Q3 2025 Kohl's Corp Earnings Call

November 25, 2025

Speaker #1: Good morning and welcome to the Kohl's Corporation third quarter 2025 earnings conference call. All participants are in a listen-only mode. After the speakers, we will conduct a question-and-answer session.

Operator: Good morning and welcome to the KOHLS Corporation Q3, 2025 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you'll need to press star, followed by the number one on your telephone seat pad. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Trevor Novotny, Director of Investor Relations. Thank you. Please go ahead.

Operator: Good morning and welcome to the Kohl's Corporation Q3, 2025 earnings conference call. All participants are in a listen-only mode. After the speaker's remarks, we will conduct a question-and-answer session. To ask a question at this time, you'll need to press star, followed by the number one on your telephone seat pad. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Trevor Novotny, Director of Investor Relations. Thank you. Please go ahead.

Speaker #1: To ask a question at this time, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded.

Speaker #1: I’d now like to turn the call over to Trevor Novotny, Director of Investor Relations. Thank you. Please go ahead.

Speaker #2: Thank you. Certain statements made on this call, results, business outlook, and future initiatives, are forward-looking on current expectations and statements. These statements are based including those regarding our projected financial assumptions and are subject to certain risks and uncertainties that could cause KOHL's actual results to differ materially from those projected.

Trevor Novotny: Thank you. Certain statements made on this call, including those regarding our projected financial results, business outlook, and future initiatives, are forward-looking statements. These statements are based on current expectations and assumptions and are subject to certain risks and uncertainties that could cause Kohl's actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the factors described in Item 1A of Kohl's most recent annual report on Form 10-K and, as may be supplemented from time to time in Kohl's other filings with the SEC, all of which are expressly incorporated here and by reference. Forward-looking statements relate to the date initially made, and Kohl's undertakes no obligation to update them. In addition, during this call, we may refer to certain non-GAAP financial measures.

Speaker #2: These risks and uncertainties include but are not limited to the factors described in item 1A of KOHL's most recent annual report on Form 10-K and is maybe supplemented from time to time in KOHL's other filings with the SEC, all of which are expressly incorporated here in my reference.

Speaker #2: Forward-looking statements relate to the date initially made in KOHL's undertaking no obligation to update them. In addition, during this call, we may refer to certain non-GAAP financial measures.

Speaker #2: Please refer to the cautionary statement in reconciliations of these non-GAAP measures, included in the investor presentation filed as an exhibit to our Form 8-K, as filed with the SEC and available on our investor relations website.

Trevor Novotny: Please refer to the cautionary statement and reconciliations of these non-GAAP measures included in the investor presentation, filed as an exhibit to our Form 8-K, as filed with the SEC, and available on our investor relations website. Please note that this call will be recorded. However, replays of this call will not be updated. So, if you are listening to a replay, it is possible that the information discussed is no longer current, and KOHL undertakes no obligation to update such information. With me this morning are John Schliske, our independent chair of the board; Michael Bender, our chief executive officer; and Jill Timm, our chief financial officer. And I'll turn the call over to John.

Please refer to the cautionary statement and reconciliations of these non-GAAP measures included in the investor presentation, filed as an exhibit to our Form 8-K, as filed with the SEC, and available on our investor relations website. Please note that this call will be recorded. However, replays of this call will not be updated. So, if you are listening to a replay, it is possible that the information discussed is no longer current, and KOHL undertakes no obligation to update such information. With me this morning are John Schliske, our independent chair of the board; Michael Bender, our chief executive officer; and Jill Timm, our chief financial officer. And I'll turn the call over to John.

Speaker #2: Please note that this call will be recorded. However, replays of this call will not be updated. So, if you are listening to a replay, it is possible that the information discussed is no longer current, and Kohl's undertakes no obligation to update such information.

Speaker #2: With me this morning are John Schlitzke, our independent Chair of the Board; Michael Bender, our Chief Executive Officer; and Jill Timm, our Chief Financial Officer.

Speaker #2: And I'll turn the call over to John.

Speaker #3: Thank you, Trevor, and thank you for joining us this morning. I will be providing some brief introductory remarks, and then I'm going to turn it over to Michael and Jill to go over our Q3 performance.

John Schliske: Thank you, Trevor, and thank you for joining us this morning. I will be providing some brief introductory remarks, and then I'm going to turn it over to Michael and Jill to go over our Q3 performance, and then we'll take some Q&A. As announced yesterday, the board has appointed Michael Bender as chief executive officer of KOHLS. Michael is a seasoned retail veteran who has a deep understanding of KOHL's business, serving as a board member since 2019, former chair of the board, and most recently as interim CEO since May. In addition to his KOHL's experience, Michael brings over 30 years of senior leadership experience across the retail and consumer goods industries. Over the last six months, the board has gone through an extensive search process to identify our new CEO, and we could not be more thrilled to have Michael as the next leader of this company.

John Schliske: Thank you, Trevor, and thank you for joining us this morning. I will be providing some brief introductory remarks, and then I'm going to turn it over to Michael and Jill to go over our Q3 performance, and then we'll take some Q&A. As announced yesterday, the board has appointed Michael Bender as chief executive officer of Kohl's. Michael is a seasoned retail veteran who has a deep understanding of Kohl's business, serving as a board member since 2019, former chair of the board, and most recently as interim CEO since May. In addition to his Kohl's experience, Michael brings over 30 years of senior leadership experience across the retail and consumer goods industries. Over the last six months, the board has gone through an extensive search process to identify our new CEO, and we could not be more thrilled to have Michael as the next leader of this company.

Speaker #3: And then we'll take some Q&A. As announced yesterday, the board has appointed Michael Bender as chief executive officer of KOHLS. Michael is a seasoned retail veteran who has a deep understanding of KOHL's business, serving as a board member since 2019, former chair of the board, and most recently as interim CEO since May.

Speaker #3: In addition to his Kohl's experience, Michael brings over 30 years of senior leadership experience across the retail and consumer goods industries. Over the last six months, the board has gone through an extensive search process to identify our new CEO, and we could not be more thrilled to have Michael as the next leader of this company.

Speaker #3: There's been a lot of change over the last year at Kohl's, and Michael has proven to be an effective leader, fostering a strong culture and providing stability through the transition.

John Schliske: There's been a lot of change over the last year at KOHLS, and Michael has proven to be an effective leader, fostering a strong culture and providing stability through the transition. Additionally, during this time as interim CEO, Michael has made important strategic decisions, addressed key areas of opportunities, and helped deliver progressive improvements to the business. KOHLS has a solid foundation for the future, boasting over 1,100 stores and a vast digital platform that serves more than 60 million customers each year. We have the utmost confidence that Michael is the right leader for this company, and we're excited about the substantial opportunity that can be realized under his leadership. On behalf of the board, I'd like to congratulate Michael on his new position. We look forward to supporting him and the management team in this next chapter. With that, I'll now turn the call over to Michael.

There's been a lot of change over the last year at Kohl's, and Michael has proven to be an effective leader, fostering a strong culture and providing stability through the transition. Additionally, during this time as interim CEO, Michael has made important strategic decisions, addressed key areas of opportunities, and helped deliver progressive improvements to the business. Kohl's has a solid foundation for the future, boasting over 1,100 stores and a vast digital platform that serves more than 60 million customers each year. We have the utmost confidence that Michael is the right leader for this company, and we're excited about the substantial opportunity that can be realized under his leadership. On behalf of the board, I'd like to congratulate Michael on his new position. We look forward to supporting him and the management team in this next chapter. With that, I'll now turn the call over to Michael.

Speaker #3: Additionally, during this time as interim CEO, Michael has made important strategic decisions address key areas of opportunities and helped deliver progressive improvements to the business.

Speaker #3: KOHLS has a solid foundation for the future, boasting over 1,100 stores and a vast digital platform that serves more than 60 million customers each year.

Speaker #3: We have the utmost confidence that Michael is the right leader for this company, and we're excited about the substantial opportunity that can be realized under his leadership.

Speaker #3: On behalf of the board, I'd like to congratulate Michael and his new position. We look forward to supporting him in the management team in this next chapter.

Speaker #3: With that, I'll now turn the call over to

Speaker #3: Michael. Thank you, John.

Michael Bender: Thank you, John. Good morning, everyone, and thank you for joining KOHLS Q3 earnings conference call. I'm honored to assume the role as chief executive officer of KOHLS, and I would like to thank John and the board for giving me the opportunity to lead this great company. Since I joined the team in May, I've been deeply impressed with the KOHLS team, their resilience, and their motivation to win. My commitment is to lead this organization, our associates, and our customers. Every day, KOHLS has the privilege of serving millions of customers, and we will continually strive to enhance their experience and meet their evolving needs. I'm excited about the opportunity that lies ahead and look forward to repositioning KOHLS for future success. Now, during our call today, I'd like to discuss three items with you. First, discuss our Q3 performance.

Michael Bender: Thank you, John. Good morning, everyone, and thank you for joining Kohl's Q3 earnings conference call. I'm honored to assume the role as chief executive officer of Kohl's, and I would like to thank John and the board for giving me the opportunity to lead this great company. Since I joined the team in May, I've been deeply impressed with the Kohl's team, their resilience, and their motivation to win. My commitment is to lead this organization, our associates, and our customers. Every day, Kohl's has the privilege of serving millions of customers, and we will continually strive to enhance their experience and meet their evolving needs. I'm excited about the opportunity that lies ahead and look forward to repositioning Kohl's for future success. Now, during our call today, I'd like to discuss three items with you. First, discuss our Q3 performance.

Speaker #4: Good morning, everyone, and thank you for joining KOHL's third quarter earnings conference call. I'm honored to assume the role as chief executive officer of KOHLS, and I would like to thank John and the board for giving me the opportunity to lead this great company.

Speaker #4: Since I joined the team in May, I've been deeply impressed with the Kohl's team, their resilience, and their motivation to win. My commitment is to lead this organization, our associates, and our customers every day.

Speaker #4: Kohl's has the privilege of serving millions of customers, and we

Speaker #1: Lies opportunity that ahead and forward to look repositioning Kohl's for future success during our call. Now, today, I'd like to discuss three items with you.

Speaker #1: First , discuss our third quarter performance Second , highlight the . progress we're making our against 2025 And initiatives . lastly , give a brief are of how we positioned overview for the Q4 season holiday .

Michael Bender: Second, highlight the progress we're making against our 2025 initiatives. And lastly, give a brief overview of how we are positioned for the Q4 holiday season. Let me start with our Q3 results. We are pleased as we delivered both top-line and bottom-line performance ahead of our expectations for the third consecutive quarter. These results directly reflect the progress we're making against our 2025 initiatives, which are building momentum and continuing to resonate with our customers. While we are encouraged with the progressive improvement we're making, we want to acknowledge that this performance is not representative of where we aspire to be. Our team is working diligently to further execute against these 2025 initiatives to deliver quality products, great value, and a frictionless experience to our customers. Looking deeper into our top-line performance, our comparable sales performance continued to improve as we ran down 1.7% in the Q3.

Second, highlight the progress we're making against our 2025 initiatives. And lastly, give a brief overview of how we are positioned for the Q4 holiday season. Let me start with our Q3 results. We are pleased as we delivered both top-line and bottom-line performance ahead of our expectations for the third consecutive quarter. These results directly reflect the progress we're making against our 2025 initiatives, which are building momentum and continuing to resonate with our customers. While we are encouraged with the progressive improvement we're making, we want to acknowledge that this performance is not representative of where we aspire to be. Our team is working diligently to further execute against these 2025 initiatives to deliver quality products, great value, and a frictionless experience to our customers. Looking deeper into our top-line performance, our comparable sales performance continued to improve as we ran down 1.7% in the Q3.

Speaker #1: me Let start with our third quarter results . We are pleased as we delivered both and top line line bottom performance ahead of our expectations for the third consecutive quarter These .

Speaker #1: results directly reflect the progress we're making against our 2020 . Five initiatives , which are building momentum and continuing to resonate with our customers While we .

Speaker #1: Encouraged by the progressive improvement we're making, we want to acknowledge that our current performance is not representative of where we aspire to be. Our team is working diligently to further execute against these 2025 initiatives to deliver quality products.

Speaker #1: Great value and a frictionless experience to our customers . Looking deeper into our top line performance , our comparable sales performance continued to improve as we ran down 1.7% in the third quarter .

Speaker #1: We quarter started the with a better than expected performance in August and back to school season . However , in September , we experienced a as we faced slowdown unseasonably warmer weather impacting our fall seasonal businesses .

Michael Bender: We started the quarter with a better-than-expected performance in August and back-to-school season. However, in September, we experienced a slowdown as we faced unseasonably warmer weather impacting our fall seasonal businesses. October was the strongest month as we delivered a positive 1% comparable sales performance. The quarter was led by a strong digital performance, up 2% versus last year. As Jill will discuss in further detail later in the call, the improved performance was driven by an acceleration in our transactions versus prior quarter. This was particularly notable with our KOHLS Card customer, whose sales performance improved by over 500 basis points from Q2. This demonstrates important progress we're making with re-engaging our core customers. While these results are encouraging, we continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income remains pressured.

We started the quarter with a better-than-expected performance in August and back-to-school season. However, in September, we experienced a slowdown as we faced unseasonably warmer weather impacting our fall seasonal businesses. October was the strongest month as we delivered a positive 1% comparable sales performance. The quarter was led by a strong digital performance, up 2% versus last year. As Jill will discuss in further detail later in the call, the improved performance was driven by an acceleration in our transactions versus prior quarter. This was particularly notable with our Kohl's Card customer, whose sales performance improved by over 500 basis points from Q2. This demonstrates important progress we're making with re-engaging our core customers. While these results are encouraging, we continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income remains pressured.

Speaker #1: October was the strongest month, as we delivered a positive 1% comparable sales performance. The quarter was led by a strong digital performance, up 2% versus last year.

Speaker #1: As Jill will discuss in further detail later in the call, the improved performance was driven by an acceleration in our transactions versus the prior quarter.

Speaker #1: This was particularly notable with our Kohl's card customer, whose sales improved by performance over 500 basis points from Q2. This demonstrates important progress we're making with reengaging our core customers.

Speaker #1: While these results are encouraging, we continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income remains pressured.

Speaker #1: This is especially notable in our low- to middle-income consumers, as well as in our younger customers. These customers are becoming increasingly savvy and are seeking more value.

Michael Bender: This is especially notable in our low- to middle-income consumers, as well as in our younger customers. These customers are becoming increasingly savvy and are seeking more value. We expect this customer behavior to continue into Q4 as we believe the macroeconomic environment will remain uncertain. This leads into the progress we're making against our 2025 initiatives. These efforts are centered around three key priorities. First, offering a curated, more balanced assortment that fulfills the needs of our customers. Next, reestablishing Kohl's as a leader in value and quality. Lastly, delivering a frictionless shopping experience across our omnichannel platforms. Starting with our first initiative, offering a curated and more balanced assortment that fulfills the needs across all of our customers. By delivering an improved, rebalanced assortment, we are able to serve a broader range of customers.

This is especially notable in our low- to middle-income consumers, as well as in our younger customers. These customers are becoming increasingly savvy and are seeking more value. We expect this customer behavior to continue into Q4 as we believe the macroeconomic environment will remain uncertain. This leads into the progress we're making against our 2025 initiatives. These efforts are centered around three key priorities. First, offering a curated, more balanced assortment that fulfills the needs of our customers. Next, reestablishing Kohl's as a leader in value and quality. Lastly, delivering a frictionless shopping experience across our omnichannel platforms. Starting with our first initiative, offering a curated and more balanced assortment that fulfills the needs across all of our customers. By delivering an improved, rebalanced assortment, we are able to serve a broader range of customers.

Speaker #1: We expect this customer behavior to continue into the fourth quarter as we believe the macro economic environment will remain uncertain . leads into the progress we're making against our 2025 initiatives .

Speaker #1: These efforts are centered around priorities . First , offering a curated , more balanced assortment that fulfills the needs of our customers . Next , reestablishing Kohl's as a leader in value and quality .

Speaker #1: And lastly, delivering a frictionless shopping experience across our omnichannel platforms, starting with our first initiative offering a curated and more balanced assortment that fulfills the needs of all of our customers.

