Kohl's Corporation (KSS): Business Model Canvas [Dec-2025 Updated]

You're looking at a retailer fighting hard to redefine its place in the market, and frankly, the next few quarters for Kohl's Corporation are going to be telling. After years of trying to find the right mix, their late 2025 strategy hinges on making that massive real estate footprint-over 1,100 stores-work harder, primarily by anchoring traffic with Sephora and keeping a tight lid on costs, targeting SG&A between 3.75% to 4% for FY 2025. It's a delicate balance: driving sales from the loyal Kohl's Card base while spending up to $425 million on store refreshes to capture that new, younger beauty shopper. To see exactly how they plan to pull off this omnichannel pivot-from private brand development to managing credit card revenue that's expected to dip-dive into the full Business Model Canvas we've broken down below.

Kohl's Corporation (KSS) - Canvas Business Model: Key Partnerships

The Key Partnerships for Kohl's Corporation are critical enablers of its omnichannel strategy and its efforts to attract new customer demographics.

Sephora: Anchor tenant in over 900 stores, driving new, younger customer traffic.

The collaboration with Sephora is a cornerstone of the current strategy, aiming for full chain rollout across the entire store base.

Here are the key metrics associated with the Sephora at Kohl's partnership:

• Sales Goal: Projected to surpass $2 billion in annual sales by 2025.
• 2023 Sales: Sales exceeded $1.4 billion in 2023.
• New Customer Acquisition: Acquired more than 1 million new customers since the August 2021 launch.
• Store Footprint: The goal was to have a Sephora presence in every Kohl's store across America. Capital investment for 2025 includes the completion of the Sephora rollout.
• Sales Lift: Stores with Sephora openings in 2021 maintained a high-single digit percent sales lift relative to the chain.
• Basket Attachment: Approximately half of customers shopping the Sephora space added at least one additional category purchase.

The expansion included the opening of approximately 140 new small-format shops by summer 2024.

National Brands: Key vendor relationships for apparel, footwear, and home goods.

Kohl's Corporation maintains relationships with a portfolio of national brands, supplemented by exclusive brand additions and in-store shop-in-shops.

New brand additions announced in late 2024 included the exclusive launch of:

• Fanatics, selling branded gear across sports teams.
• Caliville, a men's lifestyle apparel brand.
• Scott Living, featuring home products like furniture and bedding.
• ED Ellen DeGeneres Pet Collection.

Kohl's Corporation also entered a collaboration with WHP Global to open Babies'R'Us shops, with plans for approximately 200 shops in 200 stores in fall 2024. Furthermore, the Kohl's Cares program supports nonprofit partners, renewing a commitment to the Boys & Girls Clubs of America in 2025 with a $3.5 million donation over one year.

Credit Card Issuers: Partner for the proprietary Kohl's Card, a major revenue source.

The proprietary Kohl's Card program is a significant financial component, where Kohl's Corporation shares in the net risk-adjusted revenue, which includes finance charges and late fees, with the third-party issuer.

Financial context around the credit business includes:

The company is actively pursuing strategies to mitigate potential impacts from regulatory changes affecting credit card revenues. The Kohl's Card rewards benefit was planned to be enhanced to 7.5% everyday.

Logistics Providers: Essential for managing the omnichannel fulfillment network.

Kohl's Corporation relies on a network of dedicated logistics providers and its own store base to manage fulfillment.

The structure of the fulfillment network involves:

• Leveraging its more than 1,100 stores to fulfill Kohls.com orders.
• In 2020, stores fulfilled nearly 45 percent of digital orders through services like Buy Online, Pick Up In Store (BOPIS).
• Utilizing third-party logistics (3PL) partners for receiving, warehousing, and compliance with Kohl's-compliant labeling and packaging.
• Employing integrated technology, such as EDI, for transparency across B2B and DTC fulfillment models.

This network supports the overall business outlook, which for the full year 2025 projects net sales to decrease by (5%) to (6%).

Kohl's Corporation (KSS) - Canvas Business Model: Key Activities

You're looking at the core engine driving Kohl's Corporation's strategy as of late 2025. The key activities center on integrating physical and digital, driving high-margin exclusives, maintaining tight cost control, and completing the major store format overhaul.

