Hello, everyone. Thank you for joining us and welcome to Q2 2026 Kohl's Corporation earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Trevor Novotny, Director of Investor Relations. Trevor, please go ahead. Thank you. Certain statements made on this call, including those regarding our projected financial results, business outlook, and future initiatives, are forward-looking statements. These statements are based on current expectations and assumptions and are subject to certain risks and uncertainties that could cause Kohl's actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the factors described in Item 1A of Kohl's most recent annual report on Form 10-K, and as may be supplemented from time to time in Kohl's other filings with the SEC, all of which are expressly incorporated herein by reference. Forward-looking statements relate to the date initially made, and Kohl's undertakes no obligation to update them. In addition, during this call, we may refer to certain non-GAAP financial measures. Please refer to the cautionary statement and reconciliations of these non-GAAP measures included in the investor presentation, filed as an exhibit to our Form 8-K as filed with the SEC and available on our investor relations website. Please note that this call will be recorded. However, replays of the call will not be updated. So if you are listening to a replay, it is possible that the information discussed is no longer current and Kohl's assumes no obligation to update such information. With me this morning are Michael Bender, our Chief Executive Officer, and Jill Timm, our Chief Financial Officer. I will now turn the call over to Michael. Thank you, Trevor. Good morning, everyone, and thank you for joining us today for Kohl's second quarter 2026 earnings conference call. Our second quarter performance reflects the continued progress we are making against our key initiatives, leading to another improvement in our comparable sales trend. In addition to the top-line performance, our team demonstrated strong operational discipline. By maintaining this rigor around our expense and inventory management, we have substantially improved our balance sheet and cash flow generation. The solid financial foundation we have built over the past year is enabling us to invest in the business, drive value for our customers, and return capital to shareholders. We are operating in a challenging macroeconomic environment where our customers are experiencing persistent financial pressures from inflation in their everyday expenses, like gas and food. While their day-to-day priorities may change, the consumer is consistently looking for value, a compelling assortment, and an inspiring experience. The work we have underway is focused on addressing each of these customer priorities. As we look to the remainder of the year, we expect this economic backdrop to continue. We believe that our healthy balance sheet will provide us meaningful support and flexibility to navigate through this environment to continue our journey of progressive improvement. Before I get into more detail, I would like to extend my sincere gratitude to our entire Kohl's team for their efforts over the past quarter. While this quarter marks another small step in the right direction, we know there is more work to be done. Each day, we have the opportunity to show up for our customers, and I'm confident that the work we are executing is leading us in the right direction. Now, let me share some additional highlights from our performance. We are pleased to see continued positive momentum across key areas of our business throughout the second quarter. First, our loyal Kohl's Card customer showed ongoing progress and delivered a sales increase of 1% in the second quarter. Over the past year, we implemented multiple targeted actions to successfully reengage these individuals. This milestone represents the beginning of our journey, and we see further opportunities to deepen our engagement with this key customer, which represents our most productive customer base. Second, our proprietary brands increased 3% in the second quarter. Over the past year, we have made significant progress enhancing our proprietary offerings, receiving strong positive customer response. We have driven major improvements by delivering exceptional value and increasing inventory depth by 6% to support better product availability. Third, we also made deliberate progress in transitioning our seasonal goods earlier, a strategy that drove positive sales in the spring and maintained a flat performance in Q2. Building on this, we set our fall seasonal assortment in July to effectively capitalize on the back-to-school window, which has already provided a strong start to the season. We plan to continue this proactive approach as we head into the holiday season, positioning us to capture demand early and maximize momentum throughout the remainder of the year. Next, I would like to give you an update on the progress we are making against our three key initiatives we outlined at the beginning of the year. This work is rooted in putting the customer at the center of everything we do. Let me begin with our first initiative, offering a curated and more balanced assortment that fulfills the needs of all customers. Through enhancing assortment clarity, fulfilling customer demands, and improving product relevance, we are continuing to refine our offerings. This strategic focus enabled sales improvement across the majority of our lines of business. Home had the strongest performance this quarter, delivering sales growth of 1%. The strength in home was driven by decor and small electrics. Home decor benefited from our adjustments in merchandising efforts to deliver more choices in this category, with choice count receipts up over 10% to last year. We saw particular strength in our Americana decor as we celebrated America's 250th anniversary. As we head into the fall, we are investing into more choices for our fall and harvest decor assortment. Small electrics continue to benefit from newness and innovation in national brands such as Shark and Ninja. We also saw strong performances from KitchenAid and GreenPan. We anticipate further opportunity in this category in the back half of the year, as we have strong receipt flow this year after being limited in our buys last year due to tariff pressures. Our bedding and bath categories were flat for the quarter, with strength coming from our proprietary brand offerings of The Big One and Mariana. We also saw solid growth in our Mingle & Co. brand within our tabletop category. Now let me move to our kids business, which was flat in the quarter. Toys continues to be strong with a double-digit sales increase led by LEGO, KPop Demon Hunters, and our value towers. To support the high-volume holiday season, we will continue driving growth in toys by expanding our inventory investment. Additionally, in Q2, we launched value-driven family fan zones featuring localized team apparel and