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.