Omnichannel Integration: Seamlessly linking 1,100+ physical stores with Kohls.com

The foundation of the current strategy is making sure the digital and physical worlds work as one. Kohl's Corporation operates approximately 1,150 stores across 49 states at the start of the year, and these locations are now deeply connected to Kohls.com. This integration is critical for customer convenience and inventory efficiency. Digital sales represented 28% of net sales in the third quarter of 2025, showing the continued importance of the online channel. A key activity here is the ongoing rollout of the Sephora partnership, which is planned to reach the balance of the chain in 2025. On the other hand, the company has made moves to streamline logistics, including discontinuing Amazon returns at select locations.

Private Brand Development: Designing and sourcing exclusive, high-margin proprietary brands

Building out owned brands is a direct lever for margin protection and differentiation. Private label products accounted for 23.1% of unit sales and 21% of dollar sales in 2024. The focus is on balancing the assortment to cater to both new and core customers. Standout proprietary brands include Sonoma, Tek Gear, Simply Vera Vera Wang, and FLX. You see new additions like Hotelier, Mariana, and Mingle & Co. hitting the bed, bath, and bedding categories earlier this year. The financial expectation tied to this activity is clear: Gross margin for the full year 2025 is expected to improve by 30 to 50 basis points, supported by increased proprietary brand sales. In Q2 2025, the owned brands actually outperformed the company overall, improving 500 basis points from Q1.

• Proprietary brands like FLX are planned for expansion into children's, available online and in 300 stores.
• The goal is to reestablish value and quality leadership through a curated assortment.

Inventory and Cost Discipline: Reducing SG&A expenses by an expected 3.75% to 4% in FY 2025

Controlling the cost base is non-negotiable while investing in growth. The stated expectation for the year is to reduce Selling, General & Administrative (SG&A) expenses by an expected 3.75% to 4%. The actual performance shows progress: in Q1 2025, SG&A expenses decreased 5.2% year-over-year, totaling $1.2 billion, which leveraged approximately 32 basis points. By Q3 2025, SG&A expenses were down 2.1% year-over-year, totaling $1.3 billion. The company is managing inventory tightly; inventory levels were $3.1 billion at the end of Q1 2025, but by Q3 2025, inventory had seen a 5% year-over-year decrease. The full-year operating margin projection for fiscal 2025 sits between 2.2% and 2.6%.

Store Experience Refresh: Remodeling stores to accommodate Sephora and improve flow

The physical store footprint is being actively reconfigured around the Sephora partnership, which is a cornerstone of the turnaround. Stores featuring Sephora are showing better performance than those without. This activity involves significant capital allocation to update the layout and flow for customers. Here's the quick math on the scale of this key activity:

The initial 200 stores that opened in 2021 maintained a high single-digit percent lift compared to the rest of the chain. This refresh effort is designed to bring a fully immersive, premium beauty destination to the floorplan.

Kohl's Corporation (KSS) - Canvas Business Model: Key Resources

You're looking at the core assets Kohl's Corporation relies on to run its business as of late 2025. These aren't just things they own; these are the engines driving their current operations and strategy.

Real Estate Footprint

The physical presence remains a massive asset, even with ongoing optimization. Kohl's Corporation operates over 1,150 department stores across 49 states, with the majority situated in convenient strip centers. This scale is significant, though the company actively manages this asset base; for instance, 27 underperforming locations were slated for closure by April 2025, representing under 3% of the total fleet. The base of stores, as of February 1, 2025, was cited as 1,175 locations.

Kohl's Card Customer Base

The proprietary credit card program locks in a dedicated spending group. Kohl's Corporation serves over 60 million customers through its physical stores and website as of Q1 2025. The Kohl's Card segment is key because it drives high-frequency purchases, evidenced by an increase in transactions among these card customers during October 2025.

Proprietary Brands Portfolio

Exclusive labels are crucial for margin control and differentiation. Management has highlighted these owned brands as central to the turnaround. In Q1 2025, the performance of these owned brands improved by 500 basis points compared to the company overall, which directly supports gross margin expansion efforts.

Here's a quick look at the financial context around the Q3 2025 period:

Digital Platform

The online presence, Kohls.com and the Kohl's App, is a non-negotiable resource. For the first nine months of fiscal 2025, total sales were $9.80 billion. Digital penetration was cited at 28% in Q1 2025, reflecting the importance of this channel to the overall revenue base, even as Q3 2025 net sales were down 2.8% year-over-year.

