How KSS (Kohl's) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a retail department store operator like KSS Income Statement Overview makes money is essential for investors and anyone interested in the business of retail. In this post, we break down KSS's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick KSS Overview

KSS Income Statement Overview operates a nationwide chain of department stores, offering apparel, footwear, home goods, and accessories. Revenue comes primarily from in-store and online retail sales to consumers. The company’s business segments focus on general merchandise, with additional context on e-commerce and loyalty programs driving customer engagement.

Revenue Breakdown

• Total Revenue (Q3 2025): $3.55B (−5.0% YoY)
  • Apparel & Accessories: [Data not disclosed, but typically the largest segment]
  • Home Goods: [Data not disclosed]
  • E-commerce: [Data not disclosed, but a growing contributor]
  • Growth is powered by digital sales initiatives and loyalty program expansion, though overall revenue declined YoY due to softer consumer demand and competitive pressures.

Gross Profit and Margins

• Gross Profit: $1.54B (43.3% gross margin)
  • Cost of Revenue: $2.01B (−13.2% YoY)
  • KSS maintains robust margins due to effective inventory management, vendor negotiations, and a scalable retail model.
• Most costs come from merchandise procurement, store operations, and fulfillment logistics.

Operating Income and Expenses

• Operating Income: $279M (+68.1% YoY, 7.9% margin)
• Operating Expenses: $1.20B (−4.1% YoY)
  • R&D: [Not disclosed; typically minimal for retail]
  • SG&A: $1.20B (−4.1% YoY, 33.8% of revenue) — includes store payroll, marketing, IT, and administrative costs.
  • KSS continues to control costs and optimize store operations while investing in digital transformation and customer experience.

Net Income

• Pre-Tax Income: $201M (+151.3% YoY, 5.7% margin)
• Income Tax: $48M (23.9% effective tax rate)
• Net Income: $153M (+131.8% YoY, 4.3% net margin)
• KSS converts a moderate portion of sales into profit due to operational efficiency and disciplined expense management.

What Drives KSS's Money Machine?

• Retail sales: Overwhelmingly the main revenue driver, accounting for nearly all revenue.
• SG&A efficiency: SG&A expenses at 33.8% of revenue, reflecting ongoing cost discipline.
• Digital investments: Strategic investments in e-commerce and loyalty programs to drive future growth.
• E-commerce and omnichannel: Areas of future growth, though not yet profitable at scale.

Visualizing KSS's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant costs, 4.3% of revenue drops to the bottom line.

Key Takeaways

• KSS's money comes overwhelmingly from retail sales in stores and online.
• High gross margins illustrate the power of KSS's scalable retail model and effective cost controls.
• Heavy investment in digital transformation, balanced by efficiency in operating costs.
• Ongoing growth is driven by e-commerce expansion and customer loyalty programs.

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FAQ About KSS's Income Statement

1. What is the main source of KSS's revenue in 2025?

KSS generates over 95% of its revenue from retail sales of apparel, footwear, home goods, and accessories. E-commerce and loyalty programs are additional revenue sources, but remain smaller contributors.

2. How profitable is KSS in Q3 2025?

KSS reported net income of $153M in Q3 2025, with a net margin of approximately 4.3%, reflecting moderate profitability driven by cost controls and operational efficiency.

3. What are the largest expense categories for KSS?

The biggest expenses on KSS's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs, which totaled $1.20B in Q3 2025. SG&A includes store payroll, marketing, and IT investments.

4. Why does e-commerce operate at a loss?

E-commerce, despite generating significant revenue, posted an operating loss in Q3 2025 due to aggressive investments in digital infrastructure, fulfillment, and customer acquisition. KSS believes these will drive long-term growth—even if the division is unprofitable today.

5. How does KSS's effective tax rate compare to previous years?

KSS's effective tax rate in Q3 2025 was 23.9%, consistent with previous years. This moderate rate is primarily due to standard corporate tax provisions and some benefits from share-based compensation and international structuring.