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Good morning. Kohl’s is gaining momentum in its turnaround after a period of CEO turnover, while longtime finance chief Jill Timm has been a mainstay.
The retailer reported on Wednesday Q2 2025 adjusted earnings per share (EPS) of $0.56, beating the $0.30 estimate, driven by cost controls and margin improvements, and sending shares up over 20% despite a 5.1% drop in net sales. Proprietary brands and the Sephora partnership showed positive growth.
Following years of weak sales, the better-than-expected earnings follow a tumultuous period, my Fortune colleague Sydney Lake writes. CEO Ashley Buchanan was fired in May—just over 100 days into the role—after an investigation found he directed the company to do business with a vendor who was his romantic partner, under highly unusual terms favorable to the vendor. Former board chair Michael Bender is now serving as interim CEO while the company searches for a permanent replacement.
When Buchanan joined the company in January as chief executive, he succeeded Tom Kingsbury, who had followed Michelle Gass after she stepped down as CEO in December 2022 to become chief executive at Levi’s.
Working toward a turnaround
Timm has been with Kohl’s since 1999 and became finance chief in 2019, having previously held various finance leadership roles, including VP of financial planning and analysis and EVP of finance.
“As Timm has been around through multiple CEO changes, she provides stability at a company that has lacked it,” David Swartz, senior equity analyst at Morningstar, told me, though he added that a new CEO could insist on making executive changes.
Swartz also said Kohl’s needs a CEO with long-term vision and experience in retail and apparel. “It hasn’t really had this in years,” he said, emphasizing the need for a strategic plan for real estate and greater adaptability to competitive threats. “Obviously, the board and its search firm need to do a much better job than it did with Ashley Buchanan, which was a disaster,” he said.
Kohl’s outperformed Morningstar’s expectations on EPS, margin, and comparable sales, with shares still “very undervalued” versus Morningstar’s estimates of $40 fair value. Modest Q2 gains have not changed Swartz’s long-term forecast for 1% comparable sales growth and 5% operating margins.
Kohl’s turnaround centers on rebuilding proprietary brands, simplifying promotions, improving the omnichannel experience, and regaining its reputation for value and quality.
On the earnings call, Timm stressed Kohl’s continued focus on value: “We’re also navigating a lot of uncertainty in the macro environment, and we know our consumer, particularly the middle- and lower-income customer, remains under pressure, and so we’re going to have to fight for every dollar in the back half.”
Sheryl Estrada
sheryl.estrada@fortune.com
This story was originally featured on Fortune.com
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