You can see the digital contribution in context:

• Digital Sales Growth in October 2025: 2% year-over-year.
• Q3 2025 Ecommerce Sales Growth: 2.4% year-over-year.
• Digital Penetration (Q1 2025): 28%.

Finance: draft 13-week cash view by Friday.

Kohl's Corporation (KSS) - Canvas Business Model: Value Propositions

Convenience and Value: Moderately priced national and private-label brands for families.

Kohl's Corporation emphasizes offering quality products at a lower opening price point, which resonates with core loyal customers. The performance of proprietary brands supports this value focus.

Proprietary brand comparable sales improved 500 basis points sequentially in the second quarter of 2025 over the first quarter of 2025. Customers who buy proprietary brands spend more of their wallet with Kohl's Corporation. National brands are being made more eligible for coupons to provide clarity of offer.

Beauty Destination: Sephora at Kohl's, offering prestige beauty products in-store.

The full chain rollout of Sephora at Kohl's was completed in Spring 2025, putting Kohl's Corporation on track to deliver a $2 billion beauty business. The impulse category, which includes some beauty-adjacent items, delivered 30% sales growth in the second quarter of 2025.

Loyalty and Rewards: Kohl's Rewards program and Kohl's Cash promotions.

Kohl's Rewards is a free customer loyalty program. Members earn rewards constantly, which is a key differentiator from promotional-only offers.

• Earn 5% Kohl's Rewards on every purchase, every day ($5 for every $100 spent).
• Kohl's Card holders earn 7.5% Kohl's Rewards on every purchase made with the card.
• Kohl's Rewards balance converts to $5 Kohl's Cash increments on the 1st of the following month.
• Issued Kohl's Cash is valid for 30 days.
• Members receive a special birthday gift, typically a $10 bonus.

Kohl's Cash earned through the Kohl's Rewards membership cannot be used on Sephora at Kohl's merchandise.

Curated Assortment: Balanced mix of apparel, home, and beauty in one location.

Digital sales represented 28% of net sales in the third quarter of 2025. The home category saw significant growth, with seasonal and everyday decor sales increasing over 50% year-over-year in the third quarter of 2025. Kohl's Corporation operated approximately 1,150 stores across 49 states as of early 2025.

The Sephora shops will be in over 1,050 stores for the holiday season, which is 15% more than the previous year. The company is also expanding impulse queue lines, with over 300 additional stores receiving them in the second quarter of 2025.

Kohl's Corporation (KSS) - Canvas Business Model: Customer Relationships

You're looking at how Kohl's Corporation keeps customers engaged and spending, which is critical given the current environment where the middle-income customer is stretched. The relationship strategy is clearly multi-faceted, blending digital personalization with in-store experience enhancements.

Loyalty Program: Automated and personalized offers via the Kohl's Rewards program.

The Kohl's Rewards program remains a central pillar, designed to drive retention and increase the share of wallet. As of early 2025, Kohl's Corporation was serving over 60 million customers, with 30 million of those being Kohl's Loyalty Members. This large base is incentivized through a simplified structure that replaced the older points system.

The core earning structure is designed to be immediately rewarding:

• Members earn 5% back on every purchase.
• Kohl's Cardholders elevate this to 7.5% back on every purchase.
• Rewards are converted and issued as Kohl's Cash in $5 increments, which are valid for 30 days.
• Members also receive personalized deals and a special birthday gift.

The company has been actively refining this to reestablish value leadership; for instance, they began scaling back exclusions on coupons and promotions like Kohl's Cash starting in spring 2025. The data shows that since the enhancements, Rewards members spent more than non-members.

Self-Service: Extensive use of the Kohl's App for digital coupons and payments.

Digital engagement is strong, providing the automation layer for personalized offers. In the second quarter of fiscal 2025, Kohl's Corporation reported having 20 million users of the Kohl's app. This mobile platform is key to delivering the personalized offers mentioned above, as mobile shopping and the app are primary drivers of digital traffic.

The digital channel's contribution to the top line is significant, with digital sales penetration holding steady at 28% of net sales in the third quarter of 2025. This digital strength, alongside proprietary brands, was noted as a key driver of improved operating performance toward the end of Q2 2025.

