EPS of $-0.13 increased by 45.8% from previous year
Gross margin of 43.3%
Net income of -15.00M
"N/A" - N/A
Kohls Corporation (0JRL.L) QQ1 2025 Results – Revenue Decline Amid Margin Expansion and Cash Flow Pressure in a Challenging Consumer Environment
Executive Summary
Kohls Corporation reported QQ1 2025 results with a modest top-line decline but continued margin discipline and a clearer path toward gross margin expansion, set against a still-challenged operating environment for US specialty retail. Revenue for QQ1 2025 was $3.233 billion, down 4.4% year over year and 40% quarter over quarter. Despite the revenue headwinds, gross profit rose to $1.399 billion, yielding a gross margin of 43.3%, a material improvement versus the prior-year period, signaling ongoing benefits from pricing, mix, and cost discipline.
Operating profitability improved modestly to $60 million (1.86% operating margin) from $43 million in QQ1 2024, but the bottom line remained negative at a net loss of $15 million (-$0.13 per share) as interest costs, depreciation, and other expenses compressed earnings. EBITDA stood at $235 million with an EBITDA margin of roughly 7.3% for the quarter. Cash flow remained challenging, with operating cash flow of -$92 million and free cash flow of -$202 million, driven by a significant working capital drain (change in working capital of -$282 million and inventory increase of -$191 million). The company ended QQ1 2025 with $153 million in cash and total gross debt of approximately $7.37 billion (net debt about $7.22 billion), underscoring a high leverage backdrop that will be a key focus for investors going forward.
Absent an earnings call transcript in the provided dataset, there were no management quotes available to anchor the qualitative narrative. The quantitative signals, however, point to a company in the early stages of a deleveraging and margin-restore cycle, contingent on improving consumer demand, inventory normalization, and continued efficiency initiatives.
Key Performance Indicators
Revenue
3.23B
QoQ: -40.10% | YoY:-4.41%
Gross Profit
1.40B
43.27% margin
QoQ: 4 152.28% | YoY:10.07%
Operating Income
60.00M
QoQ: -52.38% | YoY:39.53%
Net Income
-15.00M
QoQ: -131.25% | YoY:44.44%
EPS
-0.13
QoQ: -130.23% | YoY:45.83%
Revenue Trend
Margin Analysis
Key Insights
Gross Margin: 43.27%
Operating Margin: 1.86%
Net Income Margin: -0.46%
Net cash provided by operating activities: -$92.0M
Cash Flow and Balance Sheet:
- Net cash provided by operating activities: -$92.0M
- Capital expenditures: -$110.0M
- Free cash flow: -$202.0M
- Cash and cash equivalents: $153.0M
- Total debt: $7.371B; Net debt: $7.218B
- Total assets: $13.639B; Total liabilities: $9.860B; Total stockholders’ equity: $3.780B
- Inventory: $3.137B; Working capital (current assets minus current liabilities) indicative of tight liquidity during QQ1 2025
Liquidity and leverage remain a central concern given the sizable debt load and negative free cash flow, even as gross margin expansion supports a degree of profitability. Earnings quality is constrained by interest expense and persistent working capital requirements.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.23B
-4.41%
-40.10%
Gross Profit
1.40B
10.07%
4 152.28%
Operating Income
60.00M
39.53%
-52.38%
Net Income
-15.00M
44.44%
-131.25%
EPS
-0.13
45.83%
-130.23%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No QQ1 2025 earnings call transcript data were provided in the dataset. Consequently, there are no management quotes or thematic highlights to quote or contextualize. Investors should consider seeking the official transcript for precise management commentary on strategic initiatives (cost discipline, store optimization, and digital strategy) and any quantified guidance.
N/A
— N/A
N/A
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Forward Guidance
No explicit forward guidance was disclosed in the provided materials. Given the current trajectory—modest revenue decline, margin stabilization, and pronounced working capital/churn risk—the plausible near-term focus areas would include: (1) deleveraging cadence and financing strategy to reduce net debt; (2) inventory normalization and optimized promotions to stabilize gross margins without sacrificing top-line growth; (3) continued emphasis on omnichannel growth (digital channel expansion, store network optimization, and private/house brands to improve margin mix); (4) expense discipline to improve operating leverage as demand normalizes. Investors should monitor consumer spending trends, holiday season momentum, promotional intensity, vendor terms, and any refinancing actions tied to Kohl’s substantial debt burden.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0JRL.L Focus
43.27%
N/A
N/A
N/A
0JXD.L
41.10%
2.86%
1.48%
21.73%
0KF5.L
74.10%
15.40%
5.93%
83.94%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Moderate near-term skepticism remains warranted given the material debt load and negative free cash flow, despite margin improvement and a positive trend in operating income. The stock could re-rate on clearer deleveraging progress, improved working capital efficiency, and evidence of top-line stabilization or growth driven by digital and store optimization. Key catalysts include debt refinancing milestones, milestones on inventory normalization, improved holiday season performance, and any explicit guidance from management on deleveraging timelines and cost-reduction commitments. Investors should monitor cash burn rate, working capital trajectory, and the pace of margin recovery as critical inputs to the longer-term thesis.
Key Investment Factors
Growth Potential
Digital sales growth and omnichannel optimization have potential to lift same-store sales and improve margin mix. Store portfolio rationalization (closing or re-purposing underperforming locations) and a renewed focus on higher-margin private labels could improve operating leverage. A stable or improving macro environment for US consumer discretionary would further support revenue recovery and cash flow normalization.
Profitability Risk
High leverage and ongoing negative free cash flow drive balance sheet and liquidity risk. Dependence on promotional selling and discounting could suppress margin realization. Macro consumer weakness, elevated promotional intensity, rising interest costs, and potential supply chain disruptions pose downside risks. Competition from large-format retailers and e-commerce players could compress pricing power and market share.
Financial Position
Liquidity is modest with $153 million cash against $7.37 billion of gross debt; net debt of $7.22 billion. Operating cash flow was negative in QQ1 2025, signaling continued capital needs or working capital pressure. Although gross margins expanded to 43.3%, the company needs sustained improvements in working capital efficiency and deleveraging to stabilize the balance sheet and enhance equity value.
SWOT Analysis
Strengths
Solid brand equity and a broad national store footprint providing scale and availability.
Visible gross margin expansion in QQ1 2025, indicating favorable pricing, mix, and cost discipline.
Diversified product mix across apparel, footwear, accessories, beauty, and home with omnichannel reach.
Weaknesses
Significant net debt load (~$7.22B net debt) and ongoing negative free cash flow.
Bottom-line profitability still negative in QQ1 2025 despite gross margin gains.
High working capital intensity and elevated inventory levels (~$3.14B).
Opportunities
Store optimization and portfolio rationalization to improve capital efficiency.
Digital channel expansion and improved omnichannel fulfillment to lift same-store sales and margins.
Expansion of private labels and brand partnerships to improve gross margin profile.
Threats
Cyclical consumer weakness and intense promotional competition in the US retail landscape.
Rising interest costs and refinancing risk tied to large debt burden.
Macro shocks or supply chain disruptions could compress demand and increase costs.