Key Stats for Kohl’s Stock
- Price Change for Kohl’s stock: 42%
- $KSS Share Price as of Nov. 25: $22.42
- 52-Week High: $22.46
- $KSS Stock Price Target: $15.61
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What Happened?
Kohl’s (KSS) stock exploded higher on Tuesday, jumping over 42% after the struggling department store chain delivered a surprise profit and better-than-expected sales.
The rally came just one day after the company officially removed the “interim” tag from CEO Michael Bender’s title, confirming him as permanent chief executive.
The third quarter results showed real progress in Kohl’s turnaround efforts.
- The company earned an adjusted $0.10 per share, crushing Wall Street’s expectation of a $0.19 loss.
- Revenue came in at $3.58 billion, also beating estimates.
- Comparable store sales fell just 1.7%, representing the third consecutive quarter of sequential improvement and significantly better than the 3.2% decline year-to-date.
This marks the second time in two years that Kohl’s stock has surged roughly 40% in a single trading session. When it happened last time in July, there was no clear catalyst, and the stock appeared to become the latest meme play.
This time, however, the rally is backed by tangible business improvements and strategic progress.
Bender emphasized that momentum is building. “These results are a direct reflection of the progress we are making against our 2025 initiatives, reinforcing our confidence as we continue to move in the right direction,” he said during the earnings call.
The CEO officially took the permanent role on Monday after serving as interim chief executive since May, when former CEO Ashley Buchanan was fired for cause over allegations that he improperly funneled business to a vendor who was a personal contact.
Bender has been a Kohl’s board member since 2019 and previously served as board chair, bringing over 30 years of senior leadership experience in retail and consumer goods.
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What the Market Is Telling Us About Kohl’s Stock
The massive surge in Kohl’s stock shows that investors are starting to believe the turnaround story. The company is executing on three key strategic priorities that are clearly resonating with customers.
First, Kohl’s is rebalancing its merchandise assortment to serve a broader range of customers. After focusing heavily on attracting new shoppers in recent years, the company unintentionally neglected its core loyal customers.
Management has been fixing this by bringing back proprietary brands like Lauren Conrad, Simply Vera Vera Wang, and Tek Gear, which performed well during the quarter.
The women’s business, which is critical to overall company performance, showed significant improvement and aligned with company results.
Second, Kohl’s is reestablishing itself as a leader in value and quality. The company delivered positive proprietary brand sales for the first time in the quarter, led by brands like SO, Tek Gear, and FLX. This is crucial because proprietary brands carry higher margins, enabling Kohl’s to offer better opening price points to price-sensitive customers.
After years of excluding growing numbers of brands from its signature coupon promotions, Kohl’s brought back coupon eligibility for key items.
This move is driving meaningful improvement with Kohl’s Card customers, whose sales performance improved by over 500 basis points from the second quarter.
Third, Kohl’s is delivering a more frictionless shopping experience. The company completed the rollout of 613 impulse queuing lines in nearly all stores during September.
This initiative delivered over 40% sales growth in the quarter by adding incremental units to customer baskets. Jewelry surged 10% as it established accessories as a destination behind Sephora.
Gross margin expanded 51 basis points to 39.6%, driven by better inventory management and mix benefits from positive proprietary brand performance.
Inventory declined 5% despite comparable sales falling just 1.7%, positioning it well for the holidays. SG&A expenses fell 2.1%, demonstrating cost control even as the business invests in the turnaround.
Operating cash flow should reach $1.3 billion for the full year, with borrowings on the revolver declining by over $700 million from last year. Management remains committed to entirely exiting the revolver by year-end, which would free up $1.5 billion in additional liquidity.
While other revenue (primarily credit income) declined 17% due to lapping last year’s co-brand launch, the sales improvement among cardholders suggests the program is stabilizing.
Payment rates remain elevated, but loss rates declined slightly in the quarter, indicating better portfolio health.
For the fourth quarter, Kohl’s stock investors should expect continued progress but remain cautious about macro headwinds.
Sephora, which has built a nearly $2 billion business in just 4 years, posted 2% sales growth, with comparable sales down 1%. While growth has moderated as the partnership matures, management remains excited about the pipeline.
Looking ahead, Kohl’s narrowed full-year guidance with net sales expected to decline 3.5% to 4% and comparable sales down 2.5% to 3%.
Adjusted diluted earnings per share should land between $1.25 and $1.45. Importantly, October delivered a positive 1% comparable sales gain, the first positive monthly comp in some time.
The big question for Kohl’s stock is when the company will return to sustained positive growth. Management didn’t provide a specific timeline but emphasized that sequential improvements are building momentum.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