Assisted Sales: In-store associates, especially in the specialized Sephora areas.

The partnership with Sephora is a major driver of assisted sales and new customer acquisition, with Kohl's Corporation on track to achieve its goal of a $2 billion beauty business by 2025. This dedicated beauty destination requires specialized associate interaction.

The performance metrics around this relationship are telling:

Furthermore, the company is investing in physical infrastructure to support high-volume transactions and service, committing to implementing 613 additional Impulse queuing lines across the store fleet, with over 300 already implemented in Q2 2025.

Transactional: High-volume, coupon-driven sales model.

The overall transactional environment in late 2025 reflects pressure on the core customer, necessitating a value-focused approach. For the third quarter of 2025, net sales declined 2.8% year-over-year, and comparable store sales fell 1.7%. Revenue for Q3 2025 was $3.58 billion, representing a 3.6% year-on-year decline.

The strategy to counteract this involves leaning into promotions, as the CFO stated that being more promotional with reduced coupon exclusions is important, especially because the middle-income customer is 'pretty stretched.' This is evidenced by the focus on making more brands coupon-eligible in 2025 to drive transaction volume.

• Q3 2025 Net Sales: $3,507 million (vs. $3,507 million in prior year period ended Nov 1, 2024, based on 10-Q filing data).
• Q3 2025 Comparable Sales Change: -1.7%.
• Inventory Levels: Decreased 5% year-over-year as of Q3 2025, contributing to margin improvement.

Finance: draft 13-week cash view by Friday.

Kohl's Corporation (KSS) - Canvas Business Model: Channels

The physical store footprint remains a core channel for Kohl's Corporation, despite ongoing optimization efforts. As of early 2025, Kohl's operated approximately 1,150 stores across 49 US states. This network is actively being refined, with announcements made to close 27 underperforming stores by April 2025, leaving over 1,120 locations operational. The company believes in the health and strength of its remaining, profitable store base.

The integration of physical and digital touchpoints is central to the current strategy, as shown by the performance across various access points.

The E-commerce Platform, Kohls.com, serves as a critical revenue driver, especially as the company manages a challenging macro environment. Digital sales represented 28% of net sales in the third quarter of 2025. For that same quarter, net sales reached about $3.41 billion, with e-commerce sales growing 2.4% year-over-year, mitigating a decline in total revenue. The company projects its e-commerce sales to decline 17.7% year-over-year for the full 2025 fiscal year, though specific monthly performance showed strength, with October e-commerce sales up 2% year-over-year.

The Mobile Application is a key tool for customer engagement and loyalty program integration. As of the second quarter of 2025, Kohl's management reported 20 million users on the Kohl's App. This platform is used to track rewards and facilitates the use of proprietary payment methods like Kohl's Pay, which acts as a mobile analog to the Kohl's Charge card.

Buy Online, Pick-up In Store (BOPIS) leverages the extensive physical network for rapid fulfillment. Kohl's provides BOPIS Self-Pickup services across its entire U.S. store base, covering all 1,100 shops. This service is designed to offer speed, with the self-pickup procedure starting generally within two hours of the customer receiving an availability confirmation email.

• The company is focused on creating an elevated, more consistent experience across digital platforms and its store fleet.
• The mobile app centers on the customer loyalty program, allowing shoppers to track rewards.
• The physical stores are also being updated in layout as part of the omnichannel experience improvement.
• The San Bernardino E-commerce Fulfillment Center, one of 15 in the network, was scheduled to close in May 2025, reflecting a shift to fulfilling orders from store locations.

Kohl's Corporation (KSS) - Canvas Business Model: Customer Segments

You're looking at the core groups Kohl's Corporation is trying to serve right now, based on their latest operational data.

Middle-Income Families: Core demographic seeking value and convenience for everyday needs.

This segment represents the foundation of the Kohl's Corporation base, anchored by proximity and a history of value. As of 2025, Kohl's Corporation serves over 52.77 million customers across the United States. Around 80% of these customers live within a 15 mile range of one of the company's 1,153 stores. Demographically, 70% of Kohl's Corporation customers are female, with the majority of these women falling between the ages of 35 to 54. Over half of the entire customer base consists of Gen X and Baby Boomers. The company's fiscal year 2025 guidance anticipates net sales decreasing between 5% to 7%, showing the ongoing pressure on this core spending base.