Speaker #1: By delivering an improved, rebalanced assortment, we are able to serve a broader range of customers, as we have previously communicated.

Speaker #1: Our focus in recent years has been around attracting a new customer , which unintentionally led to not fully catering to our core loyal customers needs each quarter this year , we have made meaningful improvements to our assortment offerings , which have translated to an in improvement transactions , particularly from our core customers .

Michael Bender: As we have previously communicated, our focus in recent years has been around attracting a new customer, which unintentionally led to not fully catering to our core, loyal customers' needs. Each quarter this year, we have made meaningful improvements to our assortment offerings, which have translated to an improvement in transactions, particularly from our core customers. In addition, we're pleased to report that the new assortment continues to resonate with our non-KOHLS Card customers, driving a fourth consecutive quarter of positive sales growth. A category that is particularly important to this core customer and overall company performance is our women's business. Women's ran in line with company performance and experienced a significant improvement from the Q2. This was led by positive performance in our proprietary brands, which heavily penetrate into our women's business.

As we have previously communicated, our focus in recent years has been around attracting a new customer, which unintentionally led to not fully catering to our core, loyal customers' needs. Each quarter this year, we have made meaningful improvements to our assortment offerings, which have translated to an improvement in transactions, particularly from our core customers. In addition, we're pleased to report that the new assortment continues to resonate with our non-Kohl's Card customers, driving a fourth consecutive quarter of positive sales growth. A category that is particularly important to this core customer and overall company performance is our women's business. Women's ran in line with company performance and experienced a significant improvement from the Q2. This was led by positive performance in our proprietary brands, which heavily penetrate into our women's business.

Speaker #1: In addition , we are pleased to report that the new assortment continues to resonate with our non Kohl's card customers driving a fourth consecutive quarter of positive sales growth .

Speaker #1: The category that is important particularly to this core customer and overall company performance is our women's business. Women's ran line within performance and experienced a significant improvement from the second quarter.

Speaker #1: This was led by positive performance in our proprietary brands , which heavily penetrate into our women's business . We continue to see the benefit from reinvesting inventory into key priority brands like Lauren Conrad , Simply Vera , Vera Wang and Tech Gear within the women's category .

Michael Bender: We continue to see the benefit from reinvesting inventory into key priority brands like Lauren Conrad, Simply Vero Vero Wang, and Tech Gear. Within the women's category, we experienced an acceleration in our juniors business, which ran a positive comp in the quarter. Juniors is a pivotal component to the women's performance as it is a faster-turning business and has reduced lead times on products. We saw strength in our key fall categories such as sweaters and fleece. We also benefited from the denim trend with national brands like Levi's and proprietary brands like Sew. Lastly, we continue to see positive performance in petites as we benefit from reestablishing this category in all stores earlier this year. Building on this success, we are excited about expanding this presence next year with our proprietary brands Lauren Conrad and Simply Vero Vero Wang in all stores.

We continue to see the benefit from reinvesting inventory into key priority brands like Lauren Conrad, Simply Vero Vero Wang, and Tech Gear. Within the women's category, we experienced an acceleration in our juniors business, which ran a positive comp in the quarter. Juniors is a pivotal component to the women's performance as it is a faster-turning business and has reduced lead times on products. We saw strength in our key fall categories such as sweaters and fleece. We also benefited from the denim trend with national brands like Levi's and proprietary brands like Sew. Lastly, we continue to see positive performance in petites as we benefit from reestablishing this category in all stores earlier this year. Building on this success, we are excited about expanding this presence next year with our proprietary brands Lauren Conrad and Simply Vero Vero Wang in all stores.

Speaker #1: We experienced an acceleration in our juniors business, which ran a positive comp in the quarter. Juniors is a pivotal component to the women's performance, as it is a faster-turning business and has reduced lead times on products.

Speaker #1: We saw strength in our key fall categories, such as sweaters and fleece. We also benefited from the denim trend with national brands like Levi's and proprietary brands like SO.

Speaker #1: continue to see positive performance in petites as we benefit from reestablishing this category in all stores . Earlier this year , building on this success , we are excited about expanding this presence next year with our proprietary brands .

Speaker #1: Lauren Conrad and Simply Vera Vera Wang in all stores . Our men's business showed significant improvement in the quarter , running in line with company performance .

Speaker #1: This improvement from Q2 was driven by better clarity in our offering. As we enter Q4, we are continuing to make progress around clarity, as receipts for our choice counts are down 10% and depth is up 5%.

Michael Bender: Our men's business showed significant improvement in the quarter, running in line with company performance. This improvement from Q2 was driven by better clarity in our offering. As we enter Q4, we are continuing to make progress around clarity as receipts for our choice counts are down 10% and depth is up 5%. Customers leaned into proprietary brands, which ran a positive comp in the quarter as they looked for key brands like Flex and Tech Gear. In addition to solid proprietary brand performance, men's apparel also saw strong performance in the dress and tailored category with brands like Hager and Apartment 9. Accessories continues to be a bright spot for the company, with Sephora, Impulse, and jewelry collectively helping to deliver positive comparable sales in the quarter.

Our men's business showed significant improvement in the quarter, running in line with company performance. This improvement from Q2 was driven by better clarity in our offering. As we enter Q4, we are continuing to make progress around clarity as receipts for our choice counts are down 10% and depth is up 5%. Customers leaned into proprietary brands, which ran a positive comp in the quarter as they looked for key brands like Flex and Tech Gear. In addition to solid proprietary brand performance, men's apparel also saw strong performance in the dress and tailored category with brands like Hager and Apartment 9. Accessories continues to be a bright spot for the company, with Sephora, Impulse, and jewelry collectively helping to deliver positive comparable sales in the quarter.

Speaker #1: Customers leaned into proprietary brands, which ran a positive comp in the quarter as they looked for key brands like Flex and Tech Gear.

Speaker #1: In addition to solid proprietary brand performance . Men's apparel also saw strong performance in the dress and tailored category , with brands like Haggar and Apartment nine .

Speaker #1: Accessories continues to be a bright spot for the company , with Sephora , impulse and Jewelry collectively helping to deliver positive comparable sales in the quarter , Sephora ran up quarter , 2% in the with comparable sales down one with solid performance in categories like fragrance and from hair care brands like YSL , Valentino and Summer Fridays .

Michael Bender: Sephora ran up 2% in the quarter with comparable sales down 1%, with solid performance in categories like fragrance and hair care from brands like YSL, Valentino, and Summer Fridays. We continue to be pleased with this partnership, which delivered nearly a $2 billion business in four years. Sephora is outstanding at offering discovery, innovation, and newness to customers, and we are thrilled to announce that we will be offering MAC in 850 of our Sephora at KOHLS stores in spring of 2026. In September, we completed the rollout of 613 Impulse queuing lines, establishing a presence in nearly all stores. Impulse ran up over 40% in the quarter as we continue to benefit from this white space opportunity that adds an additional unit to our customers' baskets.

Sephora ran up 2% in the quarter with comparable sales down 1%, with solid performance in categories like fragrance and hair care from brands like YSL, Valentino, and Summer Fridays. We continue to be pleased with this partnership, which delivered nearly a $2 billion business in four years. Sephora is outstanding at offering discovery, innovation, and newness to customers, and we are thrilled to announce that we will be offering MAC in 850 of our Sephora at Kohl's stores in spring of 2026. In September, we completed the rollout of 613 Impulse queuing lines, establishing a presence in nearly all stores. Impulse ran up over 40% in the quarter as we continue to benefit from this white space opportunity that adds an additional unit to our customers' baskets.

Speaker #1: We continue to be pleased with this partnership , which delivered nearly a $2 billion business in four years . Sephora is at outstanding offering discovery , innovation and newness to customers , and we are thrilled to announce that we will be offering Mac in 850 of our Sephora at Kohl's stores in spring of 2026 .

Speaker #1: In September, we completed the rollout of 613 impulse queuing lines, establishing a presence in nearly all stores. Impulse sales ran up over 40% in the quarter.

Speaker #1: As we continue to benefit from this white space opportunity, that adds an additional value to our customers' baskets, we ran up 10% in Q3 as we continue to gain traction in this category.

Speaker #1: After we established the destination for accessories behind Sephora , strength and jewelry came from both fashion and jewelry . As well as fine jewelry , both running positive comps in the quarter .

Michael Bender: Jewelry ran up 10% in Q3 as we continue to gain traction in this category after we established the destination for accessories behind Sephora. Strength in jewelry came from both fashion and rich jewelry, as well as fine jewelry, both running positive comps in the quarter. We continue to test fine jewelry in 200 doors and believe this category will be an opportunity for us moving forward as its non-substitutable nature helps provide an incremental sale. Our home business showed the largest improvement in the quarter, running in line with company performance. Soft home categories like bedding and bath outperformed, with strength from new proprietary brands like Hotelier and Muriana. Small electrics continue to underperform, as expected, given the impact of price increases and buying quantities down based on our elasticity analyses. Lastly, footwear and kids remain challenged in the quarter. These categories remain an opportunity for us moving forward.

Jewelry ran up 10% in Q3 as we continue to gain traction in this category after we established the destination for accessories behind Sephora. Strength in jewelry came from both fashion and rich jewelry, as well as fine jewelry, both running positive comps in the quarter. We continue to test fine jewelry in 200 doors and believe this category will be an opportunity for us moving forward as its non-substitutable nature helps provide an incremental sale. Our home business showed the largest improvement in the quarter, running in line with company performance. Soft home categories like bedding and bath outperformed, with strength from new proprietary brands like Hotelier and Muriana. Small electrics continue to underperform, as expected, given the impact of price increases and buying quantities down based on our elasticity analyses. Lastly, footwear and kids remain challenged in the quarter. These categories remain an opportunity for us moving forward.

Speaker #1: jewelry in We 200 Daus and believe this category will be an opportunity for us moving forward . As it's non-substitutable nature helps provide an incremental sale .

Speaker #1: Our home business largest showed the improvement in the quarter , running in line with company performance . Soft home categories like bedding and bath outperformed with strength from new proprietary brands like hotelier and Muriana .

Speaker #1: Small electrics continue to underperform as expected , given impact of the price increases and buying quantities down . Based on our elasticity analyses .

Speaker #1: Lastly , footwear and kids remain challenged in the quarter . These categories remain an opportunity for us moving forward in kids , we are looking for ways to highlight key proprietary like brands jumping beans and Little and Co .

Speaker #1: footwear business continues to The underperform with softness coming from footwear and boots . We expect the boots business to remain soft in Q4 as we adjusted our buys down .

Michael Bender: In kids, we are looking for ways to highlight key proprietary brands like Jumping Beans and Little & Co. The footwear business continues to underperform, with softness coming from active footwear and boots. We expect the boots business to remain soft in Q4 as we adjusted our buys down, given the pricing elasticities of this category. Dress and casual footwear showed strength in the quarter with brands like Apartment 9. Moving on now to our second initiative, reestablishing KOHLS as a leader in value and quality. What differentiates KOHLS is our ability to offer customers a blend of top national brands like Nike, Levi's, and Sephora, as well as proprietary brands that are exclusive to KOHLS. This complementary brand assortment is essential to our value proposition as it enables customers to find quality, relevance, and value when shopping at KOHLS.

In kids, we are looking for ways to highlight key proprietary brands like Jumping Beans and Little & Co. The footwear business continues to underperform, with softness coming from active footwear and boots. We expect the boots business to remain soft in Q4 as we adjusted our buys down, given the pricing elasticities of this category. Dress and casual footwear showed strength in the quarter with brands like Apartment 9. Moving on now to our second initiative, reestablishing Kohl's as a leader in value and quality. What differentiates Kohl's is our ability to offer customers a blend of top national brands like Nike, Levi's, and Sephora, as well as proprietary brands that are exclusive to Kohl's. This complementary brand assortment is essential to our value proposition as it enables customers to find quality, relevance, and value when shopping at Kohl's.

Speaker #1: Given the pricing elasticities of this category , dress and casual footwear showed strength in the quarter , with brands like apartment nine . Moving on now to our second initiative , reestablishing Kohl's as a leader in value and quality .

Speaker #1: What differentiates Kohl's is our ability to offer customers a blend of top national brands like Nike, Levi's, and Sephora, as well as proprietary brands that are exclusive to Kohl's.

Speaker #1: This complementary brand assortment is essential to our value proposition, as it enables customers to find quality, relevance, and value when shopping at Kohl's.

Speaker #1: This value proposition is especially important to our core loyal customers expect to find who exceptional value when shopping at Kohl's . As our customers continue to be more choiceful and remain under pressure , we have the opportunity to meet their needs and offer more value with elevating our proprietary brands .

Michael Bender: This value proposition is especially important to our core, loyal customers who expect to find exceptional value when shopping at KOHLS. As our customers continue to be more choiceful and remain under pressure, we have the opportunity to meet their needs and offer more value with elevating our proprietary brands. We identified the opportunity to reinvest into our proprietary brands one year ago as we over-indexed into market brands, making it more challenging to find products at an opening price point. Since identifying this opportunity, we have made sequential improvement each quarter, delivering a positive proprietary sales performance in the Q3. This performance was led by brands like Sew in juniors, LC and Simply Vero, Vero Wang in women's, and Tech Gear and Flex in men's.

This value proposition is especially important to our core, loyal customers who expect to find exceptional value when shopping at Kohl's. As our customers continue to be more choiceful and remain under pressure, we have the opportunity to meet their needs and offer more value with elevating our proprietary brands. We identified the opportunity to reinvest into our proprietary brands one year ago as we over-indexed into market brands, making it more challenging to find products at an opening price point. Since identifying this opportunity, we have made sequential improvement each quarter, delivering a positive proprietary sales performance in the Q3. This performance was led by brands like Sew in juniors, LC and Simply Vero, Vero Wang in women's, and Tech Gear and Flex in men's.

Speaker #1: We identified the opportunity to reinvest into our brands. Proprietary ago, as we overindexed into market brands, making it more challenging to find products at an opening price point.

Speaker #1: Since identifying this opportunity , we have made sequential improvement each quarter , delivering a positive proprietary sales performance . In the third quarter .

Speaker #1: This performance was led by brands like So and Juniors , LC and Simply Vera , Vera Wang and women's tech and Gear and Flex in men's .

Speaker #1: well-established to In are seeking find new brands , we opportunities to offer more value oriented , proprietary brands and categories like home and kids in Home .

Michael Bender: In addition to these well-established brands, we are seeking to find new opportunities to offer more value-oriented proprietary brands in categories like home and kids. In home, we recently launched three new brands: Hotelier, Mingle & Co, and Muriana, which serve our soft home and tabletop categories. Our customers have shown positive initial reactions to these introductions, and we are excited about these brands moving forward. Building off the success of our Flex brand, which delivered another quarter of double-digit sales growth, we made the decision to expand this brand into our kids' department in September. Currently, we have Flex kids in 300 doors and are committed to expanding this to more doors next spring. As we continue to refine our balance between national and proprietary brands, we're committed to moving where our customer is leading us.

In addition to these well-established brands, we are seeking to find new opportunities to offer more value-oriented proprietary brands in categories like home and kids. In home, we recently launched three new brands: Hotelier, Mingle & Co, and Muriana, which serve our soft home and tabletop categories. Our customers have shown positive initial reactions to these introductions, and we are excited about these brands moving forward. Building off the success of our Flex brand, which delivered another quarter of double-digit sales growth, we made the decision to expand this brand into our kids' department in September. Currently, we have Flex kids in 300 doors and are committed to expanding this to more doors next spring. As we continue to refine our balance between national and proprietary brands, we're committed to moving where our customer is leading us.

Speaker #1: We recently launched three new brands hotelier , Mingle and Co , and Mariana , which serve our soft home and tabletop categories . Our customers have shown positive initial reactions to these introductions , and we are excited about these brands moving forward .

Speaker #1: Building off the success of our brand, which delivered another flex quarter of double-digit sales growth, we made the decision to expand this brand into our kids department in September.

Speaker #1: Currently, we have Flex Kids in 300 doors and are committed to expanding this to more doors. Next spring, as we continue to refine our balance between proprietary national and committed to moving where brands our customer is leading us, our.

Speaker #1: The second action we took to deliver more value to our customers was through enhanced promotional strategies . Kohl's has traditionally offered incredible value to our customers through our coupon led promotional strategy , and after excluding a growing number of brands , our promotions became less impactful to our customers over recent years .