accessories. We saw strong traction around the World Cup, and we have recently transitioned these spaces to showcase our NFL licensed products ahead of the new season. We also saw strength in our private label brands in kids. We rolled out our popular FLX brand to all stores in June, and initial results are exceeding our expectations. Our SO brand generated positive tops in the second quarter, with growth in our young girls category. In addition, Jumping Beans built momentum across the quarter, supported by the July introduction of our baby line and our ongoing emphasis on the brand's exceptional value proposition. To build on our infant and baby apparel business, we are expanding our offering of baby gifts and accessories through our Babies'R' Us partnership. We recently rolled out in-store fixtures across all locations to highlight our top-selling baby gifts and accessories, driving solid second quarter growth. We're also completing 56 additional Babies Us shop build-outs in September. Total accessories also outperformed the company with a flat performance versus last year. Excluding our Sephora business, accessories increased mid-single digits. This performance was driven by newness, and impulse, and jewelry. Our impulse business maintains strong momentum supported by accessible pricing and frequent product refreshes that deliver new discoverable assortment. Key drivers include trending items like NeeDoh Squishies, alongside everyday essentials such as toiletries and sunscreen. Jewelry continues its strong performance, delivering a mid-single-digit sales increase in the second quarter. We saw strength in our boxed giftable, personalized, and sentiment themed, as well as our fashion jewelry. Building on the strength of this category, we are rolling out an additional 350 fine jewelry case lines in the fourth quarter, bringing the total store count with case lines to 549 stores. In addition, 320 stores will be receiving elevated fashion jewelry fixtures by November. These fixtures will highlight newness and inspire customers to complete their look with fashion accessories. Our Sephora at Kohl's business faced headwinds this quarter, with sales down 4%. While we continue to see strong customer demand for newness, the top-line performance was pressured by the impact of expanded distribution for several of our key brands. Breaking down the performance by category. Fragrance remained a strong driver, anchored by new brands like Dolce & Gabbana and YSL. While haircare also outperformed the company led by OUAI and Kérastase. In makeup, we continue to see strong traction from existing brands like Charlotte Tilbury, Makeup by Mario, and Merit, as well as newness buoyed by the launch of MAC. However, this growth was dampened by declines in brands with expanded distribution. Finally, skincare had a challenging quarter as we lapped several major launches and have yet to reach scale from existing new launches in K-Beauty and Body, including brands like Salt & Stone, which is already off to a strong start. We recognize that in addition to driving our core offering, this business is also driven by newness and innovation, and we are excited about our upcoming category launches. In fragrance, we are introducing Khloé Kardashian and Givenchy, alongside expansions from Kayali and Jo Malone London. This will be supported by new fragrance towers in 250 stores this November. In haircare, we are launching Emi Jay, Crown Affair, i.N.O., and Fromlabs, while our skincare category will debut Evereden, Topicals, and Ultra Violette. Furthermore, we're rolling out holiday outposts in 130 stores, building on our strong gifting category as our gift sets continue to resonate well with our customers. We are continuing to maximize our travel and trial assortment to attract new customers through our cue lines, maintaining a focus on delivering value. While we're excited about these actions to implement newness into our Sephora at Kohl's business, we want to be realistic in our expectations for the remainder of the year. We expect the softer performance we've seen year to date to persist until we can reach full scale with new brands, and cycle through the headwinds from expanded distribution from a few of the bigger brands. Turning to our women's business. Performance moderated in the second quarter, finishing down 1.5%. Despite the broader slowdown, we continue to see standout strength in our juniors department, which delivered another 10% increase. This momentum was driven by exceptional customer response to our SO brand, and a successful infusion of newness throughout the assortment. Active also outperformed the category led by Nike, which saw its largest gains of the year, alongside sustained strength in our proprietary Tek Gear and FLX brands. Furthermore, our denim business returned to positive growth, and we are well-positioned to build on this momentum as we transition into the critical back-to-school season. These gains were partially offset by underperformance in our intimates category. Additionally, growth in our proprietary brands slowed during the period. This was primarily a result of higher than anticipated sell-throughs early in the quarter, which left us inventory constrained and unable to effectively chase back into the business. We've taken decisive action to address this for the back half of the year. Our new fall proprietary receipts are already off to a strong start, and we have made a significantly larger inventory investment to ensure we are better positioned to meet demand through the remainder of the year. Our men's business improved by 100 basis points from the prior quarter, now running in line with the total company. This category continues to work through assortment edits to reduce redundancy and improve clarity in our offering. Men's is seeing strong customer engagement with proprietary brands, which increased by high single digits during the second quarter. Key growth drivers include Tek Gear and FLX, with FLX benefiting from the successful debut of its new golf apparel collection. The dress category also continues to be a strong category for us, driven by both proprietary and national brands from Apt. 9 and Haggar. This is offset by softness in our active national brand business. Although footwear continues to trail overall company performance, the category delivered the most significant sequential gain, with comp performance accelerating approximately 500 basis points compared to Q1. Momentum built across the quarter as we introduced fresh inventory and enhanced depth in core active brands like Nike and Adidas. Additionally, we saw strength in our kids footwear business running up mid-single digits, which gives us confidence in our back-to-school assortment. Looking ahead, we are reinvesting in women's boots to capture the demand unfulfilled last year because of tariff constraints. We anticipate this category will serve as a positive driver in the fall. Overall, we remain on track for further category gains in