Kohl’s had everyone convinced the store was on fire yesterday… turns out it was just burnt toast in the breakroom. 

Let’s pour one out for the short sellers who thought they had the easiest bag of their lives. After news broke that Kohl’s was begging suppliers for more time to pay invoices (translation: “we’re broke, please don’t send collections”), the stock tanked 12%. Bears were already writing their victory speeches “First off, I’d like to thank my mom for believing in me…” But what’s that old saying? Don’t count your chickens…

Because this morning Kohl’s has pulled a full uno reverse. Shares ripped more than 20% after the company absolutely smoked Wall Street’s earnings expectations. And here’s the absurd part: they did it without a permanent CEO at the helm. This place has been through three chefs in three years, and somehow they’re still out here cooking up a feast for the Suits in Manhattan. This ain’t a meme stock anymore.

The receipts: EPS came in at 56 cents adjusted, nearly double the 29 cents analysts expected. Revenue clocked in at $3.35B, beating estimates. Net income? $153M vs. $66M last year. Even comp sales only fell 4.2%... better than the doomsday slide everyone had penciled in. And now they’ve tightened guidance to 50–80 cents per share, up from the sad-ass 10–60 cents they were clinging to before. Overnight, Kohl’s went from “don’t unplug us” guidance to “maybe we actually know what the f**k we’re doing.”

(Source: CNBC)

More importantly, Kohl’s didn’t “turn it around” with some genius master plan… they just did the corporate version of cleaning their room before mom got home. Interim CEO Michael Bender said the company cut expenses, trimmed inventory, and expanded margins. Inventory fell 5% year-over-year to $3 billion, which is a big deal when you’re trying not to drown in piles of unsold seasonal sweaters. 

They’ve also gone all-in on Sephora, which now has a shop inside every Kohl’s location, and they’ve pulled back in other areas like jewelry and fulfillment centers to keep operations lean. Add in more coupons on branded products to keep middle-income shoppers interested, and suddenly Kohl’s doesn’t look like it’s on the brink of bankruptcy anymore.

That said, the bigger picture is still pretty rough (to say the least). Kohl’s market cap was almost $7 billion in 2021, and now it’s sitting closer to $1.5 billion. Sales have been shrinking for three years straight, and the revolving door of CEOs doesn’t exactly inspire confidence in the long-term game plan. But for today? Short sellers got humbled, longs got paid, and Kohl’s gets to say it lived to fight another day.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.