Kohl's Corporation is a leading omnichannel department store retailer operating 1,175 stores across 49 U.S. states and an e-commerce platform at Kohls.com. The company generated $15.46 billion in total revenue in FY2025, with net sales of $14.78 billion down 4.0% from the prior year. Net income was $272 million, though this included a $129 million gain from a credit card lawsuit settlement; adjusted net income was $186 million. Founded in 1962 by Polish immigrant Maxwell Kohl in Brookfield, Wisconsin, Kohl's is now led by CEO Michael Bender, the fourth chief executive in four years, as the company fights to reverse eight consecutive quarters of same-store sales declines in a shrinking department store sector.
Kohl's: Key Facts
- Founded: September 12, 1962, in Brookfield, Wisconsin, by Maxwell Kohl
- Headquarters: Menomonee Falls, Wisconsin
- CEO: Michael Bender (permanent since November 2025)
- Total Revenue (FY2025): $15.46 billion, down 4.6% year-over-year
- Net Sales (FY2025): $14.78 billion, down 4.0% year-over-year
- Net Income (FY2025): $272 million ($2.38 per diluted share), up from $109 million in FY2024
- Adjusted Net Income (FY2025): $186 million ($1.62 per diluted share)
- Employees: Approximately 87,000 associates
- Stores: 1,175 locations in 49 states
- Credit Card Accounts: 28.5 million with 45.3% penetration
- Stock Ticker: KSS (NYSE)
- Market Cap: Approximately $1.84 billion
How Does Kohl's Make Money?
Kohl's generates revenue through merchandise sales and non-merchandise operations that together produced $15.46 billion in FY2025. The dominant stream is merchandise sales ($14.78 billion, 95.6% of total revenue), broken into six categories: Women's ($3.60 billion, 24.4% of net sales), Accessories including Sephora ($3.12 billion, 21.1%), Men's ($2.93 billion, 19.8%), Home ($2.21 billion, 15.0%), Children's ($1.70 billion, 11.5%), and Footwear ($1.21 billion, 8.2%). The Accessories category was the sole growth driver in FY2025, increasing approximately 2% thanks to the Sephora at Kohl's partnership, which operates in over 1,100 stores. The second revenue stream is Other Revenue ($668 million, 4.3% of total), which includes credit card operations (finance charges, late fees, less write-offs), third-party advertising on Kohls.com, and gift card breakage. Kohl's has 28.5 million credit card accounts with 45.3% of transactions occurring on the card, generating high-margin revenue and driving customer loyalty through the Kohl's Cash rewards program. The Sephora partnership operates as a profit-sharing shop-in-shop arrangement rather than a wholesale purchase, reducing inventory risk while capturing beauty spending.
Who Founded Kohl's and When?
Kohl's was founded on September 12, 1962, by Maxwell Kohl, a Polish Jewish immigrant who arrived in Milwaukee and worked in factories until opening a corner grocery store in 1927. He built a 48-store supermarket chain before selling it in 1970, then opened the first Kohl's department store in Brookfield, Wisconsin, based on his own frustrating experience trying to buy a shirt. He applied supermarket efficiencies — customer service discipline, inventory management, and lower overhead — to department store retail, creating a formula that offered lower prices than high-end stores with higher quality than discounters. His sons Herbert (future U.S. Senator and Milwaukee Bucks owner) and Sidney ran the company with him until 1972, when British American Tobacco acquired a controlling interest. The company was fully acquired by BATUS Inc. in 1979, then purchased by management in 1986, and went public in 1992.
What Is Kohl's Competitive Advantage?
Kohl's single unreplicable moat is the combination of its 1,175-store suburban footprint and its credit card program with 28.5 million accounts and 45.3% penetration. No e-commerce competitor can replicate 1,175 locations where 80% of America lives within 10 miles, and no physical competitor can match the credit card's loyalty lock-in. The average transaction value via the Kohl's credit card is $127, significantly above cash transactions, and credit card customers over-index to proprietary brands, making the card both a financing tool and a merchandising strategy. The second moat is the Sephora partnership, which generated over $3.1 billion in Accessories sales in FY2025 and grew 2% while every other category declined. Sephora brings prestige beauty to suburban markets where standalone stores do not exist, creating a destination draw. The third moat is proprietary brands — Sonoma Goods for Life ($1.2 billion), Apt. 9 ($890 million), and Simply Vera Vera Wang ($650 million) — which generate higher margins than national brands and create exclusive product that cannot be price-matched.