the back half of the year. We are also further curating our product assortment by expanding our marketplace business. This year, we are more than doubling our selection of marketplace products and vendors, driving relevant category and brand expansion. While early in its growth, Kohl's Marketplace is becoming a more meaningful part of the business, increasing 88% this quarter. This capability creates an opportunity to attract more customers by expanding assortments to support seasonal transitions, invest into white space categories, and bridge inventory gaps to complement our core assortments. Now let me move to our second initiative, reestablishing Kohl's as a leader in value and quality. We know our customers remain under financial pressure, and they are becoming increasingly choiceful, actively seeking value in every purchase. Throughout the past year, we have actively refined and differentiated our value proposition to meet these expectations by expanding coupon inclusion, testing new promotional offers, and investing in our opening price point proprietary brands. These strategic enhancements are designed to deepen our engagement with our existing customer base while simultaneously attracting more new customers. Throughout the quarter, we made further strides in optimizing our pricing and promotional strategies. The successful testing of new promotional formats, including VIP cardholder events Kohl's Deal Days, and personalized Just For You offers, which generated a positive response and increased productivity with our Kohl's Card customer. Leveraging these insights, we plan to broaden our targeted pricing initiatives and promotional events to offer even greater value to our customers. Our proprietary brands continue to serve as a cornerstone of our value proposition. We are making investments focused on enhancing our inventory depth and assortment, elevating the in-store experience to better showcase our collections, and scaling our marketing support to ensure these brands remain top of mind. Our entry price point brands, including Sonoma, Tek Gear, and The Big One, continue to resonate with our customers who are focused on value. We believe these targeted actions will continue to resonate with our shoppers and bolster our competitive position. Additionally, we continue to lean into our By Kohl's marketing campaign we launched earlier this year. In Q2, we tested a By Kohl's promotion to deliver more engagement and visibility with these brands, and we are pleased with the start of this campaign and the awareness it is drawing to our proprietary brands that you can only find at Kohl's. Moving forward, we will continue to fund this campaign, leveraging a cross-channel marketing approach, utilizing a wide range of influencers on social media. As we look ahead, we are finding additional ways to feature value in our product offerings. A good example of this is our back-to-school assortment, which highlights thousands of products, all under $25 price points. Building on the momentum of our Deal Bar and Toy Tower concepts in Q2, which feature items priced under $10, these offerings effectively capture incremental basket growth with trending toys, seasonal gifts, and home decor. This leads to our third initiative, delivering a frictionless shopping experience across our omnichannel platforms. Delivering a seamless, inspiring experience, whether in-store or online, remains a critical component of our strategy. Product relevance and consistent in-stock levels are the primary enablers of this experience, and we are sharpening our focus on both. We are strategically investing in inventory depth for our apparel, increasing our depth by low double digits, while simultaneously reducing our overall assortment choices by high teens to improve clarity, simplify the shopping journey, and deliver trip assurance. Additionally, we are refining our allocation processes to provide better product distribution, especially in our lower volume stores that have previously faced limitations in inventory and selection. By getting the right inventory to the right place, we are confident this will drive improved engagement and productivity across our entire fleet. To further support these inventory investments, we are leaning into our in-store experience and marketing efforts. We will be completing our elevated in-store experience for our By Kohl's brands this fall. You will see this across all stores, elevating key brands like Sonoma, LC Lauren Conrad, FLX, SO, and more. This experience is designed to inspire our customers with full outfitting concepts on mannequins, improved signage, and way finding to the brands they love, and Find Your Fit sizing charts to lead them to the exact styles and fits they're looking for. Alongside these store enhancements for our proprietary brands, we're also investing in upgraded experiences for key strategic partners Nike and Levi's. The elevated product displays will showcase fresh looks and inspire our shoppers. By building a more engaging environment that spotlights key brands, we empower customers to spend their money on the choices that suit them best. Last, to meet our customers wherever they prefer to shop, we're also investing in our digital capabilities and enhancing the omnichannel experience. Store pickup has increased meaningfully and now represents over 20% of digital demand, reinforcing the advantage of using our store network to give customers greater speed, convenience, and choice in how they shop with Kohl's. For customers looking for same-day delivery, we continue to scale Instacart, and in July, we recently launched a new partnership with DoorDash to capture incremental demand and new customers. We're also encouraged by the early signals from agentic commerce. Adoption is still small, but customers who engage with our AI shopping assistant are showing stronger conversion and higher revenue per visit. We see significant opportunities to expand AI-assisted discovery, gifting, and purchase confidence over time. The modernization of our digital experience is well underway, with most core customer journeys now on our new platform. Early results show faster page performance and improved customer behavior through product pages, cart, and checkout. We are also continuing to build capabilities that reduce friction, including flexible payment options such as Klarna ahead of holiday. Collectively, we believe these investments will benefit us over the long term to improve the experience for our current customers and to help us attract new customers. In closing, we have a lot of great work currently underway and more opportunity lies ahead of us. The second quarter proved to be another step in the right direction, and I'm confident in the direction we're heading. Before I hand the call over to Jill, I would like to take a moment to welcome Elliott Rodgers to Kohl's as our Chief Operating Officer, who will join us on September 9th. Elliott brings more than 20 years of leadership experience in retail