Kohl's Cardholders: High-engagement, high-value customers driven by loyalty incentives.

Kohl's Cardholders are the most engaged tier, receiving superior rewards stacking capabilities. Kohl's Corporation has 30 million Kohl's Loyalty Members out of over 60 million total customers. Cardholders receive an elevated rate of 7.5% back in Kohl's Rewards on every purchase, compared to the standard 5% for non-cardholders. During promotional events like the Customer Appreciation Sale, cardholders can access the highest discount tier, such as 30% off with code KOHLS30. The credit business, which feeds into this segment, reported $890 million in other revenue in fiscal 2023, with targets set for a rebound toward those levels by 2025 through the co-brand card rollout. The company declared a quarterly cash dividend of $0.125 per share in August 2025.

Younger, Beauty-Focused Shoppers: New segment attracted by the Sephora partnership.

This segment is being actively courted through the shop-in-shop strategy. Kohl's Corporation projects the Sephora at Kohl's business will achieve $2 billion in annual sales by 2025. In the second quarter of fiscal 2025, this experience delivered a 3% increase in net sales and was flat on a comparable-sales basis. Since the partnership began in August 2021, Kohl's Corporation has acquired more than one million new customers, many of whom are younger and more diverse. The success is evident in the 2024 figures, where Sephora sales increased over 25%, driving the Accessories segment (which includes Sephora) to an approximate 9% increase in 2024, with Sephora sales exceeding $1.8 billion that year. A key metric showing cross-category appeal is that roughly 50% of customers shopping Sephora at Kohl's attach at least one other category purchase.

Value-Conscious Shoppers: Customers motivated by Kohl's Cash and promotional events.

This group is highly responsive to the value-driving mechanics Kohl's Corporation employs, such as Kohl's Cash. During major promotional periods, value-conscious shoppers can earn rewards like $10 in Kohl's Cash for every $50 spent. Standard Kohl's Rewards members earn 5% of the purchase amount back as Kohl's Cash. The company's Q2 2025 results showed Selling, General, and Administrative (SG&A) expenses decreased by 4.1% to $1.2 billion, reflecting cost discipline that supports value pricing. The company plans capital expenditures of approximately $400 million for fiscal year 2025, prioritizing initiatives like the completion of the Sephora rollout and expansion of impulse queuing lines to drive traffic.

Kohl's Corporation (KSS) - Canvas Business Model: Cost Structure

When you look at the Cost Structure for Kohl's Corporation (KSS) as of late 2025, you see the heavy lift required to run a massive physical retail footprint while investing in digital capabilities. The costs are dominated by getting the product to the customer and keeping the stores open.

Merchandise Costs: Cost of Goods Sold

The cost of the product itself is your single biggest expense, which makes sense for a retailer. For the nine months ended November 1, 2025, Kohl's reported net sales of $9.8 billion. While the exact Cost of Goods Sold (COGS) for that nine-month period isn't explicitly broken out against the $9.8 billion in net sales, we can look at the gross margin performance to understand the cost base.

Gross margin for the first nine months of 2025 was 39.8% of net sales, an increase of 39 basis points year-over-year. This means the merchandise cost (COGS) was approximately 60.2% of net sales for that period (100% - 39.8%).

For the third quarter of 2025 specifically, the gross margin was 39.6%, an improvement of 51 basis points over the prior year's third quarter. This implies a Q3 2025 COGS of about 60.4% of Q3 net sales.

Here's a quick look at the relationship between sales and the cost of those sales for the nine-month period:

Selling, General & Administrative (SG&A)

SG&A covers everything from paying store associates and running marketing campaigns to corporate salaries and utilities. For the nine months ended November 1, 2025, SG&A expenses were $3.6 billion, representing 35.0% of total revenue. This is an increase of 20 basis points year-over-year as a percentage of revenue.

Looking at the third quarter of 2025 alone, SG&A expenses decreased 2.1% year-over-year to $1.3 billion, but as a percentage of revenue, it was 35.3%, an increase of 55 basis points. You can see the pressure here; even with cost discipline, the lower sales base makes the fixed nature of some overhead costs more apparent.

The components of SG&A include:

• Store operations payroll and benefits.
• Marketing and advertising spend, especially for proprietary brand promotion.
• Corporate overhead and technology costs.
• Depreciation expense, which was $176 million in Q3 2025.