How Has Kohl's Revenue Grown Over Time?
Kohl's revenue peaked at $20.23 billion in FY2012 and has been declining since. Revenue was $17.16 billion in FY2022, $16.60 billion in FY2023, $16.22 billion in FY2024, and $15.46 billion in FY2025 — a 9.7% decline over three years. Net sales have fallen from $17.16 billion to $14.78 billion over the same period, a 13.9% drop. The decline accelerated during the pandemic recovery as consumer spending shifted to experiences, travel, and discount retailers. The company's comparable sales have been negative for eight consecutive quarters through FY2025. The only growth driver has been the Sephora partnership, which has expanded from 200 stores in 2021 to over 1,100 stores in 2025, with sales exceeding $1.8 billion in FY2024 and $3.1 billion in the Accessories category in FY2025.
Kohl's Business Model Explained
Kohl's operates as an off-price department store, positioned between traditional department stores and discounters. The company carries national brands at lower prices through reduced overhead, perpetual promotional activity, and a suburban strip mall location strategy that avoids the high rents of enclosed malls. The model has three layers. The first layer is the physical store network: 1,175 stores averaging 80,000 square feet, with 69% in suburban markets, supported by nine distribution centers and five e-commerce fulfillment centers. The second layer is merchandising: a mix of national brands (Nike, Levi's, Adidas) and proprietary brands (Sonoma, Apt. 9, Simply Vera Vera Wang) that generate higher margins. The third layer is financial services: the Kohl's Charge credit card program generates high-margin revenue through finance charges and late fees while driving loyalty through Kohl's Cash rewards. Digital sales were flat in FY2025 at 29% of net sales. The model's vulnerability is its dependence on middle-income consumers who are increasingly price-sensitive and shifting to off-price and e-commerce alternatives. The company does not hold significant long-term exclusive brand partnerships, and its national brand assortment is available at lower prices at TJX and Ross Stores.
Kohl's Key Acquisitions
Kohl's has made relatively few acquisitions compared to competitors, focusing instead on organic growth and strategic partnerships. The most significant historical acquisition was the 1988 purchase of Federated Department Stores' Main Street chain, which gave Kohl's entry into the Chicago, Detroit, and Minneapolis-St. Paul markets and established the template for national expansion. In recent years, Kohl's has pursued partnerships rather than acquisitions: the Sephora shop-in-shop deal (2020), the Amazon returns partnership (2019), and the Babies 'R' Us partnership (2024). These partnerships allow Kohl's to offer new categories without the capital expenditure and inventory risk of full acquisitions. The Sephora partnership has been the most successful, generating over $3.1 billion in Accessories sales by FY2025. The Amazon returns partnership, once hailed as transformative, is now being tested for discontinuation after failing to deliver sustained foot traffic.
What Are the Biggest Risks Facing Kohl's?
The biggest risk facing Kohl's is the structural decline of the department store sector combined with persistent sales erosion and a leveraged balance sheet. Net sales have fallen 13.9% over three years, from $17.16 billion in FY2022 to $14.78 billion in FY2025, with eight consecutive quarters of same-store sales declines. The U.S. department store sector contracted 2.7% in 2023 while total retail grew 3.5%. Kohl's carries $6.63 billion in total debt and pays $288 million in annual interest expense, consuming 46% of operating income. The company issued $360 million in 10.000% senior secured notes in 2025, reflecting credit market skepticism. If sales continue declining, Kohl's could face a debt covenant breach or liquidity crisis. Additional risks include leadership instability (four CEOs in four years), the failure of the Amazon returns partnership, competition from off-price retailers (TJX, Ross) and fast fashion (Shein, Temu), and the erosion of the proprietary brand strategy that originally built the company.
Bottom Line
Kohl's is a retailer in structural decline fighting for survival, not growth. Revenue has fallen for three consecutive years, with eight straight quarters of same-store sales declines. Net income of $272 million was inflated by a $129 million lawsuit gain; adjusted net income of $186 million barely improved from $167 million in FY2024. The company carries $6.63 billion in debt and pays 10% interest on new borrowings, reflecting credit market skepticism. The single bright spot is Sephora at Kohl's, which generated over $3.1 billion in sales and grew 2% while every other category declined. FY2026 guidance calls for net sales down 2% to flat, adjusted operating margin of 2.8% to 3.4%, and diluted EPS of $1.00 to $1.60. Whether CEO Michael Bender can stabilize the business depends on whether the proprietary brand revival and Sephora expansion can offset the structural headwinds facing all department stores.