and large-scale operational roles, has helped brands navigate through change, embrace innovation, and drive results through strong execution. I'd also like to congratulate Arianne Parisi, who will be stepping into the newly created role of Chief Customer Officer. Bringing marketing and digital experience under one leader will help foster a greater focus on the entire customer life cycle, connecting our brand positioning and customer experience. As we make important progress across the business, we are also taking meaningful steps toward building for the future. I look forward to the contributions Elliott and Arianne will make as we drive our business forward. With that, I will now turn the call over to Jill. Thank you, Michael. For today's call, I will provide additional details on our second quarter and year-to-date results, an update on our capital allocation, and provide commentary around our updated fiscal year 2026 guidance. As you heard from Michael, Q2 is another point of progress against our key initiatives. Our comparable sales declined 0.9% in the second quarter, driven by a slight decline in both average transaction value and transactions. Year- to- date, our comp sales declined 1%. Our store sales continue to show sequential improvement and were down 2%, while our digital business increased 2.8% in the quarter. As Michael mentioned, we saw the majority of our lines of business improve their sales trend from the first quarter, with Home, Kids, and Juniors leading the company. In addition, our Kohl's Card performance was up over 1% for the quarter and 0.6% for the year. Our Marketplace business continues to grow up 88% compared to last year and is becoming a more meaningful contributor to our overall performance. Including the Marketplace GMV growth, our comparable sales would have improved by 65 basis points and been down 0.2% in Q2. For the year, Marketplace increased 75% and would have improved our year-to-date comp by approximately 60 basis points to down 0.4%. Other revenue, which is primarily made up of our credit business, declined 1% in the second quarter and 5% year- to- date. This represents a notable trend improvement driven by the stronger Kohl's Card sales over the past couple quarters. Gross margin improved 305 basis points in the second quarter and 162 basis points year- to- date. In Q2, we received approximately $150 million of tariff refunds, of which approximately $100 million benefited our cost of merchandise sold. A portion of the refund was recorded as a reduction of inventory, shared with our vendor partners, and invested to deliver greater value to our customers. Excluding the impact of the tariffs, our gross margin would have increased approximately five basis points in line with our guidance. SG&A expense declined 0.9% in Q2 and 1.3% year -to- date. Our Q2 decline was mainly driven by expense savings across stores, corporate, and credit. Depreciation expense was $173 million in Q2 and $347 million year- to- date. Interest expense was $63 million in Q2 and $126 million year- to- date. In the second quarter, we retired an additional $63 million of our long-term debt at a discount of $6 million through open market debt repurchases. Year- to- date, we have repurchased a total of $113 million at a discount of $15 million. Our tax rate was 23%. This resulted in net income of $151 million in Q2, or $1.28 earnings per diluted share. Year- to- date, our net income was $137 million, or $1.18 earnings per diluted share. Moving on to our balance sheet and capital allocation. We finished the second quarter in significantly better cash position compared to last year. Our cash and cash equivalents were $821 million, and we continue to operate the business with no borrowings on our ABL. This represents over a $700 million increase to our net cash position when compared to last year. This strong cash position gives us the ability to invest in our key initiatives to drive the business and deliver value to customers. Inventory decreased approximately 3% compared to last year. We continue to invest in our proprietary brand inventory while reducing redundancy to bring better value and clarity to our customers. Our receipts were up 7% in the quarter to support trending categories such as toys, jewelry, and juniors. We also pulled forward fall seasonal receipts to capture early demand for back to school. In addition, our choice count was down mid-teens, while our depth increased mid-single digits, helping drive increased trip assurance for our customers. We now anticipate inventory to be down low single digits for the year. Now I want to provide an update on our current capital allocation priorities. Our first priority will always be to invest into our business. Capital expenditures year- to- date are $146 million. Prioritizing investments in our store fleet, including expanding impulse lines, deploying modernized store devices and self-checkouts, as well as general maintenance projects. Additionally, we are supporting our digital business by investing in site experience, automation, and AI. We continue to expect our full year capital spend to be approximately $350 million-$400 million. Second, we will continue to return capital to shareholders through our dividends. In Q2, we returned $14 million to shareholders through our quarterly dividend. As previously disclosed, the board, on August 18th, declared a quarterly cash dividend of $0.125 per share, payable to shareholders on September 23rd. Third, we will continue to evaluate the market for opportunistic debt repurchases. Year- to- date, we have repurchased $113 million of debt at a discount of $15 million. The efforts to deleverage over the last three quarters allowed us to reduce our long-term debt to its lowest level since 2007. Last, driven by our strong balance sheet and the confidence in our path forward, we are pleased to increase our capital returns to our shareholders. Under our existing $3 billion board authorization, we are resuming our share repurchase program with plans to buy back approximately $100 million in stock in 2026. This represents our first buyback since 2022 and underlines our ongoing dedication to enhancing long-term shareholder value. Now let me provide some details on our updated guidance for 2026. Our second quarter results reflect the continued progress we've made against our initiatives and demonstrate the ongoing discipline with which we operate the business. While we are encouraged with our results and we believe our strategic initiatives will allow us to make further progressive improvement throughout the year, we want to be mindful of the current macroeconomic environment we are operating in. We continue to see choiceful discretionary spending from our core low to middle income customer as they remain financially pressured. The realization of approximately $150 million of tariff refunds has provided us with even greater financial flexibility. We are strategically prioritizing the reinvestment of these proceeds