Sure, Kohl’s beat Wall Street expectations by a wide margin. That’s great news. But what exactly were the numbers? On the top line, Kohl’s brought in $3.35 billion. That figure is down 5.1% compared to the same quarter of 2024. Worse, same-store sales (comps), a metric tracking the performance of stores open for at least a year, fell 4.2%.
The company is not resonating well with customers right now. As a comparison, Dollar General, which is also working on a turnaround, saw sales rise 5.1% with a comps jump of 2.8%. It benefited from higher customer traffic and an increase in the amount customers spent on each visit.
When it comes to turnarounds, Dollar General’s rebound is clearly on sounder footing than the one that’s taking place at Kohl’s. In fact, comparatively, it is hard to suggest that Kohl’s is turning its business around.
To be fair, it did improve its gross margin and managed to cut costs, but the real story is that it did less badly than before. That’s a step in the right direction, but it is not the same as an upturn. And until customers start returning to its stores, this retailer is unlikely to be able to get back on track.
Good news, but not enough good news
Yes, Kohl’s had a strong second quarter compared to what Wall Street was expecting. It is hard to complain about that. However, there is still a lot of work to do with the retailer’s business and a huge amount of uncertainty. Only the most aggressive investors should be buying Kohl’s stock story.
And even then, you need to believe strongly that the business can stop the bleeding and turn things around. That’s a big ask when the company doesn’t even have a permanent CEO yet.
