Department store Kohl's points to promising start to 2026 as CEO attempts reset

Updates shares, adds graphic

March 10 (Reuters) - Kohl's on Tuesday signaled improvement in its apparel category in the first quarter, even as the U.S. department-store operator warned of another year of declining sales overall.

Its shares KSS.N rebounded and climbed as much as 14.5% in volatile trading, as investors seized the upbeat commentary from executives on the earnings call.

Kohl's has struggled as muted U.S. discretionary spending and a series of merchandising missteps dampened demand, with the retailer losing ground to Amazon and off-price competitors such as Ross Stores.

"We expect sales to build throughout the year and although we are pleased with our start to Q1, specifically in our spring seasonal and year-round businesses, there's a lot of quarters still ahead of us," Chief Financial Officer Jill Timm said during the call.

She projected first-quarter comparable sales to be down low- single-digits with the remaining metrics balanced by the quarter.

Michael Bender, named permanent CEO in November to lead a turnaround after years of sliding sales and shrinking profit, also chipped in.

Bender told analysts on the call that he planned to cut unproductive styles and focus more on basics, after signaling that the company was "resetting" its foundation.

Executives added the focus would also be on providing products at value.

"Our core low- to middle-income customers continue to face financial pressure and they are seeking value," Bender said.

Kohl's stock has fallen nearly 28% this year after gaining about 45% in 2025. Last year, the stock briefly doubled in value after it was caught up in a meme-stock-like rally.

The company expects full-year sales to be flat to 2% lower, compared with analysts' estimates of a 0.7% decline to $14.85 billion, according to data compiled by LSEG. The midpoint of its annual adjusted profit forecast range of $1.00 to $1.60 per share came in below estimates of $1.39.

Kohl's posted quarterly sales of $4.97 billion, compared with analysts' estimates of $5.03 billion.

On an adjusted basis, the company reported a profit of $1.07 per share, compared with estimates of 85 cents.

"The company did show better results on the profit line due to good inventory and expense control. However, the Kohl's story is about its ability to stabilize market share and both 4Q results and 2026 guidance ... suggest this story's ending has not yet been told," David Silverman, senior director at Fitch Ratings said.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Maju Samuel and Arpan Varghese and Sriraj Kalluvila)

((AnujaBharat.Mistry@thomsonreuters.com))