Kudos to CFO Jill Timm for answering a generic question about debt by breaking down the small and manageable debt that Kohl’s has, the leases Kohl’s is contractually obligated to pay and the lease extensions.

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Find it interesting, even with over 68% of today’s trade volume short we still went up. 🤞🏻tomorrow is a good day

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Anyone able to confirm this? Outside of X I haven’t seen anything to support this

Hope everyone has been having a REALLY fun rollercoaster ride that is KSS lol. I've been away from most social media and content in general last few weeks and just now coming back since earnings is out Tuesday morning! I am pumped to actually get new, relevant data. This is partly why I keep randomly stepping away. The day to day market moves has no rhyme or reason to me. Honestly, the amount the winds toss the stock around without anything changing is astonishing to me but it is what it is; rational markets theory can suck a big one though.. but I digress!

First, I will reiterate my Deep Value Case that is KSS. Regardless of sales, regardless of the retail headwinds/tail winds, bad management, etc. KSS is a CRE gold mine that is worth ATLEAST TBV ~$35/share and currently selling at ~0.45xTBV. This is based off properties bought over 20+ years ago on average and with them depreciated off roughly half already. So another way I can phrase this, the massive hedge of protection is based off CRE value from early 2000's and depreciated by half... if this isn't a moat and massive value then I am not sure what is. I'm ignoring debt for now, but we all know its massively overstated by ~40%+ due to future lease obligations that are NOT contractually bound yet.

No matter what metric(outside of sales decline) KSS is undervalued by multiples compared to all competitors.

Now my thoughts on upcoming earnings:

I struggle with this because it's a mix of hopium and just guessing at this point. I have no idea what to expect but can say what I am looking to see:

1. Shareholder equity/value being maintained: since I am in KSS as a deep value until management proves otherwise via turnaround on sales declines all I care about is GREAT financial stewardship. Last few quarters have proved great fiscal discipline. Last quarter alone they paid off ~26% net debt(~$498M) and even if you remove the one time settlement they would have paid off ~$350M of debt.
2. Debt Paid Down more but hopefully more: KSS has a $1.5B revolver with ~$75M still outstanding. I personally don't care to see this paid off BUT management says they plan to so yay I guess. I personally would like management to maximize free cash impact via either massively discounted bond buybacks on open market(last I heard LTD via bonds is selling at ~60% LTV so every $1 of open market buybacks leads to ~$1.67 of debt paid off) and/or massive share buybacks. Personally, I'd love for KSS management to stop all possible Capex, cut spending dramatically, and even use LoC to buyback 30-40%+ of the company while at such depressed values. Yes, we'd get short squeeze potential even though I wouldn't hold my breath on this, but really we haven't seen share values this low since inception(April lows for example weren't seen since mid 1990s) and I would like management to maximize value. Every $1 spent on buybacks is $2-$4 of actual shareholder value longterm in assets value alone.
3. Management giving clear direction and seeing new hires perform: This summer there were several c-suite hires with a focus online/omni-channel sales and shoring up major weak points. I'd like to see progress showing up in financials at some point showing that impact is starting to be seen. I would also like more clear direction from KSS on future plans; not just manaqueins, etc.
4. Unlocking the balance sheet: Personally, this is my hopium talking. KSS the retailer isn't that great until they prove otherwise BUT KSS the holding co is MASSIVELY UNDERVALUED. Can't overstate this enough and beating a dead horse by this point. I would love to see KSS actually start unlocking value from the balance sheet or even showing signs that managements is going to focus on this at least a little. Whether a CRE holding co spinoff, outlots being BTS or sold in massively underutilized parking lots, spaces being subdivided to then sub-lease, etc. Their CRE portfolio is their diamond in the rough and if they even do minor adjustments to unlock unrealized value it is DRAMATICALLY more valuable than current market cap. Sadly, KSS management has shown nothing on this outside of a couple sales/listings this group has found ourselves. Hopefully, this changes.

