Will Kohl's report positive comparable sales in any quarter of FY2026?

The earnings update materially shifts this market. FY2026 guidance of -2% to flat inherently requires positive quarters if the flat end is achieved — CEO Bender explicitly stated the exit rate must reach positive. Multiple categories are already running positive: juniors +8%, non-Kohl's card customers positive, men's/kids proprietary positive, accessories ex-Sephora positive. The math: if non-Kohl's card customers (majority of sales) are already positive, and Kohl's card customers are improving from down mid-teens to down single digits with CFO Timm expecting parity by H2, the trajectory points toward a positive quarter in Q3 or Q4 FY2026. However, applying the sibling market conservatism discount: we over-predicted directional outcomes before. Q4 FY2025 comps decelerated to -2.8% from Q3's -1.7%, showing improvement is not linear. Q1 guided 'down low single digits.' I assign 40%.

I focus on the base effect math and category momentum. FY2025 quarterly progression: Q1 ~-5%, Q2 -4.4%, Q3 -1.7%, Q4 -2.8%. For FY2026, the easiest comparisons are Q1-Q2 (against -5% and -4.4%). But Q1 is guided 'down low single digits,' suggesting management does not expect the easy comparison to produce a positive quarter. The window is Q2-Q4. Juniors at +8% is a leading indicator — this is the category 'furthest along' in the proprietary brand reinvestment curve, and other categories are following. The Kohl's card customer improvement trajectory (mid-teens decline to single-digit decline, with parity expected by H2) is the key swing factor. If card customers reach parity, total comps are likely positive given non-card customers already positive. I rate this at 42% — meaningful upside from 20% but uncertainty remains because the same management that guided conservatively before may be doing so again, or recovery may stall.

I weight the negative signals more. Q4 comps of -2.8% were a deceleration from Q3's -1.7%, meaning the trajectory is not monotonically improving. Weather explains 70 bps, but even weather-adjusted -2.1% is worse than Q3. Sephora decelerated to +2%/flat, reducing the contribution that previously masked core weakness. Home and footwear continue to underperform. The 'build throughout the year' narrative requires execution on multiple unproven initiatives simultaneously. The sibling market miss teaches conservatism. Against this: the breadth of positive signals (juniors, accessories, non-card customers, men's/kids proprietary) is genuinely new and broader than the Sephora-only story. I assign 38% — a significant upgrade from 20% but reflecting real execution risk.

The FY2026 guidance structure is the strongest signal. Management guided -2% to flat full-year comps, and explicitly stated the flat end requires the exit rate to reach positive. This means management itself believes a positive quarter is achievable — they would not guide flat as the upper end if they considered positive quarters impossible. The question is only whether they reach the top end of guidance. Management has demonstrated a pattern of conservative guidance followed by beats (three consecutive quarters in FY2025). If this pattern continues, the flat end (requiring positive exit) is plausible. Non-Kohl's card customers already running positive provide a floor. The market only requires ONE positive quarter out of four — the bar is lower than sustained positive comps.

I apply a heavier conservatism discount. The sibling market miss (61% YES on comp-sales, actual was NO) demonstrated that our models over-weight management guidance math. The same risk applies here: management guidance of -2% to flat could be optimistic rather than conservative. FY2026 is the first year under new CEO Bender's strategy — guidance may reflect aspiration rather than achievement. Q4 deceleration to -2.8% from -1.7% is a real datapoint showing improvement is fragile. Tariff implementation in April 2026 could disrupt merchandising strategies and consumer spending. Against this: the breadth of positive category signals is hard to dismiss, and 15+ quarters of negative comps create very easy base effects. I lean toward 37%.

I take a more constructive view based on the category-level data. When I disaggregate: juniors +8%, men's proprietary positive, kids proprietary positive, accessories ex-Sephora positive, non-Kohl's card customers positive, petites +26%, impulse queue +40%. The only clearly negative categories are home (seasonal missteps, correctable) and footwear (boots and active, partially cyclical). Kohl's card customer declining but improving rapidly (mid-teens to single digits, expected parity by H2). The weight of category-level evidence suggests underlying recovery is broader than the headline comp suggests. Q4's -2.8% was dragged down by weather (70 bps) and specific category missteps (home, footwear) that management is actively addressing. A positive quarter in Q3 or Q4 FY2026 is plausible. I assign 45%.

FY2026 guided -2% to flat. CEO says positive exit rate needed for flat. Multiple categories already positive. Only need one positive quarter out of four. Kohl's card customer improving toward parity. Base effects favorable from weak FY2025. Main risk: Q4 showed deceleration, Sephora slowing, tariff uncertainty. Assign 40%.

Applying conservatism from sibling market miss. While the positive signals are real, Kohl's has not reported a positive comp quarter in 15+ periods. Breaking that streak requires sustained execution across multiple categories. Q4 deceleration from Q3 suggests recovery is bumpy. Tariffs could disrupt the H2 improvement thesis. But the guidance structure and category-level data provide a plausible path. 38%.

The upgrade from 20% to ~42% is justified by: (1) management explicitly guiding for a scenario that includes positive quarters, (2) non-Kohl's card customers already positive, (3) Kohl's card customer trajectory toward parity by H2, (4) multiple categories showing positive momentum beyond Sephora. The downgrade risks: Sephora deceleration, tariff disruption, home/footwear drag. Net: 42%.