Michael Bender: The second action we took to deliver more value to our customers was through enhanced promotional strategies. KOHLS has traditionally offered incredible value to our customers through our coupon-led promotional strategy. After excluding a growing number of brands, our promotions became less impactful to our customers over recent years. This ultimately created unnecessary friction within our shopping experience, particularly with our KOHLS Card customers. In response to this, we identified a list of brands to be coupon-eligible at the end of the Q1. Following the success of the initial wave of brand inclusion, we made the decision to add a second wave of brands into the coupon in late August. This second wave was smaller as it included roughly 50 brands that are more digitally native. We continue to see a positive impact to our digital channel as this channel experiences elevated pricing transparency.

The second action we took to deliver more value to our customers was through enhanced promotional strategies. Kohl's has traditionally offered incredible value to our customers through our coupon-led promotional strategy. After excluding a growing number of brands, our promotions became less impactful to our customers over recent years. This ultimately created unnecessary friction within our shopping experience, particularly with our Kohl's Card customers. In response to this, we identified a list of brands to be coupon-eligible at the end of the Q1. Following the success of the initial wave of brand inclusion, we made the decision to add a second wave of brands into the coupon in late August. This second wave was smaller as it included roughly 50 brands that are more digitally native. We continue to see a positive impact to our digital channel as this channel experiences elevated pricing transparency.

Speaker #1: This ultimately created unnecessary friction within our shopping experience , particularly with our Kohl's card . Customers . In response to this , we identified a list of brands to be coupon eligible at the end of the first quarter .

Speaker #1: Following the success of the initial wave of brand inclusion, we made the decision to add a second wave of brands into the coupon in late August.

Speaker #1: This second wave was smaller, as it included roughly 50 brands that are more digitally native. We continue to see a positive impact to our digital channel, as this channel experiences elevated pricing transparency.

Speaker #1: Additionally, we are encouraged by the improvements this is generating with our core Kohl's card customers. We continue to test ways to drive customer awareness on brands that are now coupon eligible through signage and graphics.

Michael Bender: Additionally, we are encouraged by the improvements this is generating with our core KOHLS Card customers. We continue to test ways to drive customer awareness on brands that are now coupon-eligible through signage and graphics. Next, I would like to discuss our last priority, which is delivering a frictionless experience across our omnichannel platforms. We're focused on creating an elevated, more consistent experience across our store fleet and on our digital platforms. To capitalize on this opportunity, we're identifying ways to optimize our store layout, increase our inspiration, and restore trip assurance. We continue to see benefits after making edits to our store layout, following some preliminary adjacency analyses, specifically with juniors and accessories businesses. We decided to move juniors to the front of the store across from Sephora and establish an accessories pad behind Sephora. Since making these changes, both categories have shown progress.

Additionally, we are encouraged by the improvements this is generating with our core Kohl's Card customers. We continue to test ways to drive customer awareness on brands that are now coupon-eligible through signage and graphics. Next, I would like to discuss our last priority, which is delivering a frictionless experience across our omnichannel platforms. We're focused on creating an elevated, more consistent experience across our store fleet and on our digital platforms. To capitalize on this opportunity, we're identifying ways to optimize our store layout, increase our inspiration, and restore trip assurance. We continue to see benefits after making edits to our store layout, following some preliminary adjacency analyses, specifically with juniors and accessories businesses. We decided to move juniors to the front of the store across from Sephora and establish an accessories pad behind Sephora. Since making these changes, both categories have shown progress.

Speaker #1: Next , I would like to discuss our last priority , which is delivering a frictionless experience across our omnichannel platforms . We're focused on creating an elevated , more consistent experience across our store fleet and on our digital platforms to capitalize on this opportunity , we're identifying ways to optimize our store layout , increase our inspiration and restore Tripp Assurance .

Speaker #1: We continue to see benefits after making edits to our store layout , following some preliminary adjacency analyses , specifically with juniors and accessories businesses , we decided to move juniors to the front of the store across from and an establish accessories pad behind Sephora .

Speaker #1: Since making these changes, both categories have shown progress in accessories, excluding Sephora. We've seen three consecutive quarters of positive sales growth, driven by initiatives like jewelry and Impulse.

Michael Bender: In accessories excluding Sephora, we've seen three consecutive quarters of positive sales growth driven by initiatives like jewelry and Impulse. For juniors, we achieved a positive comp in the Q3 as we benefit from Sephora cross-shoppers and investments we've made into our proprietary assortment. Moving forward, we're continuing to look for ways to optimize our store layout to enable us to capture incremental sales. In addition to the store layout, we are enhancing the shopping experience by increasing the inspiration in our stores. A few ways we are achieving this are by showcasing newness and relevant styles with mannequins and enhancing brand awareness and findability through in-store graphics. You will start seeing some of this in-store inspiration in Q4 with our holiday displays, with most of the inspiration to set in 2026. Digitally, we continue to make solid progress applying artificial intelligence to improve efficiency and elevate the customer experience.

In accessories excluding Sephora, we've seen three consecutive quarters of positive sales growth driven by initiatives like jewelry and Impulse. For juniors, we achieved a positive comp in the Q3 as we benefit from Sephora cross-shoppers and investments we've made into our proprietary assortment. Moving forward, we're continuing to look for ways to optimize our store layout to enable us to capture incremental sales. In addition to the store layout, we are enhancing the shopping experience by increasing the inspiration in our stores. A few ways we are achieving this are by showcasing newness and relevant styles with mannequins and enhancing brand awareness and findability through in-store graphics. You will start seeing some of this in-store inspiration in Q4 with our holiday displays, with most of the inspiration to set in 2026. Digitally, we continue to make solid progress applying artificial intelligence to improve efficiency and elevate the customer experience.

Speaker #1: For juniors, we achieved a positive comp in the third quarter as we benefited from Sephora shoppers and the investments we've made into our proprietary assortment.

Speaker #1: Moving forward, we're continuing to explore ways to optimize our store layout to enable us to capture sales. In addition to the store layout, we are enhancing the shopping experience by increasing the inspiration in our stores.

Speaker #1: A few ways we are achieving this are by showcasing newness and relevant styles with mannequins, and enhancing brand awareness and findability through in-store graphics.

Speaker #1: Seeing some of this in store, you will find inspiration in Q4 with our holiday displays. With most of the inspiration set to be established digitally in 2026, we continue to make solid progress applying artificial intelligence to improve.

Speaker #1: Seeing some of this in store, you will find inspiration in Q4 with our holiday displays. With most of the inspiration set to be digital in 2026, we continue to make solid progress applying artificial intelligence to improve customer experience and site efficiency. Our engineers are working to enhance our app in performance marketing.

Michael Bender: AI is helping our engineers work faster to complete site updates and enhance our app performance. In marketing, predictive AI is guiding media investments and personalizing offers, and generative tools are helping creative teams produce content faster. While many initiatives are still developing, we are already seeing benefits in productivity, agility, and customer engagement. We're taking a disciplined approach to scaling these capabilities as we continue to modernize the business and position KOHLS for long-term growth. Lastly, we remain extremely focused on restoring trip assurance to our customer experience. This is a core pillar of what KOHLS is known for, and our increased choice counts over recent years has resulted in limited depth in key essential items. We're making progress in this, specifically in our women's business with categories like intimates and dresses, both of which made edits to exit out of less productive styles.

AI is helping our engineers work faster to complete site updates and enhance our app performance. In marketing, predictive AI is guiding media investments and personalizing offers, and generative tools are helping creative teams produce content faster. While many initiatives are still developing, we are already seeing benefits in productivity, agility, and customer engagement. We're taking a disciplined approach to scaling these capabilities as we continue to modernize the business and position Kohl's for long-term growth. Lastly, we remain extremely focused on restoring trip assurance to our customer experience. This is a core pillar of what Kohl's is known for, and our increased choice counts over recent years has resulted in limited depth in key essential items. We're making progress in this, specifically in our women's business with categories like intimates and dresses, both of which made edits to exit out of less productive styles.

Speaker #1: Predictive AI is personalizing generative tools are content produce creative investments and guiding media . While many initiatives are still developing , already seeing we are in benefits productivity , agility , and customer engagement .

Speaker #1: Taking a disciplined approach to scaling these capabilities as we continue to modernize the business and position Kohl's for long-term growth.

Speaker #1: Lastly, we remain extremely focused on restoring trip assurance to our customer experience. This is a core pillar of what Kohl's is known for, and our choice counts over increased recent years have resulted in limited depth in key essential items.

Speaker #1: making progress in We're this , specifically in women's business with our categories like and dresses , both of which made edits to exit out of less productive styles .

Speaker #1: We're also investing into depth for key sizes , helping deliver improved sales performance in both categories . As we prioritize this continue to initiative , we're using AI to help optimize our inventory allocation , which will help provide a more consistent and reliable shopping experience .

Michael Bender: We're also investing into depth for key sizes, helping deliver improved sales performance in both categories. As we continue to prioritize this initiative, we're using AI to help optimize our inventory allocation, which will help provide a more consistent and reliable shopping experience going forward. Now, I would like to give a preview on how we're approaching the ever-important holiday season. We're excited about the momentum and opportunity we have heading into the holidays. The holidays are always a promotional time period, and we expect this to continue this year, especially given the state of the consumer. We have done a lot of great work throughout the year to show up for customers as a destination for exceptional value and gifting, a third of which will be exclusive to KOHLS.

We're also investing into depth for key sizes, helping deliver improved sales performance in both categories. As we continue to prioritize this initiative, we're using AI to help optimize our inventory allocation, which will help provide a more consistent and reliable shopping experience going forward. Now, I would like to give a preview on how we're approaching the ever-important holiday season. We're excited about the momentum and opportunity we have heading into the holidays. The holidays are always a promotional time period, and we expect this to continue this year, especially given the state of the consumer. We have done a lot of great work throughout the year to show up for customers as a destination for exceptional value and gifting, a third of which will be exclusive to Kohl's.

Speaker #1: Going forward . Now , I'd like to give a preview on how we're approaching the ever important holiday season . We're excited about the momentum and opportunity we have heading into the holidays .

Speaker #1: The holidays are always a promotional time period, and we expect this to continue this year, especially given the state of the consumer.

Speaker #1: We have done a lot of great work throughout the year to show up for customers as a destination for exceptional value and gifting.

Speaker #1: A third of which will be exclusive to Kohl's. We entered the quarter in a better inventory position, particularly with our proprietary brands, which will be essential in offering value to our customers during the holiday season through our sweaters and fleece offerings.

Michael Bender: We entered the quarter in a better inventory position, particularly with our proprietary brands, which will be essential in offering value to our customers in holiday through our sweaters, knits, and fleece offerings. In Sephora, we expanded our holiday gifting sets, which have continued to resonate well with our customers. We're also building on new brand launches from Q3 with additional brands like Danessa Myricks, Astora, Biodance, and Kayali, which has become our number one fragrance in women's. In addition to proprietary brands in Sephora, we're excited about the product offerings in our home category this year. In hard home business, we're thrilled to offer new items such as the green pan by Bobby Flay, alongside new innovative items from key brands like Ninja and Shark. On the soft home side, we're emphasizing our betting with value-oriented brands like Cuddle Duds and Cozy Throws from Big One.

We entered the quarter in a better inventory position, particularly with our proprietary brands, which will be essential in offering value to our customers in holiday through our sweaters, knits, and fleece offerings. In Sephora, we expanded our holiday gifting sets, which have continued to resonate well with our customers. We're also building on new brand launches from Q3 with additional brands like Danessa Myricks, Astora, Biodance, and Kayali, which has become our number one fragrance in women's. In addition to proprietary brands in Sephora, we're excited about the product offerings in our home category this year. In hard home business, we're thrilled to offer new items such as the green pan by Bobby Flay, alongside new innovative items from key brands like Ninja and Shark. On the soft home side, we're emphasizing our betting with value-oriented brands like Cuddle Duds and Cozy Throws from Big One.

Speaker #1: In Sephora , we expanded our holiday gifting sets , which have continued to resonate well with our customers . We're also building on new launches brand from , with Q3 additional brands like Danessa , Myricks , Astera Bioscience and Kayali , which has become our number one fragrance in women's .

Speaker #1: In addition to proprietary brands in Sephora, we're excited about the product offerings in our home category this year in hard home.

Speaker #1: Thrilled to offer items such as the Green We’re Pan by Bobby Flay alongside new innovations from key brands like Ninja and Shark on the soft home side, we’re emphasizing our bedding with value-oriented brands like Cuddle Duds cozy throws and Big One.

Speaker #1: Importantly , toys will be a key gifting category for us . This holiday . We're excited about our offering of trending toys like Barbie , Lego and Tony's two , as well as toys from favorite brands like Hot Wheels and Step two .

Michael Bender: Importantly, toys will be a key gifting category for us this holiday. We're excited about our offering of trending toys like Barbie, Lego, and Tony's Too, as well as toys from favorite brands like Hot Wheels and Step 2. This year, we're also seeing great engagement with our trading card offerings like Pokémon. From a marketing standpoint, we're making a statement in front of the store that is designed to inspire, featuring everything customers need to welcome the holidays, find thoughtful gifts for the family, and host in style. We're leading with compelling value to our customers, leaning into KOHLS Cash and Rewards, which helps drive repeat trips and increased engagement. Additionally, given the changes we made to our coupon inclusion this year, our customers will have more purchasing power this year compared to last year.

Importantly, toys will be a key gifting category for us this holiday. We're excited about our offering of trending toys like Barbie, Lego, and Tony's Too, as well as toys from favorite brands like Hot Wheels and Step 2. This year, we're also seeing great engagement with our trading card offerings like Pokémon. From a marketing standpoint, we're making a statement in front of the store that is designed to inspire, featuring everything customers need to welcome the holidays, find thoughtful gifts for the family, and host in style. We're leading with compelling value to our customers, leaning into Kohl's Cash and Rewards, which helps drive repeat trips and increased engagement. Additionally, given the changes we made to our coupon inclusion this year, our customers will have more purchasing power this year compared to last year.

Speaker #1: This year , we're also seeing great engagement with our trading card offerings like Pokemon . From a marketing standpoint , a we're making statement in front of the store that is designed to inspire , featuring everything customers need to welcome the holidays , find thoughtful gifts for the family , and host in style .

Speaker #1: We're compellingly leading with value to our customers, leaning into Kohl's Cash and Rewards, which helps drive repeat trips and increased engagement.

Speaker #1: Given the changes we additionally made to our coupon inclusion this year, our customers will have more power purchasing this year compared to last year.

Speaker #1: I turn the call Before over , I want to reiterate the key messages from this call . First , our improved performance in the third quarter is a direct reflection of momentum .

Michael Bender: Before I turn the call over, I want to reiterate the key messages from this call. First, our improved performance in the Q3 is a direct reflection of momentum we're building to better serve all customers. Second, we're making great progress against our 2025 initiatives. We're encouraged with the results but still have more work to do. And third, we're excited about how we are positioned to deliver exceptional value to our customers during this important 2025 holiday season. All this progress and momentum could not have been made without the incredible work from our KOHLS associates. We have made great strides together as a team, and each day I work with you, I am more and more impressed with our resilience and desire to win. The opportunity that lies ahead of us is clear and substantial, and we are committed to making more progress each quarter.

Before I turn the call over, I want to reiterate the key messages from this call. First, our improved performance in the Q3 is a direct reflection of momentum we're building to better serve all customers. Second, we're making great progress against our 2025 initiatives. We're encouraged with the results but still have more work to do. And third, we're excited about how we are positioned to deliver exceptional value to our customers during this important 2025 holiday season. All this progress and momentum could not have been made without the incredible work from our Kohl's associates. We have made great strides together as a team, and each day I work with you, I am more and more impressed with our resilience and desire to win. The opportunity that lies ahead of us is clear and substantial, and we are committed to making more progress each quarter. With that, I would now like to hand the call over to Jill.

Speaker #1: We're building to better serve all customers . Second , we're making great progress against our 2025 initiatives . encouraged with the We're results , but still have more work to do .

Speaker #1: And third, we're excited about how we are positioned to deliver exceptional value to customers during this important 2025 holiday season. All this progress and momentum could not have been made without the work of our incredible Kohl's associates.