directly into our core business initiatives to better serve our customers. We are deploying this capital to uphold our commitment to value while simultaneously strengthening our inventory position to support our opening price point brands. In addition, we are investing in media to deepen customer engagement and increasing store payroll to build on positive results from our recent staffing tests, which demonstrating meaningful improvements in customer satisfaction and sales productivity. Our updated guidance does not include the impact of any future tariff refunds. Given that context, we are raising our annual guidance and now expect comp sales to be in the range of 1.5% decrease to flat versus 2025. Adjusted operating margin to be in the range of 3.5%-4%, and adjusted earnings per diluted share of $1.80-$2.40, which includes tariff refund benefit of approximately $0.65. Before we move to Q&A, I'd like to extend my sincere gratitude to every Kohl's associate for your continued hard work and dedication. Your commitment and passion to serving our customers and executing against our key initiatives is helping create a stronger Kohl's with many exciting opportunities ahead. With that, Michael and I are happy to take your questions at this time. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Chuck Grom with Gordon Haskett. Your line is open. Please go ahead. Hey, good morning. Thanks a lot. You've seen some nice improvement in your Kohl's Charge comp over the past four to six quarters from down mid-teens to a positive 1% here this quarter. Historically, what does that suggest about the trajectory of the business, particularly in your proprietary brands, but also in your women's business? Sure. Good morning, Chuck. What I would say first, we're really pleased with the rebound of our Kohl's Charge customer. I think it reflects how they've reacted to a lot of the changes that we have made in the store, particularly around our proprietary brands and adding back key categories like jewelry and petites, as well as the coupon inclusions. I think when we look at the Kohl's Charge card, we know they never stopped shopping us. They just went elsewhere to find some of those items that weren't substitutable, like jewelry and petites in our stores. As we've brought back in the brands that they've known to love for us, which was proprietary brands, they've reacted quite well, and we've seen that work. Obviously, juniors is a standout, doing incredibly well. But juniors, I think now, is on its third almost double-digit positive quarters of comps. So really a sentiment from that customer that they're reacting to that assortment. From a women's perspective, I'd say they over-penetrate their proprietary brands, about 70% of our women's apparel and our Kohl's Charge customer makes up a lot of that share as well. So it's been bringing those items back into the store. They've reacted incredibly well. In fact, women's, I think you heard on the call, we had higher sell-throughs than anticipated and just couldn't chase into that business fast enough. The good news is we did accelerate our fall receipts, and we're feeling really good with that business as it exited July and into August. So I would say that Kohl's Charge rebounding is definitely a function of the efforts that we had afoot, but also them reacting to the great product that we're now showcasing in our stores. Yep. The only other thing I would add to that, Chuck, would be that it also bodes well for us in looking out into the future about the projections for our credit revenue. Right? Exactly. What you saw, I think, in credit revenue only being down one in the quarter, I would say now we expect that more to be probably with the company top line versus lagging, just given the quick rebound we saw off of this customer. Okay. Got to my second question, but on the credit revenue. Thanks very much. Then just on the comp in the quarter, any color on the cadence phasing throughout the quarter? It sounds like July may be strong, but can you confirm that? Any thoughts on back to school? As we think about the back half of the year, your guide does imply a little bit of an acceleration on the stacks. Can you help us think about the trajectory of the phasing here in 3Q and 4Q, and I guess what gives you the optimism that you can improve on a stack basis? A multi-part question there. Thanks. Yes. Sure. I can start. I think for quarterly comps, there was a lot of shifts in the calendar this quarter, particularly around Deal Days and a prime event. What I would say is we feel very good with how we exited July. Pulling forward those back-to-school receipts definitely gave us that momentum. We were able to capture that market share. As that moves into August, we are seeing strength out of sweaters, fleece, denim. Even you heard Michael on the call talk about footwear improving 500 points. We are seeing our active footwear rebounding, particularly in performance and any newness that is setting in the floor. I would say we feel good with the momentum that we brought out of July. We are building that in August as well. As we approach the back half of the year, I think, what it brackets is the guide for the back half would be flat to down two. Kind of very similarly to how we approach the guidance for the front half of the year. We do like our initiatives. We see the progressive improvement happening. I think particularly around inventory, we are investing back into inventory. We talked about that being in a lot of our low volume stores. We have done a lot of testing about that inventory in the stores, making sure it is productive, and really saw a large movement in a sales perspective by putting in some of those basics, having that depth, restoring that trip assurance. Those are things that give us confidence that we can build. However, as I mentioned, we're operating in really uncertain times, and we have a lot of pressure on our customer from a macro perspective. I look at it as though we have really run a one in the front half. That's the midpoint of the guide. That means we do nothing different. If the initiatives continue to progress as we anticipate them to, that's how you then get up to the flat. Quite honestly, I would say that would build into Q4. I think Q4 for us last year was a little disappointing, so we would expect to do a little better there. We know we fell short with some of our fall seasonal products. We know we are limited in some of our buys, particularly around home decor, boots, and small electrics, all in which are doing much better as we've seen in the front half of the season and are excited about even the start to harvest in decor in the back half of the season. We would expect to be flat to exiting positively from the top end of the guide as we close out the year. Yep. Just maybe one other thing to add, or two other things to add in terms of the category performance that gives us confidence that the back half of the year has some upside potential. We think about