Observed Signal · Aug 26, 2026 · Earnings Report · Source: Retail Dive · Impact: 4/5 · Sentiment: Neutral
Financials Market: Sephora Decline Pressures Kohl's Q2 Sales
Kohl’s reported Q2 fiscal 2026 results showing net sales of $3.3 billion, down less than 1% year-over-year, while Sephora shop-in-shop sales at Kohl’s fell 4% for a second consecutive quarter. Gross margin expanded 305 basis points to 43%, aided by about $150 million in tariff refunds; net income was $151 million (down just over 1%). Kohl’s raised its full-year guidance to expect net and comparable sales to be flat to down as much as 1.5% (previously flat to down 2%), and expects adjusted operating margin of 3.5%–4.0%. Kohl’s CEO Michael Bender attributed the Sephora softness to a lack of fresh SKUs and category weakness in skincare. Fitch Ratings and other research firms note Sephora at Kohl’s had contributed roughly 10% of Kohl’s topline, and Kohl’s and Sephora plan assortment and merchandising expansions for the holiday season.
Quarterly earnings and guidance from a major U.S. retailer affect retail performance, merchandising strategy, and potential retail-media budgets; the report includes material margin and guidance revisions.
Key Takeaways & Evidence Grounding
- Kohl’s Q2 net sales: $3.3 billion, down less than 1% year-over-year.
- Sephora at Kohl’s sales fell 4% in Q2, the second straight quarterly decline.
- Gross margin expanded 305 basis points to 43%, helped by ~$150 million in tariff refunds.
- Net income was $151 million, down just over 1%.
- Kohl’s raised full-year guidance: net/comparable sales expected flat to down up to 1.5%; adjusted operating margin now 3.5%–4.0%.
Connected Companies & Entities
4 Entities mappedGlobalData
Enterprise intelligence platform combining proprietary data, experts and AI.
“This was Kohl’s 18th straight quarter of declining comps, though it was the best performance since Q3 2021, per GlobalData research....”
Circana
Retail, consumer and media measurement platform for enterprises.
“In the first half of the year, beauty has remained a strong category in the U.S. despite consumer wariness, driven by fragrance, skin care a...”
Sephora
Prestige beauty retailer with omnichannel commerce, loyalty and digital engagement.
“Sephora at Kohl’s sales fell 4%, after dropping in Q1....”
Kohl's
US omnichannel retailer with marketplace, loyalty and retail media operations.
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