Speaker #1: We have made great strides together as a team, and each day I work with you, I am more and more impressed with our resilience and desire to win. The opportunity that lies ahead of us is clear and substantial, and we are committed to making more progress each quarter.

Speaker #1: With that, I would now like to hand it over to Jill.

Speaker #2: Thank you, Michael, for today's call. I'll provide details on our third quarter results and give an additional update on our fiscal 2025 guidance.

Michael Bender: With that, I would now like to hand the call over to Jill. Thank you, Michael. For today's call, I'll provide additional details on our Q3 results and give an update on our fiscal year 2025 guidance. Net sales declined 2.8% in the Q4 and 4% year-to-date. Comparable sales declined 1.7% in Q3 and declined 3.2% year-to-date. The Q3 improvement was mainly driven by an increase in transactions versus prior quarter, while our average transaction value remained flat year-over-year. In addition, proprietary brands ran a positive comp in the quarter, with business accelerating as the quarter progressed. Digital sales outperformed stores again in Q3, angering by 2.4% versus last year. This performance was driven by an increase in traffic throughout the quarter, going from high single digits in August to high teens in October.

Jill Timm: Thank you, Michael. For today's call, I'll provide additional details on our Q3 results and give an update on our fiscal year 2025 guidance. Net sales declined 2.8% in the Q4 and 4% year-to-date. Comparable sales declined 1.7% in Q3 and declined 3.2% year-to-date. The Q3 improvement was mainly driven by an increase in transactions versus prior quarter, while our average transaction value remained flat year-over-year. In addition, proprietary brands ran a positive comp in the quarter, with business accelerating as the quarter progressed. Digital sales outperformed stores again in Q3, angering by 2.4% versus last year. This performance was driven by an increase in traffic throughout the quarter, going from high single digits in August to high teens in October.

Speaker #2: Net sales declined 2.8% in the third quarter and 4% year to date. Comparable sales declined 1.7% in Q3 and 3.2% year to date.

Speaker #2: The third quarter improvement was mainly driven by an increase in transactions versus the prior quarter, while our average transaction value remained flat year over year.

Speaker #2: In addition , proprietary brands ran a positive comp in the with quarter , accelerating as the business quarter progressed . Digital sales outperformed stores again in Q3 and grew by 2.4% versus last year .

Speaker #2: This performance was driven by an increase in traffic throughout the quarter, from high single digits in August to high teens in October.

Speaker #2: From a customer perspective , we saw significant improvement in our Kohl's card customers , which were down high single digits in Q3 , an increase in trend of over 500 basis last points in the quarter .

Michael Bender: From a customer perspective, we saw significant improvement in our KOHLS Card customers, which were down high single digits in Q3, an increase in trend of over 500 basis points from the last quarter, with the improvement coming from both the store and digital channels. Moving down the P&L, other revenue, which primarily consists of our credit business, was $168 million in Q3, a 17% decline compared to last year. As a reminder, we launched our co-brand credit card last September, so on a comparable basis, starting this quarter, we are no longer receiving the incremental benefits seen in the first half of this year. In addition to this, we continue to face a headwind as we shifted some credit-related expenses from SG&A into other revenue. While our KOHLS Card still remains pressured, we have made meaningful progress re-engaging this customer throughout the year.

From a customer perspective, we saw significant improvement in our Kohl's Card customers, which were down high single digits in Q3, an increase in trend of over 500 basis points from the last quarter, with the improvement coming from both the store and digital channels. Moving down the P&L, other revenue, which primarily consists of our credit business, was $168 million in Q3, a 17% decline compared to last year. As a reminder, we launched our co-brand credit card last September, so on a comparable basis, starting this quarter, we are no longer receiving the incremental benefits seen in the first half of this year. In addition to this, we continue to face a headwind as we shifted some credit-related expenses from SG&A into other revenue. While our Kohl's Card still remains pressured, we have made meaningful progress re-engaging this customer throughout the year.

Speaker #2: With the improvement coming from both the store and digital channels moving down the PNL . Other revenue , which primarily consists of our credit business , was $168 million in Q3 , a 17% decline compared to last year as a reminder , we launched our Co-brand credit card last September .

Speaker #2: So, on a comparable basis, starting this quarter, we are no longer receiving the incremental benefit seen in the first half of this year.

Speaker #2: In addition to this , we continue face a to headwind as we shifted some credit related expenses from SGA into other revenue . While our Kohl's card still remains pressured , we have made meaningful progress reengaging this customer throughout the year .

Speaker #2: We committed to remain furthering this progress as we continue Q4 and next year into . Gross margin in Q3 was 39.6% , an improvement of 51 basis points versus last year .

Michael Bender: We remain committed to furthering this progress as we continue into Q4 and next year. Gross margin in Q3 was 39.6%, an improvement of 51 basis points versus last year. This year-over-year improvement was driven primarily by strong inventory management and product mix benefits driven by our positive proprietary sales performance this quarter. Year-to-date, gross margin was 39.8%, an increase of 39 basis points to last year. SG&A expenses declined 2.1% to $1.3 billion in Q3, driven by lower spending in stores, marketing, and fulfillment, with additional savings stemming from a portion of credit expenses shifting into other revenue. Year-to-date, SG&A expenses have declined 3.8%. Depreciation expense was $176 million in Q3, a decrease of $8 million versus last year. The decrease was driven by lower capital expenditures and the impact from closed locations. Year-to-date, depreciation expense was $526 million, down $34 million to the prior year.

We remain committed to furthering this progress as we continue into Q4 and next year. Gross margin in Q3 was 39.6%, an improvement of 51 basis points versus last year. This year-over-year improvement was driven primarily by strong inventory management and product mix benefits driven by our positive proprietary sales performance this quarter. Year-to-date, gross margin was 39.8%, an increase of 39 basis points to last year. SG&A expenses declined 2.1% to $1.3 billion in Q3, driven by lower spending in stores, marketing, and fulfillment, with additional savings stemming from a portion of credit expenses shifting into other revenue. Year-to-date, SG&A expenses have declined 3.8%. Depreciation expense was $176 million in Q3, a decrease of $8 million versus last year. The decrease was driven by lower capital expenditures and the impact from closed locations. Year-to-date, depreciation expense was $526 million, down $34 million to the prior year.

Speaker #2: This year year over improvement was driven primarily by strong inventory management and product mix benefits driven by our positive proprietary sales performance this quarter , year to date , gross margin was 39.8% , an increase of 39 basis points to last year .

Speaker #2: Expenses in G&A declined 2.1% to $1.3 billion in Q3, driven by lower spending in stores, marketing, and fulfillment, with additional savings stemming from a portion of credit expenses shifting into other revenue. Year-to-date expenses have declined compared to Q3, with the last decrease being 3.8%.

Speaker #2: The decrease was driven by lower capital expenditures. Depreciation closed impact from locations year-to-date. Depreciation expense is $526 million, down $34 million from the prior year.

Speaker #2: Interest expense was $75 million in the third quarter and $229 million year to date . In the third quarter , we realized a benefit $9 million within of our adjusted tax line .

Michael Bender: Interest expense was $75 million in the Q3 and $229 million year-to-date. In the Q3, we realized a benefit of $9 million within our adjusted tax line. This benefit was due to the release of tax reserves. We now expect our full-year tax rate to be roughly 18%. Adjusted net income in the Q3 was $11 million, equating to an adjusted diluted earnings per share of $0.10. Year-to-date, adjusted net income is $61 million, and adjusted diluted earnings per share is $0.54. Moving on to the balance sheet and cash flow, we ended Q3 with $144 million of cash and cash equivalents. Inventory decreased approximately 5% compared to last year in Q3. We are positioned well from an inventory perspective as we head into the holiday season, as we had a better flow of inventory this year and brought in inventory earlier than last year, which had elevated in-transit levels.

Interest expense was $75 million in the Q3 and $229 million year-to-date. In the Q3, we realized a benefit of $9 million within our adjusted tax line. This benefit was due to the release of tax reserves. We now expect our full-year tax rate to be roughly 18%. Adjusted net income in the Q3 was $11 million, equating to an adjusted diluted earnings per share of $0.10. Year-to-date, adjusted net income is $61 million, and adjusted diluted earnings per share is $0.54. Moving on to the balance sheet and cash flow, we ended Q3 with $144 million of cash and cash equivalents. Inventory decreased approximately 5% compared to last year in Q3. We are positioned well from an inventory perspective as we head into the holiday season, as we had a better flow of inventory this year and brought in inventory earlier than last year, which had elevated in-transit levels.

Speaker #2: This benefit was due to the release of tax reserves . We now expect our full year tax rate to be roughly 18% . Adjusted net income in the third quarter was $11 million , equating to an adjusted diluted earnings per share of $0.10 .

Speaker #2: Year to date . Adjusted net income $61 million , and is adjusted diluted earnings per share is $0.54 . Moving on to the balance sheet and cash flow , we ended Q3 with $144 million of cash and cash equivalents .

Speaker #2: Inventory decreased approximately 5% compared to last year in Q3. We are positioned well from an inventory perspective as we head into the holiday season, as we had a better flow of inventory this year and brought in inventory earlier than last year, which had in-transit elevated levels year to date.

Speaker #2: Our operating cash flow is $630 million, and our adjusted free cash flow is $270 million. We remain on track to achieve $1.3 billion of operating cash flow and $900 million of free cash flow by the end of this fiscal year.

Michael Bender: Year-to-date, our operating cash flow is $630 million, and our adjusted free cash flow is $270 million. We remain on track to achieve $1.3 billion of operating cash flow and $900 million of free cash flow at the end of this fiscal year. Our borrowings on the revolver declined to $45 million at the end of Q3, over a $700 million decrease from last year. We remain committed to fully exiting the revolver by the end of this year. Capital expenditures ended at $308 million year-to-date. We are on track to spend approximately $400 million of CapEx this year, with the majority of these investments relating to the completion of our full chain Sephora rollout, implementing 613 additional Impulse Q lines, and the expansion of one of our next-generation e-commerce fulfillment centers. Year-to-date, we have returned $42 million to shareholders through our dividends.

Year-to-date, our operating cash flow is $630 million, and our adjusted free cash flow is $270 million. We remain on track to achieve $1.3 billion of operating cash flow and $900 million of free cash flow at the end of this fiscal year. Our borrowings on the revolver declined to $45 million at the end of Q3, over a $700 million decrease from last year. We remain committed to fully exiting the revolver by the end of this year. Capital expenditures ended at $308 million year-to-date. We are on track to spend approximately $400 million of CapEx this year, with the majority of these investments relating to the completion of our full chain Sephora rollout, implementing 613 additional Impulse Q lines, and the expansion of one of our next-generation e-commerce fulfillment centers. Year-to-date, we have returned $42 million to shareholders through our dividends.

Speaker #2: Borrowings on our revolver declined to $45 million at the end of Q3, a decrease of over $700 million from last year. We remain committed to fully exiting the revolver by the end of this year.

Speaker #2: Capital expenditures ended at $308 million year to date , we are on track to spend approximately $400 million of CapEx this year , with the majority of these investments relating to the full completion of our chain Sephora rollout , implementing 613 additional impulse queue lines and the expansion of one of our next generation e-commerce fulfillment centers .

Speaker #2: Year to date , we have returned $42 million to shareholders , to our dividends , and as previously disclosed , the board on November 12th declared a quarterly cash dividend of 12.5 cents per share , payable to shareholders on December 24th .

Michael Bender: And as previously disclosed, the board on November 12th declared a quarterly cash dividend of $12.50 per share, payable to shareholders on December 24th. Next, I would like to provide an update to our 2025 outlook. As mentioned previously in this call, we made meaningful progress to date on our 2025 initiatives. Each quarter, we have made sequential improvements in our key areas of focus, including investments into our proprietary brands and depth counts, delivering competitive value through our promotional strategy and optimizing our store layouts, all of which are continuing to resonate with our customers. With that said, we continue to navigate a fluid and dynamic macroeconomic environment. We recognize that our middle- to low-income customers are experiencing persistent pressure and a tightening of their discretionary income. We aim to be mindful of this as we lay out our updated outlook.

And as previously disclosed, the board on November 12th declared a quarterly cash dividend of $12.50 per share, payable to shareholders on December 24th. Next, I would like to provide an update to our 2025 outlook. As mentioned previously in this call, we made meaningful progress to date on our 2025 initiatives. Each quarter, we have made sequential improvements in our key areas of focus, including investments into our proprietary brands and depth counts, delivering competitive value through our promotional strategy and optimizing our store layouts, all of which are continuing to resonate with our customers. With that said, we continue to navigate a fluid and dynamic macroeconomic environment. We recognize that our middle- to low-income customers are experiencing persistent pressure and a tightening of their discretionary income. We aim to be mindful of this as we lay out our updated outlook.

Speaker #2: Next, I would like to provide an update to our 2025 outlook. As mentioned previously on this call, we made meaningful progress to date on our 2025 initiatives.

Speaker #2: quarter , we Each have made sequential our key areas of improvements in focus , including into our investments proprietary and death brands counts , delivering competitive value through our promotional strategy and optimizing our store layout .

Speaker #2: All of which continue to resonate with our customers. With that said, we continue to navigate a fluid and dynamic macroeconomic environment.

Speaker #2: that our We middle to low income customers are experiencing persistent pressure and a tightening of their discretionary income . We aim to be mindful of this lay out as we our updated outlook for the full year .

Speaker #2: We expect net sales decline of three and a half to comparable sales 4% , decline of two and a half to 3% . Other revenue down 11 to 12% .

Michael Bender: For the full year, we expect net sales decline of 3.5% to 4%, comparable sales decline of 2.5% to 3%, other revenue down 11% to 12%, gross margin expansion of 30% to 35 basis points, an SG&A decline of 3.75% to 4%, and adjusted diluted earnings per share of $1.25 to $1.45. Lastly, I would like to emphasize my sincere appreciation of the incredible team here at KOHLS. We have been able to make significant progress in our goals despite navigating an uncertain and challenging environment, thanks to your continued commitment. I'm excited to continue this progress forward with all of you and want to reiterate the importance of your impact to both our customers and our organization. We are now happy to take your questions at this time. As a reminder, to ask a question, please press star followed by the number one on your telephone keypad.

For the full year, we expect net sales decline of 3.5% to 4%, comparable sales decline of 2.5% to 3, other revenue down 11% to 12, gross margin expansion of 30% to 35 basis points, an SG&A decline of 3.75% to 4, and adjusted diluted earnings per share of $1.25 to 1.45. Lastly, I would like to emphasize my sincere appreciation of the incredible team here at Kohl's. We have been able to make significant progress in our goals despite navigating an uncertain and challenging environment, thanks to your continued commitment. I'm excited to continue this progress forward with all of you and want to reiterate the importance of your impact to both our customers and our organization. We are now happy to take your questions at this time.

Speaker #2: Gross margin expansion of 30 to 35 basis points and G&A decline of 3.75 to 4%, adjusted, and earnings per diluted share of $1.25 to $1.45.

Speaker #2: would like to Lastly , I emphasize my sincere appreciation of the incredible team here Kohl's at . We haven't been able to make significant progress on our goals despite navigating an uncertain and challenging your environment .

Speaker #2: Thanks to our commitment to all, I'm excited to continue progressing forward with you. I want to reiterate the impact you have on both our customers and the importance of our organization.

Speaker #2: We are now happy to take your questions at this time.

Speaker #3: As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Chuck Graham from Gordon Haskett.

Operator: As a reminder, to ask a question, please press star followed by the number one on your telephone keypad. Our first question comes from Chuck Grom from Gordon Haskett. Please go ahead. Your line is open.

Speaker #3: Please go ahead. Your line is open.

Speaker #4: Hey . Good morning . And first of all , congrats , Michael , on the new responsibilities at a high level . I'm just curious , as you as you guys add back brands to the coupon eligibility list and make changes to the store layout and bring more of the proper brands back .

Michael Bender: Our first question comes from Chuck Graham from Gordon Haskett. Please go ahead. Your line is open. Hey, good morning. And first of all, congrats, Michael, on the new responsibilities. At a high level, I'm just curious, as you guys add back brands to the coupon eligibility list and make changes to the store layout and bring more of the prop brands back, how you're connecting with former and lapsed customers to make them aware of the changes? And where do you think you are, I guess, on that recovery path at this point in time? I think, Chuck, we have the good news is with our core customers, they were still shopping us. We just lost some of their trips. So we have a lot of data around that customer. We know what they like to shop with. We know when they shop.

