Kohl's Corporation
Business Model Analysis
How Kohl's Makes Money
Annual Revenue: $15.5B
Kohl's generates revenue primarily through Department Store Retail, with roughly $15.5B in annual revenue.
Core Growth Engine: Bender's plan is narrower than earlier turnarounds. It leans on value pricing and proprietary brands, a return of coupons the core customer likes, and categories that are growing such as Sephora beauty, toys, home and im...
Revenue Model & Pricing
Kohl's makes money mainly by selling merchandise. In FY2025 net sales were $14.8 billion of $15.5 billion total revenue. It runs a high-low promotional model: frequent percent-off coupons, Kohl's Cash rewards and clearance events bring shoppers back. Its mix combines national brands such as Nike and Levi's with higher-margin private labels like Sonoma Goods for Life, Croft & Barrow and Apt. 9. The rest of revenue, $668 million of 'other revenue' in FY2025, comes mostly from Kohl's share of profits on the Kohl's Card, whose accounts are owned by Capital One. Smaller pieces are advertising and gift-card breakage. Stores also serve as pickup and ship-from-store points for Kohls.com.
Core Revenue Streams
Merchandise Sales - Women's
~23.3%Women's apparel generated $3.60 billion in FY2025, representing 24.4% of net sales. The category includes private labels (Sonoma Goods for Life, Apt. 9, Croft & Barrow) and national brands. Sales declined 5.7% year-over-year, reflecting broad weakness in women's apparel demand.
Merchandise Sales - Accessories (Including Sephora)
~20.2%Accessories, including Sephora at Kohl's beauty shops, generated $3.12 billion in FY2025, 21.1% of net sales. It was the only category to grow, up about 2%, helped by Sephora shops in more than 1,100 stores.
Merchandise Sales - Men's
~19.0%Men's apparel generated $2.93 billion in FY2025, representing 19.8% of net sales. The category includes private labels and national brands. Sales declined 4.8% year-over-year.
Merchandise Sales - Home
~14.3%Home goods generated $2.21 billion in FY2025, representing 15.0% of net sales. The category includes bedding, bath, kitchen, decor, and furniture. Sales declined 4.3% year-over-year, though the company expanded its home assortment under then-CEO Tom Kingsbury.
Merchandise Sales - Children's
~11.0%Children's apparel and baby gear generated $1.70 billion in FY2025, representing 11.5% of net sales. The category includes the Babies 'R' Us shop-in-shop partnership in approximately 200 stores. Sales declined 6.5% year-over-year.
Merchandise Sales - Footwear
~7.8%Footwear generated $1.21 billion in FY2025, representing 8.2% of net sales. The category includes athletic, casual, and dress shoes. Sales declined 6.9% year-over-year.
Other Revenue (Credit Card, Advertising, Gift Card Breakage)
~4.3%Other revenue generated $668 million in FY2025, down 10% from FY2024. This includes credit card operations (finance charges, late fees, less write-offs), third-party advertising on Kohls.com, and unused gift card breakage. Credit card revenue declined due to lower sales to charge customers and an accounting shift of expenses from SG&A to Other Revenue.
Growth Strategy
Bender's plan is narrower than earlier turnarounds. It leans on value pricing and proprietary brands, a return of coupons the core customer likes, and categories that are growing such as Sephora beauty, toys, home and impulse gifting. It also relies on lower inventory and expenses. In Q2 2026, management said proprietary brands, Kohl's Card sales, home, toys and digital all improved. Kohl's is also restarting share repurchases now that its balance sheet is stronger.
How Kohl's Makes Money: FAQ
How does Kohl's Corporation generate revenue and gross profit?
Kohl's generates revenue primarily through the retail sale of apparel, footwear, beauty, and home goods across its 1,100+ physical department stores and Kohls.com e-commerce platform, complemented by credit card revenue-sharing agreements with its co-branded credit card partner.
How does Kohl's monetize its private-label Kohl's Credit Card program?
Kohl's partners with Capital One to issue proprietary private-label credit cards and co-branded Mastercard credit cards, earning significant royalty income and profit-sharing payments while driving higher repeat shopping frequency and loyalty spend.
How does the single-level racetrack floor plan optimize Kohl's store operations?
Kohl's stores are designed around an intuitive single-level 'racetrack' loop layout with centralized checkout registers and fitting rooms, requiring significantly fewer store associates than multi-level anchor department stores and speeding up customer shopping trips.
How does Kohl's integrate omnichannel fulfillment between physical stores and Kohls.com?
Kohl's physical stores serve as localized fulfillment hubs, supporting Buy Online, Pick Up in Store (BOPIS), Curbside Pickup, and Ship-from-Store fulfillment, which reduces digital shipping costs and utilizes store inventory efficiently.
How does Kohl's promotional pricing and couponing strategy drive sales volume?
Kohl's deploys an aggressive high-low promotional pricing model centered around regular clearance events, percentage-off mystery scratcher coupons, and Kohl's Cash redemption periods that create consumer urgency and perceive high value.
How does Kohl's partner with national brands like Nike, Under Armour, and Levi's?
Kohl's establishes dedicated branded concept shops for premier national activewear and casual apparel brands (Nike, Adidas, Under Armour, Levi's), providing premium floor space and high visibility in exchange for broad product assortments.
What is Kohl's store rightsizing and small-format store expansion strategy?
Kohl's optimizes real estate by rightsizing oversized 80,000+ sq ft stores, leasing excess space to adjacent complementary retailers (like Planet Fitness or Aldi), and rolling out compact 35,000 sq ft small-format stores in untapped smaller community markets.
How does Kohl's make money?
Kohl's operates a highly specific "off-mall" strategy. While Macy's is trapped in dying indoor shopping malls, Kohl's builds standalone stores in massive suburban strip malls. They make money through a highly aggressive promotional model: they artificially inflate the base price of clothing, then offer massive discounts and "Kohl's Cash" coupons to make the consumer feel like they are getting a massive bargain.
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