Kohl's Stock for the Next 10 Years: Buy, Hold, or Avoid?

If I had to pick one consumer stock to avoid for the next decade, I would put Kohl's (NYSE: KSS) near the top of the list. The business still shows revenue today, but the way its numbers and strategy look in mid‑2026 makes it hard for me to see a path where shareholders are meaningfully rewarded over 10 years.

Kohl's most recent results tell you a lot. In the first quarter of fiscal 2026, the company reported total revenue of $3.167 billion, with net sales down 1.7% and comparable sales down 1.1% versus the prior year. Gross margin held at 39.9%, which sounds fine, but the bottom line was a net loss of $14 million and negative free cash flow of $158 million, driven by seasonal inventory build. When a retailer is shrinking its sales, losing money, and burning cash even in a quarter it calls "consistent with expectations," that does not signal long‑term compounding to me.

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The guidance for 2026 does not change that picture. Kohl's expects full‑year net and comparable sales to be flat to down 2%, with an adjusted operating margin of just 2.8% to 3.4% and adjusted earnings per share (EPS) between $1 and $1.60. That is a low‑margin, low‑growth setup in a category where competition from off‑price chains, specialty retailers, and e‑commerce has only gotten harder. The company plans $350–$400 million in capital expenditures to maintain stores and digital operations, but with long‑term debt of about $1.4 billion and a modest cash balance of $429 million, the balance sheet is not exactly overflowing with flexibility.

A dividend that doesn't keep me up at night

The dividend does not really change the story. In May, Kohl's declared a quarterly dividend of $0.125 per share, or roughly $0.50 on an annualized basis. At recent share prices, that translates into a mid‑single‑digit yield, but it is being paid by a business that is guiding for razor‑thin margins and uneven earnings. For income investors, I would much rather see a company with a long record of dividend growth and strong coverage than a department store using a small payout as a justification to call itself "shareholder-friendly."

Kohl's is also trying to position itself as a value‑oriented, off‑mall destination, with partnerships and in-store beauty shops. That may help around the edges, but it does not change the fact that department‑store‑style general merchandising has been losing share for years to Amazon, Target, Costco, and a long list of niche brands. Unless Kohl's can reinvent itself to create clear differentiation and improve margins, the next 10 years look more like a slow grind than a turnaround.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Target. The Motley Fool has a disclosure policy.