Chuck Grom: Hey, good morning. And first of all, congrats, Michael, on the new responsibilities. At a high level, I'm just curious, as you guys add back brands to the coupon eligibility list and make changes to the store layout and bring more of the prop brands back, how you're connecting with former and lapsed customers to make them aware of the changes? And where do you think you are, I guess, on that recovery path at this point in time?

Speaker #4: How are you connecting with former and lapsed customers to make them aware of the changes? And where do you think you are on that recovery at this point in time?

Speaker #5: I think we have. The good news is with our core customers, they were still shopping us. We just lost some of their trips.

Speaker #5: So, we have a lot of data around that customer. We know what they like to shop with. We know when they shop.

Jill Timm: I think, Chuck, we have the good news is with our core customers, they were still shopping us. We just lost some of their trips. So we have a lot of data around that customer. We know what they like to shop with. We know when they shop. So our marketing team has been able to use a lot of that data to go after them from a marketing perspective. I would say that's been ramping up because as we've been bringing back in the items into the coupon, as we've been bringing the proprietary inventory back into our stores, we wanted to make sure when we did invite them in that we were in stock on the items that they were looking for. Similarly, with the jewelry brand and petites coming in because they actually over-penetrated into those brands as well. So this past quarter, we did some personalization in terms of coupons because we know that resonates really well with them and actually made it in Kohl's Cash as well. So we took away the exclusion headwind from that perspective as well. And we've really seen high engagement from that.

Speaker #5: So our marketing team has been able to use a lot of that data after them . to go From a marketing perspective , I would say that's been ramping up because as we've been bringing back in the items into the coupon , as we've bringing the been proprietary inventory back into our .

Michael Bender: So our marketing team has been able to use a lot of that data to go after them from a marketing perspective. I would say that's been ramping up because as we've been bringing back in the items into the coupon, as we've been bringing the proprietary inventory back into our stores, we wanted to make sure when we did invite them in that we were in stock on the items that they were looking for. Similarly, with the jewelry brand and petites coming in because they actually over-penetrated into those brands as well. So this past quarter, we did some personalization in terms of coupons because we know that resonates really well with them and actually made it in KOHLS Cash as well. So we took away the exclusion headwind from that perspective as well. And we've really seen high engagement from that.

Speaker #2: Stores, we wanted to.

Speaker #5: Make sure when we did invite them in that we were.

Speaker #2: In stock and the items that they were looking for . Similarly , with the jewelry brand and petites coming in because they actually over penetrated into the brand , those brands as well .

Speaker #2: So, this past quarter, we did some personalization in terms of coupons because we know that resonates really well with them. And we actually made it in Kohl's Cash as well.

Speaker #2: So we took away the exclusion headwind from that perspective as well, and we've really seen high engagement from that. So we're pleased with the trend improvement we've seen in the Kohl's Charge.

Speaker #2: Customers were up 500 basis points in the quarter. But clearly, we still have room to continue to move forward. And I think as we bring back in those brands, we continue to market to them.

Michael Bender: So we're pleased with the trend improvement we've seen in the KOHLS Charged customers. That's 500 basis points in the quarter. But clearly, we still have room to continue to move forward. And I think as we bring back in those brands, we continue to market to them, we're going to get more of their footsteps, particularly during this key holiday period. And Chuck, I would just add that the difference that we see between both the brick and mortar and the digital side of that question that you're asking, we see a more immediate response on the digital side. Obviously, when we're able to communicate the brands that are back in the coupon, from a store perspective, we're still building that.

So we're pleased with the trend improvement we've seen in the Kohl's Charged customers. That's 500 basis points in the quarter. But clearly, we still have room to continue to move forward. And I think as we bring back in those brands, we continue to market to them, we're going to get more of their footsteps, particularly during this key holiday period.

Speaker #2: We're going to get more of their footsteps, particularly during this key holiday period.

Speaker #1: And Chuck , I would just add that the difference that we see between both the brick and mortar and the digital side of that question that you're asking , we see a more immediate response on the digital side .

Michael Bender: And Chuck, I would just add that the difference that we see between both the brick and mortar and the digital side of that question that you're asking, we see a more immediate response on the digital side. Obviously, when we're able to communicate the brands that are back in the coupon, from a store perspective, we're still building that. And we're doing things like making sure that when there's an item in the store that is coupon eligible, that we're placing a sign, for example, on the fixture that says, "This item now coupon eligible." That ramp-up will take a little bit more time than what you see from a digital perspective. But we're excited, as Jill said, about the progress that we're making there and unifying those efforts.

Speaker #1: Obviously , when we're able to communicate , the brands that are back in the coupon from a store perspective , we're still building that and we're doing things like making sure that when there's an item in the store that is coupon eligible , that we're placing a sign , for example , on the fixture that says this item .

Michael Bender: And we're doing things like making sure that when there's an item in the store that is coupon eligible, that we're placing a sign, for example, on the fixture that says, "This item now coupon eligible." That ramp-up will take a little bit more time than what you see from a digital perspective. But we're excited, as Jill said, about the progress that we're making there and unifying those efforts. Our next question comes from Paul Lejue from Citigroup. Please go ahead. Your line is open. Hey, thanks, guys. Jill, can you maybe break down that 1.3 billion of operating cash flow, just talk about the net income versus the one-time items versus working capital benefit within that? And then maybe if you can talk about CapEx. I think you said $400 million this year. How should we think about a CapEx number over the next several years?

Speaker #1: Now coupon eligible , that will that ramp up will take a little bit more time than what you see from a digital perspective .

Speaker #1: But we're we're excited . As Jill said , about the progress that we're making there . And unifying those those efforts .

Speaker #3: Next, our question comes from Paul from Citigroup. Please go ahead. Your line is open.

Speaker #6: Hey . Thanks , guys . Jill , can you maybe break down that 1.3 billion of operating cash flow ? Just talk about the net income versus the one time items versus working capital benefit within that .

Operator: Our next question comes from Paul Lejuez from Citigroup. Please go ahead. Your line is open.

Paul Lejuez: Hey, thanks, guys. Jill, can you maybe break down that 1.3 billion of operating cash flow, just talk about the net income versus the one-time items versus working capital benefit within that? And then maybe if you can talk about CapEx. I think you said $400 million this year. How should we think about a CapEx number over the next several years? And then I just wanted to make sure I understood the traffic versus ticket in terms of the drivers of the comp this quarter. I think maybe you said what happened versus last quarter, but just curious on an absolute basis, year-over-year, what were the drivers of comps between traffic and ticket? Thanks.

Speaker #6: And then maybe if you can talk about CapEx. I think you said $400 million this year. How should we think about the CapEx number over the next several years?

Speaker #6: And then I I wanted to make sure understood the just traffic versus ticket in terms of drivers of the the comp this quarter , I think maybe you said what happened versus last quarter , but curious on just an absolute basis , year over year , what would the drivers of comps between traffic and ticket ?

Michael Bender: And then I just wanted to make sure I understood the traffic versus ticket in terms of the drivers of the comp this quarter. I think maybe you said what happened versus last quarter, but just curious on an absolute basis, year-over-year, what were the drivers of comps between traffic and ticket? Thanks. Sure. So I think first, obviously, a billion-three in operating cash flow. We feel really good with the momentum that we've made there, in addition to paying off over $700 million on the revolver. So we'll clearly have an exit plan for that by the end of the year. I mean, a big portion of what you're seeing, we did have the one-time gain, as you alluded to, which was about $100 million that we recognized last quarter. But the majority of this cash flow is coming through our strong inventory management.

Speaker #6: Thanks .

Speaker #2: Sure. So I think, first, obviously $1,000,000,003 and operating cash flow, we feel really good with the momentum that we've made there.

Speaker #2: addition to In paying off over $700 million on the revolver . So we'll clearly have an exit plan for that by the end of the year .

Jill Timm: Sure. So I think first, obviously, a billion-three in operating cash flow. We feel really good with the momentum that we've made there, in addition to paying off over $700 million on the revolver. So we'll clearly have an exit plan for that by the end of the year. I mean, a big portion of what you're seeing, we did have the one-time gain, as you alluded to, which was about $100 million that we recognized last quarter. But the majority of this cash flow is coming through our strong inventory management.

Speaker #2: I mean , a big portion of what you're seeing , we did have the one time gain , as you alluded to , which was about $100 million that we recognized last quarter .

Speaker #2: But the majority of this cash flow is coming through our strong inventory management, and I think that's the big thing. Inventory is down 5% on the quarter.

Speaker #2: We were down 1.7% from a comp perspective. We continue to expect to manage our inventory down in that low to mid-single-digit number.

Michael Bender: And I think that's the big thing. Inventory down 5% on the quarter where we were down 17 from a comp perspective. We continue to expect to manage our inventory down in that low to mid-single-digit number. So I think that's really where we're seeing we had a better flow of goods coming into Q3 this year, which we do believe helped accelerate our business as the quarter progressed. And we continue to flow those goods, I think, more timely has been helpful to us, but it's also been beneficial from a cash flow perspective. So I think I would really narrow it down to inventory management being a key unlock. And we expect that to continue. We have opportunities to turn faster as an organization. We've had this conversation. And the faster we turn, the more we can generate from a cash flow perspective.

And I think that's the big thing. Inventory down 5% on the quarter where we were down 17 from a comp perspective. We continue to expect to manage our inventory down in that low to mid-single-digit number. So I think that's really where we're seeing we had a better flow of goods coming into Q3 this year, which we do believe helped accelerate our business as the quarter progressed. And we continue to flow those goods, I think, more timely has been helpful to us, but it's also been beneficial from a cash flow perspective. So I think I would really narrow it down to inventory management being a key unlock. And we expect that to continue. We have opportunities to turn faster as an organization. We've had this conversation. And the faster we turn, the more we can generate from a cash flow perspective.

Speaker #2: So I think that's really where we're seeing we had a better flow of goods coming into Q3 this year, which we do believe helped accelerate our business.

Speaker #2: As the quarter progressed and we continued to flow those goods, I think more timely has been helpful to us, but it's also been beneficial from a cash flow perspective.

Speaker #2: So, I think I would narrow it really down to inventory management being a key unlock. And we expect that to continue.

Speaker #2: opportunities to We turn faster as an organization . We've had this and the conversation faster we turn , the more we can generate from a cash flow perspective .

Speaker #2: feel very confident that this is a So I level of cash ex . The one time that we can continue to operate at from a CapEx perspective , at obviously , we 400 million , completed the Sephora rollout .

Michael Bender: So I feel very confident that this is a level of cash X the one time that we can continue to operate at. From a CapEx perspective, at $400 million, obviously, we completed the Sephora rollout. We accelerated the Impulse lines given the fact that they were working so well in the front half of the year. We really leaned into them and to get them in almost all stores by the back half of the year. It's really an extra unit in the basket outsized impact in the stores. As we go into next year, I'd suggest that our level will probably be in that $350 to $400 million range. Obviously, it will ebb and flow based on any big projects. And if we have a big new project to lay out, we would obviously call that out separately.

So I feel very confident that this is a level of cash X the one time that we can continue to operate at. From a CapEx perspective, at $400 million, obviously, we completed the Sephora rollout. We accelerated the Impulse lines given the fact that they were working so well in the front half of the year. We really leaned into them and to get them in almost all stores by the back half of the year. It's really an extra unit in the basket outsized impact in the stores. As we go into next year, I'd suggest that our level will probably be in that $350 to $400 million range. Obviously, it will ebb and flow based on any big projects. And if we have a big new project to lay out, we would obviously call that out separately.

Speaker #2: We accelerated the impulse lines . Given the fact that they were working so well in the front half of the year . We really leaned into them , and to get them in almost all stores by the back half of the year , it's really an extra unit in the basket .

Speaker #2: Outsized impact in the stores as we go into next year. I'd suggest that our level will probably be in that $350 to $400 million range.

Speaker #2: Obviously, this will ebb and flow based on any big projects, and if we have a big new project to lay out, we would obviously call that out separately.

Speaker #2: think that's a good run rate use But I as we move forward . And I third question from a traffic think the and ticket perspective , our average transaction value is relatively flat .

Michael Bender: But I think that's a good run rate to use as we move forward. And I think the third question from a traffic and ticket perspective, our average transaction value was relatively flat. So the difference for the quarter from a comp perspective is really about traffic, but also the improvement from last quarter in that down four to the down one seven was all about improved traffic. And the improvement we saw throughout the quarter with October actually getting to a positive comp was all driven by improvement in traffic. So those trends have continued to improve, helping drive the momentum that we've discussed. Thank you. Good luck. Thank you. Our next question comes from Mark Altschweiger from Baird. Please go ahead. Your line is open. Good morning. Thank you. And congratulations, Michael. Thanks, Mark.

But I think that's a good run rate to use as we move forward. And I think the third question from a traffic and ticket perspective, our average transaction value was relatively flat. So the difference for the quarter from a comp perspective is really about traffic, but also the improvement from last quarter in that down four to the down one seven was all about improved traffic. And the improvement we saw throughout the quarter with October actually getting to a positive comp was all driven by improvement in traffic. So those trends have continued to improve, helping drive the momentum that we've discussed.

Speaker #2: So the difference for the quarter from a comp perspective is really about traffic . But also the improvement from last quarter . And that down four to the down one seven was all about improved And the traffic .

Speaker #2: we saw throughout the quarter with October actually getting to a positive comp with all driven by improvement in traffic . trends have So those continued to improve , helping drive the momentum that we've discussed .

Speaker #6: you . Good luck .

Speaker #2: you Thank .

Speaker #3: Our next question comes from Mark Altschwager from Baird. Please go ahead. Your line is open.

Paul Lejuez: Thank you. Good luck.

Jill Timm: Thank you.

Operator: Our next question comes from Mark Altschwager from Baird. Please go ahead. Your line is open.

Speaker #7: Good morning. Thank you. And congratulations, Michael.

Speaker #1: Thanks , Mark .

Speaker #7: Michael, which of the strategic initiatives outlined at the start of the year are showing the most promise? And how are you evolving the strategy to stabilize comps based on the learnings year to date?

Mark Altschwager: Good morning. Thank you. And congratulations, Michael.

Michael Bender: Thanks, Mark.

Michael Bender: Michael, which of the strategic initiatives outlined at the start of the year are showing the most promise? And how are you evolving the strategy to stabilize comps based on the learnings year-to-date? Yeah, thanks for the question. Of the three initiatives that we started out with, I would say that one of the ones that I'm most proud of in terms of the progress that we're making is around this notion of building a more balanced assortment. We've focused a lot of attention over the last, call it, six to nine months on making sure that what we're offering to customers, particularly from a value perspective, is what they're looking for. And KOHLS has historically been known for being able to offer choice, but also depth so that there's trip assurance. That's the piece that we underscore quite a bit about making sure that that's what we're known for.

Mark Altschwager: Michael, which of the strategic initiatives outlined at the start of the year are showing the most promise? And how are you evolving the strategy to stabilize comps based on the learnings year-to-date?

Speaker #1: Yeah , thanks for the question . the of You know , the three initiatives that we started out with , I would say that one of the ones that I'm most proud of in terms of the progress that we're making , is around this of notion building a more balanced assortment .

Michael Bender: Yeah, thanks for the question. Of the three initiatives that we started out with, I would say that one of the ones that I'm most proud of in terms of the progress that we're making is around this notion of building a more balanced assortment. We've focused a lot of attention over the last, call it, six to nine months on making sure that what we're offering to customers, particularly from a value perspective, is what they're looking for. And Kohl's has historically been known for being able to offer choice, but also depth so that there's trip assurance. That's the piece that we underscore quite a bit about making sure that that's what we're known for.

Speaker #1: know , You we've lot of focused a attention over the last call it 6 to 9 months on making sure that what we're offering to customers , particularly from a value perspective , is , is what they're looking for .

Speaker #1: And Kohl's has been historically being able to offer choice , but also depth , so that there's trip assurance . That's the piece that we quite a bit about making sure that that's what we're known for .

Speaker #1: So, if you take categories like women's dresses and intimates, there's been an awful lot of work done in those two categories.