things like team apparel. We used to have that here at Kohl's. It's coming back into stores. Jill mentioned small electrics and boots that were impacted by tariffs last year. That's something we'll overcome that's not a challenge for us going forward. We're also going to be rolling out, as I'd mentioned, Babies Us stores to about 60 more stores, roughly. We're rolling out also jewelry, both in fine and fashion expansion as well across several hundred stores. Those things certainly bode well for us to believe that the holiday season and the balance of the year have some greater potential even than the performance that's shown year- to- date. Best of luck. Thank you both. Thanks. Thanks, Chuck. Your next question comes from the line of Mark Altschwager with Baird. Your line is open. Please go ahead. Good morning. Thank you for taking my question. I wanted to start off following up on the proprietary brands. In the prepared remarks, you flagged the slowdown due to inventory constraints. I am curious roughly how much sales you think that costs you, and then just any more color you can give on what that trend has looked like as you have chased into the fall receipts. Sure. I think for proprietary brands, Mark, we are actually quite pleased. We are still up 3%, so I think this consistently shows us putting back positive comps on the board, which of course as this matures, is going to be not at the highest level of growth that we have seen. But we think this is really a drumbeat that we can continue to prove into. I think women's is probably the one category that we lagged in, and that was you had seen top line took a little bit of a step back, and it is really being bifurcated between junior still up 10, but in that core women's business, we just had stronger sell-throughs. As you know, we approached the year from a conservative perspective from an inventory as we were making these changes, but really saw consumers react quite well to the changes we are making. So brought forward some fall receipts, like I had mentioned, sweaters, fleece, and denim. Being in a great denim cycle, seeing that both on the proprietary side, but also in Levi's on our national brand side as well. I think we feel very well set as we approach the back half of the year. But I would say if you look at where women's took a step back, that would say was mainly a measure of the inventory that we did not have in stores. Thank you. To follow up also, Jill, on the EPS guide. The range moved up to $0.80. The tariff refund was $0.65 of that. Can you talk us through the rest? Any of that operating versus what are the below the line impacts with interest expense and share count? Did anything change with respect to your back half assumptions on the gross margin and SG&A puts and takes? Thank you. Sure. What I would say overall is credit revenue obviously was a standout for the quarter, and we expect that to get better. So high level, that is probably the biggest difference between the guide with tariffs taking in the $0.65, and I would say credit revenue being the remainder. There are some other pokes and takes from the P&L. We talked about on the call, we are going to continue to invest into value. So I think if you look at the margin guide, you are going to expect fall to be negative now, but that gives us a lot of flexibility to make sure that we are being competitive and watching where the prices are in the back half of the year. We know and we set ourselves up for Q4 originally with our guidance, that it was going to be much more promotional and expected Q4 to be down. I would just say now we are set up well with these tariff refunds to invest it back into value and be competitive from a pricing perspective. We also talked about investing it into both media, because we need to make sure people are aware of that pricing change, as well as store apparel. We did some testing in our store apparel where we were much more customer facing with that store apparel, and we saw a nice lift in both of our sales and our customer engagement. So I would say, SG&A will probably be more flat-ish to slightly down on the year as we make that investment. And to your point, that comes out of some of those other below-the-line items like D&A and interest to keep us whole from an EPS perspective. Thanks for the color. Best of luck. Thank you. Your next question comes from the line of Paul Lejuez with Citi. Your line is open. Please go ahead. Thanks. Tracy Kogan filling in for Paul. First question, I was hoping you guys could comment on your free cash flow expectations for the year, and if they have changed at all, and whether that includes the tariff benefit. Is it fair to think your capital allocation strategy, at least for the remainder of the year, would favor debt repayment over share repo, and where do you expect to end the year on cash? My second question is it fair to think that your current trends are in line with what your implied back half guidance is of flat to down 2%? Thanks. Sure. I will start with the free cash flow. I would say I would start with operating cash flow, Tracy, and we think that will probably be in the call it $950 million, maybe up as high as $1 billion, depending on where you put us on the range from that perspective. We still think CapEx will be $350 million- $400 million. We have a lot of projects that we think could be helpful, particularly in the stores as we called out on the call, as well as IT around our digital business as well. So that would put you in that $600 million OCF range, both of which will or free cash flow range, both of which will include the tariff. That is where I feel like we have a great positioning from a cash flow generation, which gave us the opportunity to reinstate a share buyback program, which we had mentioned on the call, first time since 2022. Hopefully you see that as a strong confidence that we have as we continue to build this business, as well as the cash flow generation that this business has brought us forth with, which has helped us be able to invest back in and really show that progressive improvement. I would say in terms of a prioritization, I am looking at both. Obviously we had some opportunistic buys from a debt perspective, so we will continue to watch how those are trading and take the opportunity at the discounts and take advantage of that. But I would not say we are prioritizing one over the other. I also think we have a big opportunity to take advantage of where our share price is as well and do a buyback here. So I would say from my perspective, we have room to do both. I would not say that one is prioritized over the other. I just think debt will be more opportunistic just based on where it is trading at. In terms of where I think we are going to end the year, I would say, we think we need about $700 million, I have said that many times, to run the business. We will probably be over that this year, I would say, just given the cash flow generation that we had and the tariff. So I would say