KSS Stock Rises 20% on Q1 Beat as Turnaround Gains Traction

Kohl’s Corp. NYSE: KSS delivered first-quarter results last week that were better than Wall Street had feared. Although sales were still weak and Kohl’s posted a quarterly loss, the retailer delivered its best comparable sales performance in more than four years and exceeded analyst expectations for both revenue and earnings.

The report sent shares higher, raising hopes that the retailer’s years-long turnaround efforts may finally be gaining momentum.

Q1 Results Top Expectations Despite Declining Sales

For the quarter, Kohl’s reported a loss of 13 cents per share, matching its loss last year and coming in ahead of Wall Street expectations for a loss of 18 cents per share.

Revenue of $3.17 billion was down 1.7% from last year but beat analyst estimates by about $177 million. Comparable sales (comps) were down 1.1% year over year.

The company said the decline in sales was mainly due to fewer in-store transactions.

Inside the business, Kohl’s proprietary brands were the standout, with comps up 6%. Four lines of business posted flat to slower computer growth, including women’s, children’s, utilities, and home. Men’s and footwear were weak and underperformed for the company overall.

The company also strengthened its balance sheet during the quarter, improving its cash position by more than $800 million and reducing inventory by approximately 8%.

Kohl’s Confirms Full-Year Outlook

Kohl’s also reaffirmed its full-year outlook, as it continues to expect comps to be 2% lower compared to 2025. The company also maintained its forecast for an operating margin of 2.8% to 3.4% and earnings per diluted share of $1 to $1.60.

On the earnings call, CEO Michael Bender highlighted the company’s encouraging early results, saying, “Last quarter’s continued progress demonstrates our ability to execute strategically and make necessary changes to our business.”

He added, “Going forward, we remain mindful of the significant work ahead of us, but the preliminary Q1 results give us great confidence in our ability to execute against our key plans.”

The company’s turnaround strategy was focused on three main initiatives: delivering a more curated and balanced assortment, repositioning Kohl’s as a leader in value and quality, and developing its omnichannel platform to create a seamless shopping experience.

Positive Surprise Sparks Sharp Rally

Investors applauded the Q1 report, sending shares over $16 during the session before closing at $15.64, up more than 20% on the day.

The rally was a welcome boost for the stock, which has been falling steadily since hitting a 52-week high above $25 in December. Even after the post-earnings surge, the stock remains down about 22% year to date.

However, shares have staged a major recovery from a 52-day low below $8, which was reached on June 2, 2025. At the current price of $15.88, it has risen more than 95% since then.

The poor performance of Kohl’s stock is nothing new. The retailer has spent years struggling with declining traffic, increased competition from lower-priced retailers, and changing consumer preferences, all against a challenging macroeconomic backdrop. As a result, shares have lost more than 70% of their value in the past five years.

Wall Street Remains Skeptical Despite Rally

While the latest quarter provided encouraging signs, Wall Street remains cautious at Kohl’s. The stock carries a consensus Rating of Reduce. Among the analysts covering the company, six rate the stock a Sell, eight rate it a Hold, and just two recommend the stock a buy.

After the earnings report, analyst reaction has been mixed. One analyst lowered the price target to $14 from $15, while another modestly raised its price to $9 from $8. This week, Citigroup upgraded Kohl’s to Buy from Neutral.

The average price target of $14.92 is higher than the current share price, suggesting that analysts see a potential downside from current levels. Price targets range from a low of $8 to a high of $22.

Short Sellers Are Still Skeptical

Investors have continued to take a bearish stance on Kohl’s with about 25.8 million shares, or 23.3%, of the float sold short since May 15. However, that’s down from more than 30.5 million shares, or 27.5% of the float, at the end of March.

From a valuation perspective, Kohl’s may look very attractive at current levels. The stock trades at about 6X earnings, a discount to the retail industry’s average price-to-earnings ratio of about 11.6. It also trades below some of its retail peers. Dillards Inc. NYSE: DDSreported better-than-expected earnings in May, trading at about 14X earnings, while Macy’s Inc. NYSE: Mscheduled to report earnings on Wednesday, it trades at about 9X.

While Kohl’s turnaround is still a work in progress, the latest quarter delivered a positive surprise, suggesting the company’s efforts may be starting to pay off. Going forward, investors will be looking for continued improvement in like-for-like sales and evidence that management’s strategy can deliver sustainable results.

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