Michael Bender: So if you take categories like in women's dresses, intimates, there's been an awful lot of work done in those two categories in particular to reset and edit some of the choices that we've had and make sure that the depth is available for our customers. So there's still work to be done in that instance, but we feel really good about that work. I would say, secondly, in general, the focus on proprietary brands and making sure that we're bringing those forward and achieving, I'll say, what is the proper mix. And again, we don't have a target, but we have a customer-led mindset about where we need to be with proprietary brands. The curation of that assortment has been a big positive for the business, as Jill noted, in terms of the progress that we're making and the performance that we're seeing from our efforts there.

So if you take categories like in women's dresses, intimates, there's been an awful lot of work done in those two categories in particular to reset and edit some of the choices that we've had and make sure that the depth is available for our customers. So there's still work to be done in that instance, but we feel really good about that work. I would say, secondly, in general, the focus on proprietary brands and making sure that we're bringing those forward and achieving, I'll say, what is the proper mix. And again, we don't have a target, but we have a customer-led mindset about where we need to be with proprietary brands. The curation of that assortment has been a big positive for the business, as Jill noted, in terms of the progress that we're making and the performance that we're seeing from our efforts there.

Speaker #1: In particular, we want to reset and edit some of the choices that we've had and make sure that the depth is available for our customers.

Speaker #1: So there's still work to in be done that . In that instance . But we feel really good about that . That work .

Speaker #1: So there's still work to in be done that . In that instance . But we feel really good about that . That work . I would say .

Speaker #1: Secondly , the in general , the focus on proprietary brands and making sure that we're bringing those forward and achieving , I'll say , what is the proper mix ?

Speaker #1: And again, we don't have a target, but we have a customer lead mindset about where we need to be with proprietary brands.

Speaker #1: The curation of that assortment has been a positive big for the businesses , Jill noted . In terms of the progress that we're making and the performance that we're seeing from from our efforts , there , and it dovetails nicely into being able to support opening price points for customers who are pressured these days .

Michael Bender: And it dovetails nicely into being able to support opening price points for customers who are pressured these days. And so it marries nicely with where the customer mindset is right now. Those are a couple of areas that I would focus on. That's great. And so do you think you have the pieces in place to deliver top-line growth as we look into 2026? And then separately, as a follow-up for Jill, how should we think about the further opportunity for cost savings on the SG&A line and the ability to sustain SG&A dollars down year over year over the next several quarters? Thank you. Yeah. So, Mark, I would say on your question about our trajectory toward growth, clearly, that's what we talk about on a daily basis here internally.

And it dovetails nicely into being able to support opening price points for customers who are pressured these days. And so it marries nicely with where the customer mindset is right now. Those are a couple of areas that I would focus on.

Speaker #1: And so it matches nicely with where the customer mindset is right now . Those are a couple of areas that I would that I would focus on .

Speaker #7: That's great . And so do you think you have the pieces in place to deliver top line growth ? As we look into 2026 and then separately as a follow up for for Jill , how should we think about the further opportunity for cost savings on the SG&A line and the ability to sustain SG&A dollars down year over year over the next several quarters ?

Mark Altschwager: That's great. And so do you think you have the pieces in place to deliver top-line growth as we look into 2026? And then separately, as a follow-up for Jill, how should we think about the further opportunity for cost savings on the SG&A line and the ability to sustain SG&A dollars down year over year over the next several quarters? Thank you.

Speaker #7: Thank you . Yeah .

Speaker #1: I would say I on your question about our trajectory toward growth. Clearly, that's what we talk about on a daily basis here.

Michael Bender: Yeah. So, Mark, I would say on your question about our trajectory toward growth, clearly, that's what we talk about on a daily basis here internally. I think the performance that we've shown consecutively now over the last three quarters of the progression toward growth is an indicator light that the kinds of things that we're focused on delivering on behalf of the customers is what we should be working on. I don't like to put a timetable on it and say on April 21st, that's when you'll see growth. But we've shown in October, I think, is a good example of we have the ability to get to a positive growth trajectory in the business. And that's what we're doing every day in the work that we're advancing here.

Speaker #1: Internally, I think the performance that we've shown consecutively now over the last three quarters of progression toward growth is an indicator like that.

Michael Bender: I think the performance that we've shown consecutively now over the last three quarters of the progression toward growth is an indicator light that the kinds of things that we're focused on delivering on behalf of the customers is what we should be working on. I don't like to put a timetable on it and say on April 21st, that's when you'll see growth. But we've shown in October, I think, is a good example of we have the ability to get to a positive growth trajectory in the business. And that's what we're doing every day in the work that we're advancing here. And then from a cost perspective, I think we have a history, I think, of managing our business with good cost discipline. Obviously, our costs being down 2% in the quarter on the down one seven comp.

Speaker #1: The things that kinds of we're focused on delivering on behalf of the customers is what we should be working on . I don't like to put a timetable on it and say , you know , on April 21st , that's when that's when you'll see growth .

Speaker #1: But, you know, we've shown in October, I think, is a good example of we have the ability to get to a positive growth trajectory in the business.

Speaker #1: And that's that's what we're doing every day . In the work that we're that we're advancing here .

Speaker #2: then from a cost perspective , I think , you know , we have a history . I think , of managing our business with good cost discipline .

Speaker #2: Obviously , our costs being down 2% in the quarter on the down one . Seven comp . So we continue to find ways to be much more efficient .

Jill Timm: And then from a cost perspective, I think we have a history, I think, of managing our business with good cost discipline. Obviously, our costs being down 2% in the quarter on the down one seven comp. So we continue to find ways to be much more efficient. I think this is just instilled in our organization. It is something that we are constantly looking for is how can we do things more efficiently, more productively? How can we leverage technology in what we're doing day in and day out? We've introduced a lot of new technology, whether it be within our new e-fulfillment centers, within our stores to help us have those efficiencies. So I feel like the model and the discipline that has been established within the organization will help us continue to sustain that cost discipline. And I think the variable model we run runs really well. So if we get to positive growth, we should be adding those expenses in to support that as well. So I think that's the model.

Speaker #2: I think this is just instilled in our organization. It is something that we are constantly looking for: how can we do things more efficiently, more productively?

Michael Bender: So we continue to find ways to be much more efficient. I think this is just instilled in our organization. It is something that we are constantly looking for is how can we do things more efficiently, more productively? How can we leverage technology in what we're doing day in and day out? We've introduced a lot of new technology, whether it be within our new e-fulfillment centers, within our stores to help us have those efficiencies. So I feel like the model and the discipline that has been established within the organization will help us continue to sustain that cost discipline. And I think the variable model we run runs really well. So if we get to positive growth, we should be adding those expenses in to support that as well. So I think that's the model.

Speaker #2: How can we leverage technology in what we're doing day in and day out? We've introduced a lot of new technology, whether it be within our new fulfillment centers or within our stores, to help us have those efficiencies.

Speaker #2: So I feel like the model and the discipline that has been established within the organization will help us continue to sustain cost discipline.

Speaker #2: And I think the variable model we run performs really well. So, if we get to positive growth, we should be adding those expenses in to support that as well.

Speaker #2: So I think that's the model . As you know , we think we can typically that 1% comp . than that this year as we've really known we needed to tighten so we could open up funds to help us continue to drive into the initiatives that we've outlined to really help drive the progressive improvement you see on the top line .

Michael Bender: As you know, we think we can leverage typically around that 1% comp. We've done better than that this year as we've really known we needed to tighten so we could open up funds to help us continue to drive into the initiatives that we've outlined to really help drive the progressive improvement you see on the top line. And Mark, I would just say, in answering your earlier question a little bit further too around what's going to help us get to a positive growth trajectory, we spend a lot of time inside the business since I've been on board focusing on product and making sure that that's at the center of how we actually drive the business. We do well with promotions. We have that down.

As you know, we think we can leverage typically around that 1% comp. We've done better than that this year as we've really known we needed to tighten so we could open up funds to help us continue to drive into the initiatives that we've outlined to really help drive the progressive improvement you see on the top line.

Speaker #1: And , Mark , I would just say in answering your your earlier question a little bit further to around what's going to help us get to a positive growth trajectory .

Michael Bender: And Mark, I would just say, in answering your earlier question a little bit further too around what's going to help us get to a positive growth trajectory, we spend a lot of time inside the business since I've been on board focusing on product and making sure that that's at the center of how we actually drive the business. We do well with promotions. We have that down.

Speaker #1: We spend a lot of time inside the business. Since I've been focused on board product and making sure that that's at the center of how we actually drive the business.

Speaker #1: We do well with promotions. We have that down, but to the extent that there is a focus on product and making sure that we are both relevant, the styles are right and it speaks to the customer in a compelling way.

Michael Bender: But to the extent that there's a focus on product and making sure that we are both relevant, styles are right, and it speaks to the customer in a compelling way, that's where we've been spending a lot of time making sure that we're focusing our efforts in that regard. And that is one of the things, one of the big things that's helping us show some of the results that we're speaking about today. Thank you. Happy Thanksgiving and best of luck over holiday. Thank you, Mark. Thanks. Our next question comes from Bob Durbell from BTIG. Please go ahead. Your line is open. Hi. Good morning. Michael, congratulations. Jill, question for you.

But to the extent that there's a focus on product and making sure that we are both relevant, styles are right, and it speaks to the customer in a compelling way, that's where we've been spending a lot of time making sure that we're focusing our efforts in that regard. And that is one of the things, one of the big things that's helping us show some of the results that we're speaking about today.

Speaker #1: That's where we've been spending a lot of time making sure that we're we're focusing our that efforts in regard , and that's that is one of the things , one of the big things that's helping us show some of the results that that we're speaking about today .

Speaker #7: Thank you. Happy Thanksgiving and best of luck over the holiday.

Speaker #1: Same to you. Thanks.

Mark Altschwager: Thank you. Happy Thanksgiving and best of luck over holiday.

Speaker #3: Our next question comes from Bob Doble from BTIG. Please go ahead. Your line is open.

Michael Bender: Thank you, Mark. Thanks.

Operator: Our next question comes from Bob Drbul from BTIG. Please go ahead. Your line is open.

Speaker #3: .

Speaker #8: morning Good Hi . . Congratulations Michael on the Jill question for you on the margin side . You know , when you think about sort of the fourth quarter , and I think just when you look generally at some of the adjustments and changes that you're making to the promotional cadence and exclusions , can you just talk us through like the bigger drivers of your outlook , you know , and , you think and how about the opportunities with private brands , etc.

Michael Bender: On the gross margin side, when you think about sort of the fourth quarter, and I think just when you generally look at some of the adjustments and changes that you're making to the promotional cadence and exclusions, can you just talk us through the bigger drivers of your outlook and how you think about the opportunities with private brands, etc., contributed? Thanks. Sure. I think obviously, first, if I start with where we were in Q3, up 50 basis points, we really benefited, one, from the inventory management I spoke to. By flowing goods more current and trend right, we're able to have a better reg selling price. That will continue as we move into Q4. Also, we benefited from mix in a couple of different ways.

Bob Drbul: On the gross margin side, when you think about sort of the fourth quarter, and I think just when you generally look at some of the adjustments and changes that you're making to the promotional cadence and exclusions, can you just talk us through the bigger drivers of your outlook and how you think about the opportunities with private brands, etc., contributed? Thanks.

Speaker #8: . Contributed . Thanks .

Speaker #2: think , you Sure . know , if I start with where obviously , first , Q3 , 50 basis up points , we really we were in benefited one from the inventory management .

Jill Timm: Sure. I think obviously, first, if I start with where we were in Q3, up 50 basis points, we really benefited, one, from the inventory management I spoke to. By flowing goods more current and trend right, we're able to have a better reg selling price. That will continue as we move into Q4. Also, we benefited from mix in a couple of different ways.

Speaker #2: I spoke to by slowing goods more current and trend. Right. We're able to have a better reg selling price that will continue to move as we enter Q4.

Speaker #2: Also, we benefited from mix in a couple of different ways. One, a proprietary brand portfolio, was positively running a comp in that side of the business.

Speaker #2: Obviously, this has an outsized impact on our margins, to the good side. Second, if you consider categories from a home perspective, we know that electrics would underperform.

Michael Bender: One, our proprietary brand portfolio running a positive comp in that side of the business obviously has an outsized impact to our margins to the good side. Second, if you underlook the categories from a home perspective, we knew electrics would underperform. We knew that there was going to be some pressure there and brought that down based on our last history analysis of where prices were moving. We overperformed in our soft home, which has a better margin structure for us. Overall, we start seeing mix really benefiting us. I think those things will continue to persist as we get into Q4. A couple of the headwinds, which is why we guided that margin a little softer than you saw in Q3, one is digital becomes a bigger portion of our business in Q4. We will have added pressure from a cost of shipping perspective.

One, our proprietary brand portfolio running a positive comp in that side of the business obviously has an outsized impact to our margins to the good side. Second, if you underlook the categories from a home perspective, we knew electrics would underperform. We knew that there was going to be some pressure there and brought that down based on our last history analysis of where prices were moving. We overperformed in our soft home, which has a better margin structure for us. Overall, we start seeing mix really benefiting us. I think those things will continue to persist as we get into Q4. A couple of the headwinds, which is why we guided that margin a little softer than you saw in Q3, one is digital becomes a bigger portion of our business in Q4. We will have added pressure from a cost of shipping perspective.

Speaker #2: We there was knew that going to be some pressure there and bought that down . Based on our last where analysis of prices were moving , but we over performed in our soft home , which has a better margin structure for us .

Speaker #2: So overall, we start to really see benefits for us. I think those things will continue to persist as we get into Q4.

Speaker #2: A couple of the headwinds , which is why we guided that margin a little softer than you saw in Q3 . One is digital becomes a bigger portion of our business in we will Q4 .

Speaker #2: We have added pressure from a cost of shipping perspective, and we also expect it to be a highly promotional time. We know that we have a low and middle-income customer who is going to be more prominent, and they are really seeking choice and value.

Michael Bender: And then we also expect it is a highly promotional time. We know that we have a low and middle-income customer that are going to be more choiceful, and they're really seeking value. So we wanted to be set up so we could have that ability to really lean into value and our promotions during that time of year to ensure that we are meeting the customer where they needed to be met and also grabbing those sales from that customer, particularly that core credit customer who loves the deal. Great. And thanks, Jill. And I just had a question on the, I guess, on the debt and with the progress you made on the revolver.

And then we also expect it is a highly promotional time. We know that we have a low and middle-income customer that are going to be more choiceful, and they're really seeking value. So we wanted to be set up so we could have that ability to really lean into value and our promotions during that time of year to ensure that we are meeting the customer where they needed to be met and also grabbing those sales from that customer, particularly that core credit customer who loves the deal.

Speaker #2: So, we wanted to be set up so we could have that ability to really lean into value. And our promotions during that year were designed to ensure that we are meeting the customer where they needed to be met, and also grabbing those sales from that customer, particularly that core credit customer who loves the deal.

Speaker #8: Great . And thanks , Joe . And I just had a question on the I guess on the debt . And , you know , with the progress you made revolver , can you just on the talk us of through sort rebuilding the cash balances , like how you think about your debt , debt position at this point and any sort of targets as think about heading into 26 ?

Bob Drbul: Great. And thanks, Jill. And I just had a question on the, I guess, on the debt and with the progress you made on the revolver. Can you just talk us through sort of rebuilding the cash balances, like how you think about your debt position at this point and any sort of targets as you think about heading into '26?

Michael Bender: Can you just talk us through sort of rebuilding the cash balances, like how you think about your debt position at this point and any sort of targets as you think about heading into '26? Yeah. I mean, first, if I look at just the debt outstanding, I think we're about $1.5 billion of debt outstanding. So I actually look at our net debt leverage at about a 1, 2. Obviously, our leases, which as you know, we had to reset a lot of our leases when we put in the Sephora shops in all of our stores. So when you add in the leases, that's what really brings our leverage ratio up. And if I break that into two pieces, we're really signed in for our first term of an extended lease payment, which averages about four years.

Speaker #8: Thanks .

Speaker #2: Yeah . First , if I look at just the debt outstanding , think we're I about outstanding . So I $1.5 billion of debt actually look at our net debt leverage at about a one .

