Kohl’s ended fiscal 2025 in a stronger financial position than it started, even as sales remained under pressure. Fourth quarter net sales fell 3.9% to $5.0 billion, while comparable sales were down 2.8%. For the full year, net sales declined 4.0% to $14.8 billion, with comparable sales down 3.1%.
The topline remained soft, but profitability improved. Diluted EPS reached $1.07 in the fourth quarter, up from $0.43 a year earlier, while full-year diluted EPS rose to $2.38, and adjusted diluted EPS came in at $1.62.
Margin Gains Helped Offset Weak Demand
A large part of the earnings improvement came from better margins and tighter cost control. Fourth-quarter gross margin reached 33.1%, up 25 basis points, while full-year gross margin improved to 37.5%, up 34 basis points.
Selling, general, and administrative expenses also moved lower. Fourth-quarter SG&A fell 4.9% to $1.5 billion, while full year SG&A declined 4.1% to $5.1 billion.…
That helped push fourth-quarter operating income up to $212 million from $126 million, while full-year operating income rose to $624 million from $433 million. A Settlement Lifted the Full Year Result One factor boosted the annual result beyond day-to-day operations.
Kohl’s recorded a $129 million gain tied to a credit card interchange fee lawsuit settlement, which lifted reported operating income and net income for the year. That distinction matters. Reported net income rose to $272 million from $109 million, while adjusted net income came in at $186 million, up from $167 million.
The fourth quarter was cleaner, with diluted EPS of $1.07 on both a reported and an adjusted basis. Cash Flow and Inventory Improved The balance sheet looked healthier at year’s end. Inventory closed the fourth quarter at $2.7 billion, down 7%, showing tighter control over stock as the company worked to protect margins.
Cash generation improved sharply. Operating cash flow reached $1.4 billion for the full year, up from $648 million, while cash and cash equivalents rose to $674 million from $134 million. Borrowings under the revolving credit facility dropped to $0, and the company repaid $353 million…
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