Kohl's stock: why EPS beat and raised guidance isn't sufficient?

Kohl’s KSS shares opened in the red on Wednesday morning after the retailer reported its fiscal Q2 earnings.

Despite a better-than-expected adjusted earnings per share (EPS) of $1.28 and raised full-year guidance of about $15.4 billion in sales, underlying weaknesses rattled investors.

At the time of writing, Kohl’s stock is down more than 17% versus the start of this year (2026).

What’s driving Kohl’s stock lower today?

Investors bailed on KSS stock this morning primarily because both net sales and comparable-store sales both fell 0.9% year-on-year to $3.32 billion, missing Wall Street expectations.

Investors viewed the ongoing top-line decline as a sign that the company’s core turnaround strategy is taking longer than expected to reignite customer traffic.

While Kohl’s raised its full-year EPS guidance to a range of $1.80–$2.40, the upward revision was heavily aided by $150 million in IEEPA tariff refunds received during the quarter rather than pure operational expansion.

At its intraday low, Kohl’s was even seen trading below its 100-day MA (briefly), indicating bulls are losing control for the longer-term.

What else is weighing on KSS shares?

Kohl’s shares are under pressure also because broader retail trends continue to weigh on middle-to-lower-income consumer behaviour.

Cautious spending on non-essential categories like apparel and home goods remains a headwind across department store firms, including Kohl’s.  

Concurrent with the earnings release, KSS announced executive reshuffling – introducing a new Chief Customer Officer while detailing the departure of its Chief Marketing Officer – adding an extra layer of management uncertainty.

Investors should also note that Kohl’s has a history of closing the month of September in “red”, a seasonal trend that further dulls its appeal for the near-term.  

Options sentiment remains bearish

On the plus side, Kohl’s management pointed to improved gross margin (up 305bps to 43%) in Q2 and announced plans to resume up to $100 million in share buybacks as well.

However, investors seem to be fixating on the muted sales trajectory over short-term balance sheet enhancements.

Crucially, the options market expects the post-earnings weakness to sustain through the end of this week, as evidenced in the put-to-call ratio of 1.93 on contracts expiring August 28. A reading above 1.00 is typically interpreted as bearish.

The lower price on those contracts is set at $16.97 – indicating potential downside of another 6% from here.

Wall Street’s view on Kohl’s Corp

For income-focused investors, KSS shares nonetheless remain somewhat attractive given they pay a healthy dividend yield of 2.76% at the time of writing.

More broadly, though, Wall Street analysts recommend caution in playing Kohl’s Corp at current levels.

According to Barchart, the consensus rating on Kohl’s stock sits at Hold only, with the mean price target of $16.23 indicating potential downside of nearly 10% from here.