Jill Timm: Yeah. I mean, first, if I look at just the debt outstanding, I think we're about $1.5 billion of debt outstanding. So I actually look at our net debt leverage at about a 1, 2. Obviously, our leases, which as you know, we had to reset a lot of our leases when we put in the Sephora shops in all of our stores. So when you add in the leases, that's what really brings our leverage ratio up. And if I break that into two pieces, we're really signed in for our first term of an extended lease payment, which averages about four years.

Speaker #2: Two . Obviously our which leases , as you know , we had to lot of our reset a leases when we put in the Sephora shops in all of our stores .

Speaker #2: So when you add in the leases , that's what really brings our leverage ratio up . And if I break that into two pieces , we're really signed in for our first term of an extended lease payment , which averages about four years .

Speaker #2: So if you add that back in , it brings our lease leverage about ratio to 2.6 times . But then when you add in the extended term , which is what we're using on our balance sheet , because that's what we're depreciating our asset over , is what brings you to times the four and a half leverage .

Michael Bender: So if you add that back in, it brings our lease leverage ratio to about 2.6 times. But then when you add in the extended term, which is what we're using on our balance sheet because that's what we're depreciating our asset over, is what brings you to the four and a half times leverage. So I actually feel very good with a billion and a half outstanding. We just refied our long-term debt. We have nothing coming. We don't have a stack coming due for five years. And as you saw, we deleveraged our balance sheet by about 700 million from last year. We'll be completely out of the revolver by the end of this year, which gives us additional liquidity of a billion and a half as well. So I feel very well positioned from a balance sheet perspective.

So if you add that back in, it brings our lease leverage ratio to about 2.6 times. But then when you add in the extended term, which is what we're using on our balance sheet because that's what we're depreciating our asset over, is what brings you to the four and a half times leverage. So I actually feel very good with a billion and a half outstanding. We just refied our long-term debt. We have nothing coming. We don't have a stack coming due for five years. And as you saw, we deleveraged our balance sheet by about 700 million from last year. We'll be completely out of the revolver by the end of this year, which gives us additional liquidity of a billion and a half as well. So I feel very well positioned from a balance sheet perspective.

Speaker #2: So I actually feel very good with a billion and a half outstanding . We just refied our long term debt . We have nothing coming .

Speaker #2: We don't have a stack coming due for five years. As you saw, we deleveraged our balance sheet by about $700 million from last year.

Speaker #2: We'll be completely out of the revolver by the end of this year , which gives us additional liquidity of a billion and a half as well .

Speaker #2: So I feel very well positioned from a balance sheet And that as we talked about generating a billion , three of operating cash flow , really benefiting from inventory that management , which we think will be a continued benefit for us into 2026 as well .

Michael Bender: And then as we talked about generating a billion three of operating cash flow, really benefiting from that inventory management, which we think will be a continued benefit for us into 2026 as well. Great. Thank you. Happy holidays. Thanks to you as well. Our next question comes from Oliver Chen from TD Cowan. Please go ahead. Your line is open. Hi, Michael and Jill. On the progress you made, how might you rank order some of the progress in terms of the opportunities on that positive comp opportunity with categories and/or strategies? Also, Jill, was credit card income in line with what you expected and anything we should know in terms of making sure we model that correctly going forward? And then on the topics of speed and the organization, what's ahead for driving that?

And then as we talked about generating a billion three of operating cash flow, really benefiting from that inventory management, which we think will be a continued benefit for us into 2026 as well.

Speaker #8: Great. Thank you. Happy.

Speaker #2: Thank you. You too. Thanks.

Speaker #3: Our question comes next from Oliver Chen from TD Cowen. Please go ahead. Your line is open.

Bob Drbul: Great. Thank you. Happy holidays.

Jill Timm: Thanks to you as well.

Operator: Our next question comes from Oliver Chen from TD Cowen. Please go ahead. Your line is open.

Speaker #9: Michael and Hi , Jill . On the progress you made . How might you rank order some of the progress in terms of the opportunities on that positive cop opportunity with categories and or strategies ?

Oliver Chen: Hi, Michael and Jill. On the progress you made, how might you rank order some of the progress in terms of the opportunities on that positive comp opportunity with categories and/or strategies? Also, Jill, was credit card income in line with what you expected and anything we should know in terms of making sure we model that correctly going forward? And then on the topics of speed and the organization, what's ahead for driving that?

Speaker #9: Also, credit card income and line with what you expected, and anything we should know in terms of making sure we model that correctly.

Speaker #9: Going forward . And then on the topics of and speed what's organization , ahead for driving that ? I know it's critical for merchandising , and there's lots of AI opportunities , and the demand volatility has been unprecedented .

Michael Bender: I know it's critical for merchandising and there's lots of AI opportunities and the demand volatility has been unprecedented. And KOHLS Cash is also iconic, and I know that program has been an opportunity to simplify, but any updates there as well? Thank you. Great. So that's four questions in there. We'll try to address those, Oliver. The first one, in terms of rank order of the growth and initiatives work, I would say that, again, the focus that we've had on getting the assortment right, I rank is probably at the top of the list. Inclusive in that, as I had mentioned around proprietary brands and getting the mix between national and proprietary brands in a better place. I feel like we've made some really good progress on that front. Reassorting ourselves in terms of the style and relevancy of the product and the focus that we have there.

I know it's critical for merchandising and there's lots of AI opportunities and the demand volatility has been unprecedented. And Kohl's Cash is also iconic, and I know that program has been an opportunity to simplify, but any updates there as well? Thank you.

Speaker #9: Cash Kohl's is also iconic, and I know that program has been an opportunity to simplify. But any updates there as well?

Speaker #9: Thank you .

Speaker #1: Great . So that's four questions in there . We'll try to address those Oliver . The first one in terms of rank order of the of the the growth in the initiatives work I would say that again the focus that we've had on getting the assortment right , I rank as probably at the at the top of the list , inclusive in that , as I mentioned around proprietary brands and getting the mix between national and proprietary brands in a better place .

Michael Bender: Great. So that's four questions in there. We'll try to address those, Oliver. The first one, in terms of rank order of the growth and initiatives work, I would say that, again, the focus that we've had on getting the assortment right, I rank is probably at the top of the list. Inclusive in that, as I had mentioned around proprietary brands and getting the mix between national and proprietary brands in a better place. I feel like we've made some really good progress on that front. Reassorting ourselves in terms of the style and relevancy of the product and the focus that we have there.

Speaker #1: I feel like we've made some really good progress on that front. Reasserting ourselves in terms of the style and relevancy of the product and the focus that we have there. I've spent a lot of time myself with teams, particularly on the women's side of the business.

Speaker #1: Since I've been on board , because , as you know , women's here at Kohl's drives Kohl's . And so that's the that's been the focus for me in the first call it couple of months or so of really digging in with the merchant organization .

Michael Bender: I've spent a lot of time myself with the teams, particularly on the women's side of the business since I've been on board because, as you know, women's here at KOHLS drives KOHLS. And so that's been the focus for me in the first, call it, couple of months or so of really digging in with the merchant organization. I would say also that what you should see going forward from us and what I'm excited about also, you saw that we hired in the last three months or so a new CTO, Steve D, as well as a new chief digital officer, Arian Parisi, and building out an experience that's truly omnichannel. And to your point, modernizing the business, they have leaned in very quickly, both of them, on helping us think through from a more commercial standpoint what needs to happen in the business from that perspective.

I've spent a lot of time myself with the teams, particularly on the women's side of the business since I've been on board because, as you know, women's here at Kohl's drives Kohl's. And so that's been the focus for me in the first, call it, couple of months or so of really digging in with the merchant organization. I would say also that what you should see going forward from us and what I'm excited about also, you saw that we hired in the last three months or so a new CTO, Steve Dee, as well as a new chief digital officer, Arianne Parisi, and building out an experience that's truly omnichannel. And to your point, modernizing the business, they have leaned in very quickly, both of them, on helping us think through from a more commercial standpoint what needs to happen in the business from that perspective.

Speaker #1: I would say also that what you should see going forward from us and what I'm excited about. Also, you saw that we hired in the last three months or so a new CTO, Steve D., as well as a new Chief Digital Officer, Aaron Parisi, and we are building out an experience that's truly omnichannel.

Speaker #1: And to your point , modernizing the business . They have leaned in very quickly , both of them , on helping us think through from a more commercial standpoint , what needs to happen in the business from that perspective .

Speaker #1: So those are a couple of areas that I would highlight in answering that first question that you have. And, Jill, you want to take credit.

Speaker #10: And sure, from a credit perspective, it did come in where we.

Michael Bender: So those are a couple of areas that I would highlight in answering that first question. Do you have a—Jill, you want to take credit and—Sure. From a credit perspective, it did come in where we expected it to be. Obviously, we had guided it down as we lapped the launch of the co-brand last year. You can see in the implied guide that it will get slightly better in Q4. What I would say is our KOHLS card customer sales did improve that 500 basis points, but as you know, it just takes a little bit of a leg for that AR to build and then revolve. So it's always going to be legged based off performance before it hits into the credit line. The other thing I would call is our payment rates do remain above last year.

So those are a couple of areas that I would highlight in answering that first question. Do you have a—Jill, you want to take credit and—

Speaker #2: Expected it to be. We guided it obviously down as we lapped off the launch co-brand last year. You can see in the implied guide that it will get slightly better in Q4.

Jill Timm: Sure. From a credit perspective, it did come in where we expected it to be. Obviously, we had guided it down as we lapped the launch of the co-brand last year. You can see in the implied guide that it will get slightly better in Q4. What I would say is our Kohl's card customer sales did improve that 500 basis points, but as you know, it just takes a little bit of a leg for that AR to build and then revolve. So it's always going to be legged based off performance before it hits into the credit line. The other thing I would call is our payment rates do remain above last year.

Speaker #2: What I would say is our Kohl's card customer sales did improve by 500 basis points. But, as you know, it just takes a little bit of a lag for that AR to build.

Speaker #2: And then revolve. So it's always going to be lagged based off performance before it hits into the credit line. The other thing I would call is our payment DO rates.

Speaker #2: remain above last year, so that comes back into not building as much from an air perspective, and also a little bit less late fee income.

Speaker #2: And while our loss rates are elevated, we actually did see them down slightly in Q3. So I feel pretty good about the health of the portfolio.

Michael Bender: So that comes back into not building as much from an AR perspective and also a little bit less late fee income. And then although our loss rates are elevated, we actually did see them down slightly in Q3. So I feel pretty good with the health of the portfolio. It's really just continuing to get that credit card customer coming in, shopping, and letting their balances revolve to bring that back in. So we are expecting a little bit of the benefit into Q4, and then you should see more of that benefit as we enter into 2026, just given the leg of how that credit line runs. I think from a KOHLS Cash perspective, I mean, you nailed it. It is iconic. We did actually celebrate our KOHLS Cash anniversary and put a whole event around it during this quarter, which was great.

So that comes back into not building as much from an AR perspective and also a little bit less late fee income. And then although our loss rates are elevated, we actually did see them down slightly in Q3. So I feel pretty good with the health of the portfolio. It's really just continuing to get that credit card customer coming in, shopping, and letting their balances revolve to bring that back in. So we are expecting a little bit of the benefit into Q4, and then you should see more of that benefit as we enter into 2026, just given the leg of how that credit line runs. I think from a Kohl's Cash perspective, I mean, you nailed it. It is iconic. We did actually celebrate our Kohl's Cash anniversary and put a whole event around it during this quarter, which was great.

Speaker #2: It's really just continuing to get that credit card customer coming in, shopping, and letting their balances revolve to bring that back in.

Speaker #2: So we are expecting a little bit of the benefit into Q4, and then you should see more of that benefit as we enter into 2026.

Speaker #2: Just given the leg of how that credit line runs, I think from a cold cash perspective, I mean, you nailed it.

Speaker #2: It is iconic. We actually celebrated our Kohl's Cash anniversary and put a whole event around it during this quarter, which was great.

Speaker #2: I think, hopefully, you saw that all out on our social media because it was well attended by many, as we were giving out some Kohl's Cash gifts, and people really love what that looks like.

Michael Bender: I think hopefully you saw that all out on our social media because it was well attended by many as we were giving out some KOHLS Cash gifts, and people really love what that looks like. As we move into the holidays, we'll continue to leverage this as well. We have events planned around it. It's a way for us to get around. Obviously, it could be used in everything. So there is no exclusions. You earn it. You can come back and redeem it. People love to earn it on gifts that they're giving and use it on a self-gift during the holiday period. So I think this is definitely something that has set KOHLS apart and really resonates with both our KOHLS charged and non-KOHLS charged customer. And so our marketing team has done a really great job of exploiting that. Okay. Thanks. I had a follow-up.

I think hopefully you saw that all out on our social media because it was well attended by many as we were giving out some Kohl's Cash gifts, and people really love what that looks like. As we move into the holidays, we'll continue to leverage this as well. We have events planned around it. It's a way for us to get around. Obviously, it could be used in everything. So there is no exclusions. You earn it. You can come back and redeem it. People love to earn it on gifts that they're giving and use it on a self-gift during the holiday period. So I think this is definitely something that has set Kohl's apart and really resonates with both our Kohl's charged and non-Kohl's charged customer. And so our marketing team has done a really great job of exploiting that.

Speaker #2: As we move into the holidays, we'll continue to leverage this as well. We have events planned around it. It's a way for us to get around.

Speaker #2: Obviously , it can be used in everything , is no so there exclusions . You earn it , you can come back and redeem it .

Speaker #2: People love to earn it . On gifts that they're giving and use it on a self gift . During the holiday period . So I think this is definitely something that has set Kohl's apart and really resonates with both our Kohl's charge and non Kohl's charge customer .

Speaker #2: And so our marketing team has done a really great job of exploiting that, okay.

Speaker #9: Thanks . I had a follow up Michael you the company's been on this journey with merchandising in the past . And differentiation has been important in making sure the brands don't all seem the same or trend .

Oliver Chen: Okay. Thanks. I had a follow-up. Michael, the company has been on this journey with merchandising in the past, and differentiation has been important, making sure that the brands do not all seem the same or trend right. I guess what is different this time, or what are your plans in terms of what is going to be distinguished? That should be a really easy compare. What should we know about the compare versus momentum? It is a compare nonetheless. Sephora being negative, was that—I know that business is remarkable, but was it a surprise that it was negative? Beauty has been overall pretty vibrant. Thank you.

Michael Bender: Michael, the company has been on this journey with merchandising in the past, and differentiation has been important, making sure that the brands do not all seem the same or trend right. I guess what is different this time, or what are your plans in terms of what is going to be distinguished? That should be a really easy compare. What should we know about the compare versus momentum? It is a compare nonetheless. Sephora being negative, was that—I know that business is remarkable, but was it a surprise that it was negative? Beauty has been overall pretty vibrant. Thank you. Yeah. I will take the Sephora question. Jill, please chime in too if there is more to say about it. The Sephora business is something that we are really excited about. As I have mentioned in the past, it is approaching a $2 billion business for us over a four-year time period.

Speaker #9: Right. I guess what's different this time, or what are your plans in terms of what's going to be distinguished? And that should be a really easy compare.

Speaker #9: What should we know about the compare versus momentum ? But it's a compare nonetheless . So being negative was that I know that business is remarkable , but was it a it was negative ?

Speaker #9: Surprise that Beauty's been overall pretty vibrant. Thank you.

Speaker #1: this

Speaker #1: before I'll take question . Jill , please . Yeah , chime in too . If there's more to say about it . But the Sephora business is something that we're excited about really .

Michael Bender: Yeah. I will take the Sephora question. Jill, please chime in too if there is more to say about it. The Sephora business is something that we are really excited about. As I have mentioned in the past, it is approaching a $2 billion business for us over a four-year time period. And we feel good about the progress that we're making there. We've mentioned in the past that with this being now a four-year-old business, you see similar to how a store matures, that business looking that way in some cases. But Sephora also, as we've mentioned, has an incredible pipeline of opportunity to bring newness and innovation. We mentioned MAC coming in the spring of next year. Those are the kinds of things that will continue to fuel the growth of that business. And we feel very good about where Sephora sits. I have no concerns at all about that at all.

Speaker #1: As I've mentioned in the past , it's approaching a $2 billion business for us over a four year time period . And we feel good about the progress that we're making there .

Speaker #1: We've mentioned past that with this being now a four year old business , you know , you see , similar to how a store matures , that that business looking that way in some cases .

