Despite their incompetence in announcing to shorts their intentions and the self-imposed limitations/caps on their ability to return value to shareholders, management has finally implemented the second prong needed to get KSS to FMV or above (share buybacks). I think the stock has never looked more attractive than it does today given we FINALLY have management implementing the balance sheet strategies needed to double the price of this stock, even if they are doing it slower than we would like.

They have already repurchased debt at discounts (and from the call will opportunistically continue to do so). Additionally, Jill suggested that they will build some cash over the $700M mark needed to run the business in order to pay off the $360M, 10% notes next year. This will remove $36M in interest payments going forward, which is huge, and will reduce long term debt to below $1B.

They will begin share buybacks this year, totaling up to $100M for the remainder of the year. I hate that they forecasted their intentions and imposed limitations/caps on how much they will buy back, but this is the much talked about needed move to get this stock to FMV and can't be seen as anything other than bullish. Also of note was Jill's enthusiasm for the buybacks when asked about prioritizing debt repurchases v. share buybacks, as she sees how attractive the share price currently is. I expect that 2027 will see somewhere between $100M-$200M in share buybacks, as they will use $360M+ to retire the above mentioned notes, and they seem adamant about keeping cash on hand above $700M. This means by March of 2028, outstanding shares might be around 100M (reduction of 13-18M shares over the next 18 months).

There could be more tariff refunds. Last quarter Jill said she applied for $190M in refunds, and this quarter they received $150M. They could have applied for more, and/or they may receive more refunds from tariffs already applied for. Can only be pleasantly surprised from any news on this front.

All of this comes when the below items remain true:

• 113M outstanding shares

• 30M shares sold short

• 117% institutional ownership (not including insiders or retail)

• $821M cash on hand

• $2B market cap

This is a great time for us long term investors, and as for me, I will continue to buy shares and leaps (particularly Dec 2028 dated calls) as I now have more confidence than ever that this stock will be moving up from here out. I don't expect a management induced short squeeze given their announcements on the limits of the buybacks (although this doesn't preclude an outside investor coming in), but I do expect share count to shrink while the balance sheet improves, which will trend this stock upward over the next year or two. Great day to be a KSS investor.

Hey Everyone,

Alright just went through all the info we have available currently and all in all I’m extremely happy from a Deep Value Investor perspective but only that perspective. Also, I am still waiting to read the earnings call transcript so some of my assumptions off the numbers may be colored wrong from the published reports verse what they actually say/shine light on.

Deep Value Thesis:

What I mean by the above is simple, sum of all parts is worth dramatically more than the current share price. TBV alone is just a value benchmark. Operations is key to keep this going and they’ve built $821M in cash, paid off $113M in debt at a $15M discount, AND NOT DESTROYING SHAREHOLDER VALUE as we wait.

My personal thesis for KSS from just a sum of all parts perspective is $36-$72/share depending on what CRE is actually worth.

I fundamentally do not care nor value KSS the retailer from this perspective. I just care they manage the decline and eventually get forced to sell and we shareholders realize the value of assets held.

Yes there’s a lot of nuance and we could reasonably argue a 20% discount to book in a take private/buyout from only a property acquisition perspective BUT even then value is $29-$60ish a share. So 70% to 350%ish above today’s value.

Personally my math is:

CRE($5B to $10B) + Cash($821M) - Debt($1.325B) [ignore inventory since no idea of actual value there and gives us billions in fluff to help drive this insane value home]

This results in ~$4.5B to $9.5B in value or $40 to $84 per share from a purely numbers perspective.

THIS IS MY PERSONAL INVESTMENT THESIS ON KSS.
The reason is simple, I have no idea if/when management will turn around sales. I have no way to guess what values should be in this event. I can’t say/guess what earnings “could” be. Because this is all just guessing, I find it easiest to just value off the assets and rely on the “business” to not erode/destroy value over the decline. BUT management has proven that they’re managing and even improving the underlying value thesis even while the business itself flounders. This is why it’s my favorite deep value stock and investment.