that would probably be closer to $800 million- $900 million in how we end the year, depending on how opportunistic we are in the market from a debt perspective. We've also mentioned to you, we have the debt coming due in 2030 that is a non-call too. We will look opportunistically at that debt as well, just given the high interest rates. We may end the year with a little bit more cash, holding onto that to make sure that we can address those debt levels into 2027 when the non-call period comes up. Got you. Thanks. Your current trend is in line with your guidance for the back half? Sorry, lost that one. I would say we feel very good with the trends. We wouldn't have guided the way we did if we weren't confident in that, Tracy. Thank you very much. Good luck. Great. Thank you. Your next question comes from the line of Dana Telsey with Telsey Advisory Group. Your line is open. Please go ahead. Hi, good morning, everyone. As you think about your consumer, do you see your consumer, compared to last quarter, are they healthier, the same? What changes have you seen in the consumer profile of your core consumer? Then when you think about inventory level planning for the back half, I think inventories were down 3% this quarter. How are you planning inventory levels going forward? It was very impressive with the positive comp that home drove. Anything we should be watching for in home? Then when you mentioned jewelry and impulse as growth drivers for accessories, how are those performing? Is this sequential improvement? Are there any other categories in accessories that we should be watching? Thank you. Thanks for your questions, Dana. I will take the first one around the consumer. I would say that the consumer is in a similar place as where we saw them in the first quarter. Serving a middle to lower income customer who is, and you have heard me describe it this way in the past, of families sitting around the kitchen table trying to make life work. Gas prices, food, heating bills, things like that need to be taken care of as essential components of the cost structure that a family has. Then after that, making sure that they have enough left over to continue to run their household. That's where we are leaning in heavily to value and making sure that all of our efforts are geared toward making sure that value is a part of what we offer, convenience in terms of the access, whether it's in the store or online. When a customer does choose to come see us, they have an inspiring experience as well. We've done some work around making sure that the in-store experience has been enhanced, and we'll continue to do that through the balance of the year. I don't necessarily see that sentiment from a consumer perspective changing very much in the coming months as we move through the holiday timeframe. That's why, as Jill mentioned, we set our plan up to make sure that we would be able to have the flexibility to be competitive as we move through this current back-to-school season and as we head toward holiday, which we know is typically a competitive season. We expect that to be the case going forward. We're staying close to the consumer sentiment. We understand their positioning and their mindset, and we're bringing value everywhere we can to make sure that we're meeting them where they need to be met. I think, Dana, from an inventory level perspective, as you called out, we were down 3%. We're going to expect to run the business down low single digits in the back half of the year from an inventory perspective. We think that's the right place to continue to try to drive top line, but also get a little bit more productivity out of that inventory from a turn perspective. I think, from a line of business perspective, I'll let Michael also chime in here. I think we feel really pleased with home. I think two things that lagged us last year, one was small electrics, which we had to buy down because of tariffs. We don't have to do that this year, and we're seeing really good news coming out of that. Shark, Ninja, anything with innovation really working well for us. The second category, as we mentioned, was home decor. Last year, harvest and Halloween were the first categories really impacted by tariffs. The buys were impacted as we were in and out of the market. We set that early, and we're starting to see strong sell-throughs out of that product, and we're very confident as we move into holiday decor products as well. We think those are both big opportunities from a home perspective as we move into the back half of the year. Jewelry just seems to be something that continues to trend incredibly well with our customers. As you know, we had gotten rid of our fine jewelry. Our core customer, that Kohl's customer, told us they wanted it back. We've brought it back in. It's worked well, and we're expanding that now to 350 additional stores this fall. But on top of that, just really our fashion jewelry, we have given it a home behind our Sephora pad and brought accessories together and really launching and elevating those fixtures has worked well for us. So seeing some goodness coming out of fashion and bridge as well. We are seeing anything really, like with personalization and sentiment, doing well in that category. So we do expect as we move into holidays, jewelry gifting is a big portion of our business. So we think we can really lean into that category and drive some additional sales there. So those are the two big categories. I would say accessories in general, just outperforming. You can see when you look at accessories without Sephora, we are up that mid-single digits. So really a category that is trending well, and we will continue to drive that through our inventory buys and placement in the back half of the year. And Dana, the only other thing I would add on to what Jill said from a category perspective would be, in our kids business, our kids area, toys would be a big driver for us during the back half of the year as well. We made significant inventory investment there across the box. The Toy Towers, where we have items under $10 also, are underpinning this idea around value. And that is an area that we have seen some strong growth in this year and want to continue that momentum with the buys and the inventory investment that we have made behind that particular category. Thank you. Yep. Your next question comes from the line of Bob Drbul with BTIG. Your line is open. Please go ahead. Hi. Good morning. Just two questions from me, really. The first one is, when you look at the trends in Sephora, where do you think that is going? I think as you look into the back half of the year, I'd even say declining, this is sort of a bit of a change, right, in the marketplace. The second question I have is, can you also just talk about traffic trends, what you're seeing with traffic? I think it was slightly negative this quarter, but if you can just talk through that would be helpful for us. Thanks. Yep, sure. Yeah, thanks for the question, Bob. I'll