Michael Bender: And we feel good about the progress that we're making there. We've mentioned in the past that with this being now a four-year-old business, you see similar to how a store matures, that business looking that way in some cases. But Sephora also, as we've mentioned, has an incredible pipeline of opportunity to bring newness and innovation. We mentioned MAC coming in the spring of next year. Those are the kinds of things that will continue to fuel the growth of that business. And we feel very good about where Sephora sits. I have no concerns at all about that at all. And I think in terms of where you're talking about updates from a branding perspective, I think the big thing—and Michael's called this out a couple of times—is we're really listening to the customer.

Speaker #1: But Sephora also, as we've mentioned, has an incredible pipeline of opportunity to bring newness and innovation. We mentioned Matt coming in the spring of next year.

Speaker #1: the kinds Those are of things that will continue to fuel the growth , fuel the growth of that business . And we feel very good about where Sephora sits , have no no concerns at all that .

Speaker #1: about all .

Speaker #2: And I think , you

Speaker #2: you're talking about updates from a branding perspective , big thing in At I think the Michael's void of we are called listening to this out a an opening customer .

Speaker #2: You're talking about updates from a branding perspective. A big thing in our thinking is the Michael's void of we are called listening to this out as an opening customer. Proprietary times is brands, couple of price points.

Jill Timm: And I think in terms of where you're talking about updates from a branding perspective, I think the big thing—and Michael's called this out a couple of times—is we're really listening to the customer.

Speaker #2: Oliver , in our store and our customer came to look for value . They came to look for brands that they had known at Kohl's , and they couldn't find that on the floor .

Michael Bender: So moving back into proprietary brands, we're void of an opening price point, Oliver, in our store. And our customer came to look for value. They came to look for the brands that they had known at KOHLS, and they couldn't find that on the floor. So we're making that investment back into our proprietary brands, but we're doing it in a really thoughtful manner. We're not overcorrecting. Our inventory last year in Q3 in proprietary brands was down about 30%. This year, we're up about 11%. So still on a two-year stack basis, we're down, but we're making those moves and making the right investments. And we're doing that in a better timely manner than what we had seen in the past. We are also editing out some of the redundancy we're seeing on the floor so that these brands can stand out more.

So moving back into proprietary brands, we're void of an opening price point, Oliver, in our store. And our customer came to look for value. They came to look for the brands that they had known at Kohl's, and they couldn't find that on the floor. So we're making that investment back into our proprietary brands, but we're doing it in a really thoughtful manner. We're not overcorrecting. Our inventory last year in Q3 in proprietary brands was down about 30%. This year, we're up about 11%. So still on a two-year stack basis, we're down, but we're making those moves and making the right investments. And we're doing that in a better timely manner than what we had seen in the past. We are also editing out some of the redundancy we're seeing on the floor so that these brands can stand out more.

Speaker #2: So we're making that investment back We're not brands , but we're really it in a into our thoughtful doing overcorrecting , you know , our inventory last year in Q3 and proprietary brands was down about 30% this year .

Speaker #2: We're up about So still on a two year 11% . but we're down , making those moves and making basis , we're the right investments , and we're doing that in a timely manner than what we have better , the seen in past .

Speaker #2: We are also editing out some of the redundancy we're seeing on the so that floor , these brands can stand out more . You know , we've made reductions so that we can have from a dress perspective , we can have a really great dress assortment , but we're going to do on half the racks that you've seen past , because in the that's really what the customer was shopping .

Michael Bender: We've made reductions so that we can have, from a dress perspective, we can have a really great dress assortment, but we're going to do it on half the racks that you've seen in the past because that's really what the customer was shopping, and we saw our most productivity out of it. We're starting to make some of those adjacency analysis and making those moves within our store. We've talked a lot about accessories and juniors. We know there's more to come from that as well. So how can we take advantage of what we know the customer is putting in their basket and what could be that next item that they're looking to purchase for as well? I think the big thing is trip assurance that we've talked about, and that's probably in the more early innings of things.

We've made reductions so that we can have, from a dress perspective, we can have a really great dress assortment, but we're going to do it on half the racks that you've seen in the past because that's really what the customer was shopping, and we saw our most productivity out of it. We're starting to make some of those adjacency analysis and making those moves within our store. We've talked a lot about accessories and juniors. We know there's more to come from that as well. So how can we take advantage of what we know the customer is putting in their basket and what could be that next item that they're looking to purchase for as well? I think the big thing is trip assurance that we've talked about, and that's probably in the more early innings of things.

Speaker #2: And we saw our most productivity out of it. You know, we're starting to make some of those adjacency analyses and making those moves within our store.

Speaker #2: We've talked a lot about accessories and juniors. We know there's more to come from that as well. So how can we take advantage of what we know the customer is putting in their basket, and what could be that next item looking to purchase as well?

Speaker #2: I think the big thing is reassurance that we've about , and talked that's probably in the more early innings things . We of are starting to see , particularly as we move into Q4 , that you're going to see our receipts are going to be more about adding depth on the floor and less choice count , and really being able to drive back that assurance .

Michael Bender: We are starting to see, particularly as we move into Q4, that you're going to see our receipts are going to be more about adding depth on the floor and less choice count and really being able to drive back that trip assurance our customer had come to know us for that we really disappointed her with. So I feel like the progress we've made is we got back into the coupon that's really resonated with our KOHLS card customer. We moved into the proprietary brands and jewelry and petites, all of which have outperformed and our customers voted yes on. And now we're going to start making some of those changes with our floor pad as well as investing more into depth, especially as we move into 2026. You're also going to see, as we move into '26, a better way of transitioning our goods.

We are starting to see, particularly as we move into Q4, that you're going to see our receipts are going to be more about adding depth on the floor and less choice count and really being able to drive back that trip assurance our customer had come to know us for that we really disappointed her with. So I feel like the progress we've made is we got back into the coupon that's really resonated with our Kohl's card customer. We moved into the proprietary brands and jewelry and petites, all of which have outperformed and our customers voted yes on. And now we're going to start making some of those changes with our floor pad as well as investing more into depth, especially as we move into 2026. You're also going to see, as we move into '26, a better way of transitioning our goods.

Speaker #2: Our customer had come to know us for that. We really disappointed her with. So I feel like the progress we've made is back. We got into the coupon that's really resonated with our Kohl's Card.

Speaker #2: Customer: We moved into the proprietary brands and jewelry and petites, all of which have outperformed, and our customers voted yes on.

Speaker #2: And now we're going to start making some of those changes with our floor pad, as well as investing more into depth, especially as we move into 2026.

Speaker #2: You're also going to see, as we move into 2026, a better way of transitioning our goods. So we're going to see a much more transitional time in January and into February.

Speaker #2: Given the strong inventory management you had, it's allowing us to have those moments and flow goods more. We can take advantage of that first mover opportunity that we probably missed out on in the last couple of years.

Michael Bender: So we're going to see a much more transitional time in January and into February. Given the strong inventory management we had, it's allowing us to have those moments and flow goods more timely so we can take advantage of that first mover opportunity that we probably missed out on the last couple of years. Okay. Thanks. Happy holidays. To you as well. Thank you, Oliver. Our next question comes from Dana Tulsey from Tulsey Group. Please go ahead. Your line is open. Hi. Good morning, everyone. Congratulations, Michael, and nice to see the progress. Obviously, a lot of talk about a lot of talk about proprietary brands and the progress and enhancements being made there. Certainly seems like women's is the core. Any other brands you would call out or categories that you would call out on proprietary to watch for that can be meaningful?

So we're going to see a much more transitional time in January and into February. Given the strong inventory management we had, it's allowing us to have those moments and flow goods more timely so we can take advantage of that first mover opportunity that we probably missed out on the last couple of years.

Speaker #9: Okay, thanks. Happy holidays.

Speaker #2: To you as well .

Speaker #1: Oliver .

Speaker #3: Our next question comes from Dana Telsey from Telsey Group. Go ahead. Please, your line is open.

Oliver Chen: Okay. Thanks. Happy holidays.

Jill Timm: To you as well.

Michael Bender: Thank you, Oliver.

Speaker #11: Hi . Good morning everyone . Congratulations , Michael , and nice to see the progress . Obviously a lot of talk about a lot of talk about proprietary brands and the progress and enhancements being made there .

Operator: Our next question comes from Dana Telsey from Telsey Group. Please go ahead. Your line is open.

Dana Telsey: Hi. Good morning, everyone. Congratulations, Michael, and nice to see the progress. Obviously, a lot of talk about a lot of talk about proprietary brands and the progress and enhancements being made there. Certainly seems like women's is the core. Any other brands you would call out or categories that you would call out on proprietary to watch for that can be meaningful? And what does it mean at all if anything changes on the tariff side? Jill, what does that mean to margins? How are you thinking about it? And then just brand inclusion and coupons. Are you done with that? Where are you on the coupon cycle with brands? Thank you.

Speaker #11: Certainly, it seems women's large is the core. Are there any other brands you would call out or categories that you would point to? Also, what proprietary items should we watch for?

Speaker #11: Can that be meaningful, and what does it mean at all? If anything changes, tariff on the side? Jill, what does margins?

Speaker #11: that mean to How are you about thinking it ? And then just brand inclusion and coupons . Are you done with that ? Where are you on the coupon cycle with brands .

Michael Bender: And what does it mean at all if anything changes on the tariff side? Jill, what does that mean to margins? How are you thinking about it? And then just brand inclusion and coupons. Are you done with that? Where are you on the coupon cycle with brands? Thank you. I'll start with that first question, Dana. In terms of the bucket of coupon inclusions, I think for now we're where we want to be. We've done two tranches, a big one back in April and the latest one in August. And we feel good about the progress that we're making there and what we're seeing from customers, particularly as it relates to the KOHLS credit card customer mouthful. And that's one of the things that we're excited about in terms of what we're seeing there.

Speaker #11: Thank you .

Speaker #1: I'll start with that . That first question , Dana , in terms of the the bucket of coupon inclusions , I think for now , we're where we want to be .

Michael Bender: I'll start with that first question, Dana. In terms of the bucket of coupon inclusions, I think for now we're where we want to be. We've done two tranches, a big one back in April and the latest one in August. And we feel good about the progress that we're making there and what we're seeing from customers, particularly as it relates to the Kohl's credit card customer mouthful. And that's one of the things that we're excited about in terms of what we're seeing there.

Speaker #1: We've done two tranches , a big one back in April and the latest one in August , and we feel good about the progress that we're making there and what we're seeing from customers , particularly as it relates to the the Kohl's credit card customer mouthful .

Speaker #1: And that's yeah , that's one of the things that that we're excited about in terms of what we're seeing there as far as other brands or categories that we see that , for me , you know , there are several , but one that I'll highlight would be in the active side , both tech and flex are areas that are important for us .

Michael Bender: As far as other brands or categories that we see, for me, there are several, but one that I'll highlight would be in the active side. Both tech and flex are areas that are important for us. We mentioned earlier in the comments about the fact that we feel so good about flex that we've extended into kids and 300 stores. There'll be 300 more in the spring and then a full almost to every store by June of next year is where we're headed with that. So that's an example of the kinds of things that we're focused on in terms of additional focus on proprietary brands and extending it outside of categories that we currently have. And then your question on tariff, Dana, I think obviously this quarter we did well. I think it's had less of an impact.

As far as other brands or categories that we see, for me, there are several, but one that I'll highlight would be in the active side. Both tech and flex are areas that are important for us. We mentioned earlier in the comments about the fact that we feel so good about flex that we've extended into kids and 300 stores. There'll be 300 more in the spring and then a full almost to every store by June of next year is where we're headed with that. So that's an example of the kinds of things that we're focused on in terms of additional focus on proprietary brands and extending it outside of categories that we currently have.

Speaker #1: We mentioned earlier in the comments about the fact that we feel so good about flex , that we've extended into kids in 300 stores .

Speaker #1: There'll be 300 more in the spring , and then a full almost almost to every store by June of next year is where we're where we're headed with with that .

Speaker #1: So those are that's an example of of the kinds of things that we're focused on in terms of additional focus on proprietary brands and extending it outside of categories that that we that we currently have .

Speaker #2: your

Speaker #2: question . And then on tariffs , Dana , I think , you know , obviously this quarter we did well , I think we saw less of an impact .

Speaker #2: So, you know, I really want to give a shout-out to our merchant and sourcing teams. They've done an incredible job navigating a dynamic environment.

Speaker #2: So , you know , really want to give a shout out to our merchant and sourcing teams . They've done an incredible job navigating dynamic this And letting it really end in terms great place of how we showed our margin , up in a we do expect that this will be a little bit more pressure as we go into Q4 and into 2026 .

Jill Timm: And then your question on tariff, Dana, I think obviously this quarter we did well. I think it's had less of an impact. So I really want to give a shout-out to our merchant and sourcing teams. They've done an incredible job navigating this dynamic environment and letting it really end up in a great place in terms of how we showed our margins. We do expect that this will be a little bit more pressure as we go into Q4 and into 2026 first because we'll have a full year of this exposure. And also, I think just there's more certainty around what these tariffs mean. So we're going to have a little bit more pressure as we do move into '26, but we feel good with our ability and how we've offset them to date. I just think with the certainty, we're going to see a lot more movement there as we go into 2026, both with our proprietary brands and international vendors.

Michael Bender: So I really want to give a shout-out to our merchant and sourcing teams. They've done an incredible job navigating this dynamic environment and letting it really end up in a great place in terms of how we showed our margins. We do expect that this will be a little bit more pressure as we go into Q4 and into 2026 first because we'll have a full year of this exposure. And also, I think just there's more certainty around what these tariffs mean. So we're going to have a little bit more pressure as we do move into '26, but we feel good with our ability and how we've offset them to date. I just think with the certainty, we're going to see a lot more movement there as we go into 2026, both with our proprietary brands and international vendors. Got it.

Speaker #2: First, because we'll have a full exposure to this. And also, I think there’s just more certainty around what these mean.

Speaker #2: Tariffs. So, we're going to have a little bit more pressure as we do move into 2026. But we feel good with our ability and how we've offset them to date.

Speaker #2: I just think with the certainty we're going to see a lot more movement there as we go into 2026, both with our brands and international vendors.

Speaker #11: Got last thing . If it hadn't been mentioned , it . Just one anything on the store portfolio , how you think about openings , closings , relocations , going forward ?

Dana Telsey: Got it. Just one last thing that hadn't been mentioned. Anything on the store portfolio, how you're thinking about openings, closings, relocations going forward? Thank you.

Speaker #11: Thank you .

Michael Bender: Just one last thing that hadn't been mentioned. Anything on the store portfolio, how you're thinking about openings, closings, relocations going forward? Thank you. Yeah. I would just say that that's a normal hygiene practice for us to review our store fleet. The good news is that the vast majority of our stores, well over 90%, are profitable and productive for us. And so as we do at the beginning of every year, we'll take a look at our stores. And if we deem there to be any necessary adjustments, we'll make that. But as we did last year in closing 20 or so stores, we'll take a look. But that process is underway. Thank you. Yep. We are out of time for questions today. This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Speaker #1: Yeah , just say I would that , you know , that's that's a normal hygiene practice for us to review our store fleet .

Michael Bender: Yeah. I would just say that that's a normal hygiene practice for us to review our store fleet. The good news is that the vast majority of our stores, well over 90%, are profitable and productive for us. And so as we do at the beginning of every year, we'll take a look at our stores. And if we deem there to be any necessary adjustments, we'll make that. But as we did last year in closing 20 or so stores, we'll take a look. But that process is underway.

Speaker #1: The good news is that the vast majority of our stores , will over 90% are profitable and productive for us . And so , as we do at the beginning of every year , we'll take a look at our stores .

Speaker #1: And if we deem there to be any necessary we'll make that . But adjustments , , you know , as we did last year , in closing , 20 or so stores , we'll look .

Speaker #1: But we'll take it that that process is underway.

Speaker #11: you Thank .

Speaker #12: Yep .

Speaker #3: We are questions out of time will today . This conclude today's call . for your Thank you participation . conference You may now disconnect .

Dana Telsey: Thank you.

Michael Bender: Yep.

Operator: We are out of time for questions today. This will conclude today's conference call. Thank you for your participation. You may now disconnect.

Q3 2025 Kohl's Corp Earnings Call

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