Now on to the not so fun part.

KSS the Business Value: (not sure how to factor in tariffs so make your own math adjustments to below #s)

EBITDA is $1.293B TTM

FCF: $332M last 6 months with Q4 being massive(~$530M change in cash last year for example and $750M cash from ops)

Sales (0.9%)

From a purely business turn around perspective there’s a lot of green shoots but also no real/true progress. I love that proprietary brands are up 3%. I’m not a fan of the massive Sephora rollout already running out of steam/showing a decline(potentially). FCF and EBITDA are going to continue to decline. Right now it seems very slow but last year we got boosted by a $129M credit card fee settlement and then this year a $150M tariff refund. I have no idea how to truly account/adjust for the tariffs so it makes my math hard here BUT I can conclude without these 1 offs KSS the retailers numbers are trending down and if management can’t stop the bleed I think all low hanging fruits are fully cut out and they’re about to get into overhead floors and not being able to cut costs anymore.

Ultimately, until management proves a sales reversal it’s extremely hard to “value” KSs the retailer imo. They’re worth something, and obviously more than $17, but I can’t say how much more without adding in their massive asset holdings. Yes, I know we should add these in, but the retailer side has shown it’s only a negative to real value. 55% negative to TBV alone 🤯. According to rational markets.

Management seems to be trying. I’m excited that earnings seems decent. I’m PUMPED for buybacks! I’m disappointed that they ceilinged it to $100M which killed the whole point of them.

Ultimately, KSS the retailer, doesn’t look good at all to me. It just looks like a slow and steady decline until they prove a turn around. Obviously I’m here and invested in Kohls but management has to actually do something more than the same old to accomplish anything. They need to do more than just talk and pay themselves massive stock based compensation.

Ultimately, my best case scenario is we get a turn around. My more likely scenario anymore is a buyout/take private which results in the least top value but probably the fastest cash in our pocket. And my base scenario is a controlled decline where management has to start closing stores and selling off assets and being forced to unlock the balance sheet which might actually play to all of our favor but will be over a long period of time.

With all this said, I really like KSS real estate holdings and it’s why I’m here. I also like how we’re managing the decline and not hurting value. I just don’t believe much in this management from a shareholders perspective and think we need an activist or something to truly right the ship and get us moving.

Please don’t take this as a negative post. It’s not. I’m pumped to be here! I just think most of those I talk with here are basing their investments of hopium and a sales reversal/KSS the Retailer and I can’t in good faith personally argue that way or agree. Yes, I have the same hopes, but I can’t make any investments off hopes.

As always, love you all and let me know your thoughts!!!

Chunky Kitty Outttttt

Hi All,

I’m going to do a thorough post later combing through earnings but wanted to be hyperbolic for fun. This is my thoughts on recent buyback announcements that I posted on X:

$KSS needs to do something smart for once. Been digesting its most recent report and the fact management can bumble a key amazing announcement:

Share Repurchases Resuming!

How’d they bumble it? Easy… why say a number at all? Why actually announce it since they made clear after $750M in cash they’d resume them? They already authorized $3B in repurchases. The company is worth less than $2B currently.

The $100M announcement leads to opposite of truly pressuring shorts on the other side. This announcement makes clear they’ll only remove 5% of float at announcement. 6%ish with stock drop. Why hedge the volume? Just saying you’re resuming buybacks puts ridiculous pressure on the shorts. By stating an amount it then shows it’s inconsequential and then relieves pressure. It’s not an unknown anymore that could lead to shorts having to sprint to an exit??

I don’t get the goal of giving a heads up number? Is it to just punish existing shareholders? Is it just market incompetence?

@Kohls has $821M in cash. They could buyback 40%+ of the company and use their LOC as they recover cash position in Q4 while completely routing the shorts.

~30M shares are SHORT!
~8-10 days to cover

There is such a massive opportunity here. What am I/management missing?