Real Estate and Lease Costs

Operating expenses for the large store fleet are a major fixed cost. While specific, current lease expense figures aren't isolated in the latest earnings release snippets, we know the store count is a key driver. Kohl's announced the closure of 27 underperforming stores in the prior year (Q4 2024), which was a step to manage this cost base. The company still operates over 1,100 stores as of late 2025.

Interest expense is another significant fixed charge related to financing the business, which was $75 million in the third quarter of 2025.

Capital Expenditures

Kohl's Corporation (KSS) is actively spending to refresh its physical assets and upgrade its technology. The full-year 2025 outlook for Capital Expenditures (CapEx) was set at approximately $400 million. This was planned for store refreshes and technology investments, including the ongoing Sephora rollout.

Earlier in the year, the expectation was a range of $400 million to $425 million for FY 2025. Year-to-date through Q3 2025, CapEx totaled $308 million, primarily on the Sephora rollout, Impulse Q lines, and fulfillment expansion.

Here's the CapEx focus for 2025:

If onboarding takes 14+ days, churn risk rises. Finance: draft 13-week cash view by Friday.

Kohl's Corporation (KSS) - Canvas Business Model: Revenue Streams

You're looking at how Kohl's Corporation brings in the cash as we wrap up 2025. Honestly, it's a mix of traditional retail and the financial services tied to that retail. Here's the quick math on where the money is coming from.

Merchandise Sales: Primary revenue from national and proprietary brand products

The bulk of the revenue is still from selling physical goods, which includes national brands and the company's own proprietary labels. For the first nine months of fiscal year 2025, total net sales reached $9.80 billion. Merchandise sales are the core driver, though the full-year 2025 guidance projects a net sales decrease in the range of 5% to 7%. To give you a recent snapshot, Q3 2025 net sales were about $3.41 billion, down 2.8% year-over-year. In Q1 2025, net sales were $3 billion. The company is pushing its proprietary brands, which saw a 400 basis point better quarter-over-quarter performance in Q1 2025 as part of the turnaround effort.

Here are some recent top-line figures:

Credit Card Revenue: Interest and fees from the proprietary Kohl's Card

The Kohl's Card operation is a significant, though increasingly regulated, revenue component, categorized under Other Revenue. This includes finance charges and late fees, less write-offs. Regulatory changes impacting late fees have been a headwind; these changes were expected to cause a potential reduction of over $200 million per year starting in 2024. To counter this, Kohl's is focused on its co-brand credit card, aiming for incremental credit revenue of $250 million to $300 million per year by 2025 from that program. Separately, in Q2 2025, the company recorded a one-time gain of $129 million from a credit card interchange fee lawsuit settlement, which significantly boosted year-to-date net income.

You should note the following related financial data:

• Expected annual reduction from late fee regulation: Over $200 million.
• Target incremental annual revenue from co-brand card by 2025: $250 million to $300 million.
• One-time gain from credit card settlement (Q2 2025): $129 million.

Digital Sales: Revenue generated through Kohls.com and the Kohl's App

The omnichannel strategy is clearly a major revenue channel. In the third quarter of 2025, digital sales penetration hit 28% of net sales. This channel showed some strength, with ecommerce sales growing 2% year-over-year in October 2025. However, looking at the full year projection, Digital Commerce 360 projected Kohl's ecommerce sales to decline by 17.7% year-over-year in 2025. The company has built a substantial user base, reporting 20 million users for the Kohl's App in Q2 2025.

Sephora Concessions: Sales generated from the in-store beauty shops

The partnership with Sephora is a key growth area, though its sales are often grouped into the Accessories segment for reporting. The Accessories segment, which includes Sephora, saw a notable increase of approximately 9% in 2024, with Sephora sales exceeding $1.8 billion in that year. The full chain rollout was completed in Spring 2025, putting the company on track to deliver a $2 billion beauty business. This investment is part of the 2025 capital expenditure plan, estimated between $400 million and $425 million.

The Sephora contribution is quantified below:

• Sephora sales in 2024: Exceeded $1.8 billion.
• Projected beauty business size by end of 2025: $2 billion.
• Investment in rollout completion (part of 2025 CapEx): Included in $400 million to $425 million.