take the first one, and Jill can take the second. As far as Sephora is concerned, what I would tell you is that we're in a cycle where a handful of major brands have experienced expanded distribution. We still have a robust pipeline of existing new brands. They're just not big enough at this point because they haven't scaled to offset the softness that we're seeing from some of those much larger, well-established brands. So our focus with Sephora is really on selling these new brands that are coming through because we still have a robust pipeline, like I said. Focusing on newness. We think in the back half of the year in particular, that the gifting expansion that we have outlined for our stores will be helpful in terms of driving that business. We have holiday outposts going to 130 stores. The gift sets, like I said, really resonate. We've also added some Sephora items into the Q line activity. So those are the things that we're focused on. This is a cycle that happens within the beauty business, and we're just at a point right now, like I said, where that expanded distribution means that some of these large, established brands that we've had in our portfolio for a while, our customers have more access to those brands. We'll build these new items and new brands coming through, and as they scale, that will help to offset. We wanted to be realistic, and that's why I said in the earlier commentary that what we're seeing right now would suggest that the performance that we've seen with Sephora will continue along the same path that we've seen through the first half of the year. In terms of traffic, Bob Drbul, what I would say is that we talked about ATV and traffic both being slightly down in the quarter, and I would say slightly down is probably the best performance we've seen in traffic in some time. I want to say almost till 2019, this is our best traffic performance from a quarter perspective. Really seeing traffic be an enabler of the progress. I think part of that is our Kohl's Card customer was not giving us all of the footsteps they were previously giving us. Kohl's Card being up one, definitely comes with more trips into our store as they shop us more frequently. Benefiting from that perspective, but really feeling great about the traffic improvement that we saw in the quarter. Thank you very much. Your next question comes from the line of Michael Binetti with Evercore ISI. Your line is open. Please go ahead. Hey, guys. Thanks for taking our question here. I guess just a few on the guidance. The high end of the range for the back half embeds, maybe call it 25 basis points of operating margin improvement on a little less than a +1 comp, call it. That would be the best comp we've seen in a while from you at the high end, and you've been leveraging operating margins on negative comps for a long time. Is there some embedded level of reinvestment that you would start to put into play if you did start to turn a corner on the comps in the second half? Maybe you could just walk us through if there's a punch list. Because you just mentioned traffic versus ticket, I am curious on, given some of the changes in opening price point and the success you are having on proprietary brands and phasing into some more of that, improving availability there, how you are thinking about traffic versus ticket build in the second half. Sorry to ask a third one here, but we have heard from some of the mass retailers. They expect deflation in some of these core categories in the second half. As you think about ticket in the back half, have you seen any of that in the competitive set? Or maybe what is important to consider if we do enter a period of persistent inflation as some of us or deflation, sorry, that some of us remember from a few years ago. I will try to hit all these, Michael. Okay. Yeah, no problem. I think from a back-half comp perspective, we have leveraged incredibly well. One of the things I did mention is we are going to invest, though, some of these tariffs into media and store payroll because we see the payback. I would say the investments we are making both in price, in media, in store payroll, we are doing that because we think there is a return to be had off of those, which should help generate top-line growth. If we are not seeing that, then that is when we will make adjustments accordingly. But I think there is going to be a lot of promotional activity in the market, and we need to make sure we are being competitive. That is starting one. But two is then we need to make sure that we are informing our customers through the media side and then really ensuring they have a great experience, whether that be digitally or within the stores from a store payroll perspective. Those are the places that we feel will drive top line and we will get the return out of, and we have a lot of testing that gives us confidence in those investments and the top-line return that we will be getting. I think from an opening price point perspective, I mentioned our ATV was down slightly in the quarter. I have not said that for some time that we have been talking because we had always kind of seen the ticket moving up. We are seeing people trade into the opening price point, as you mentioned, into proprietary brands. It's where we're making our investment from an inventory expectations perspective, and we know that that's where the customer, they're stretched, and they're making those trade-offs. They're buying into our proprietary brands like Tek Gear and Active because it's a little bit more within their budget as their budgets are being stretched. We did see that trade-off happening. We saw the AURs coming down, the UPTs coming up, but not enough right now to offset it completely, which is why it was down slightly. As we move into the back half of the year, I would expect that to continue, especially given the investments we're making in price and the investments we're making in the proprietary brand portfolio. I think I hit all of them. Did I miss one? The deflation from some of the mass competitors. I wouldn't say we're seeing that yet, but I think we'll be prepared, and I think that's where we gave ourself room from a margin perspective, how we're using the tariffs to invest back in. We will be competitive from that perspective. We start seeing that, we will react accordingly. But I think right now, we're just seeing that shift down. But what we need is more units in the transaction. A lot of things we've laid out in our strategy is driving that impulse, deal bars, the under $10 deals, the toy towers. I mean, we just talked about back to school. We have thousands of items under $25. Everything we're trying to do right now is drive value, but get more in that basket and making sure that they leave satisfied from everything they're looking for, which is why we're also investing back into depth around trip assurance. Thanks so much, Jill. Appreciate it. Thanks, Michael. We have reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.