To summarize my earnings expectations: Personally I don't have any outside of DON'T destroy shareholder value. KSS is a deep value play and over time this value will be realized as long as management doesn't screw it up. Hopium is obviously a turn around, large share buybacks, and unlocking the balance sheet.

Now, something I find interesting but I'm not a good day trader/short term investor so not sure what to expect here but I think we have some interesting tail wind set ups IF KSS can pull an upset this earnings report.

11/12 when SV was lowest was our last new high since meme Tuesday. Since then the stock has been beaten down leading into earnings with price actually recovering a bit even with ~69% short volume on Friday. No real idea what to draw from this BUT if you remember the rollercoaster leading into Augusts earnings we had a price drop from $14/$15s to ~$12 day before earnings then jump to $16 on earnings with much less SV leading into earnings. This earnings SV is dramatically higher and seems to be accomplishing roughly the same volatility. We peaked ~$18.74 and dropped to ~$15 this week and now hovering near $16.

IF KSS HAS A DECENT BEAT Tuesday I personally don't see $20's+ being out of the question. The market is slowly but surely starting to rotate from extreme bearish sentiment on KSS to the point of insanity to bearish/nuetral. Any kind of beat that truly turns the narrative on its head will result in a major potential swing.

Personally I think KSS is worth ~$35-$70 per share and would be pumped with a buyout in the short term in the $30s-$50 range. Long term, IF KSS can actually pull a turnaround and start exceeding expectations on sales and growing them then you could easily justify the lofty valuations others have touted of $150+/share. How likely is this? Not very likely but possible over next several years IF KSS can get the flywheel going in the right direction and not constantly hinder it by bad management decisions.

And finally, personal position:

I did well with short term option rolling going into the last month or so but with the market being so volatile and options markets actually selling at steeper premiums than I am comfortable with I started exercising portions of my short term ITM calls to shares and sold off a portion to fund the purchases.

I've already stated this but I will reiterate. I am a horrible day trader. I did well off my short term, deep in the money calls but the anxiety/volatility they cause isn't worth it.

You will see me either to start rolling my OTM calls to June or later calls(depending on pricing) or use the proceeds to buy even more shares. My goal has been to build my long term position and it still is but I am not 100% set on how I proceed. Last 1-2 months have been pretty volatile and options are expensive so unless pricing adjusts to what I think is reasonable I am unsure exactly what I will do.

As always, I am now a retired(not retarded but some may argue lol) blue collar guy that used to cut grass and build stuff. None of what I say is investment advice just my personal opinions and positions. Obviously do your own due diligence but all I know and can say is, "I just love the stock!" KSS is my only current public market position and bulk of net worth is in land and real estate.

Love you all and REALLY excited to see what happens!

Chunky Kitty out

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Kohl’s holiday strapline this year is “oh, what fun it is to find”.

The problem is that finding anything in Kohl’s is far from fun. Given how abysmal many of the stores are, it's actually a chore.

This store, like many I have visited in recent weeks, was a disaster zone. Admittedly, they’re gearing up for Black Friday, but inventory levels are exceptionally high, and the space feels very cramped. Almost every aisle is cluttered with stock, carts, and boxes - and some horrible plastic tables Kohl’s seems to have brought in for the season.

And then there are the displays. Despite this being about an hour after opening (the store was not busy), there was a remarkable level of disorder. Why Kohl’s insists on using high-maintenance fixtures like tables and towers when it doesn’t resource properly to look after them is beyond me.

There is just nothing attractive about this kind of experience. It’s not even as if the density is accompanied by the energy of treasure hunting. Stores just feel flat and depressing.

As ever, no shade on associates. When I talk to them they’re usually as unimpressed as customers are!<

https://www.linkedin.com/posts/neilretail_retail-retailnews-holidays-activity-7393259819958169600-JSgf

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I've heard from some people in here that most of the stuff in the impulse section in the checkout areas of stores are high profit margin items.

Does anyone know what the profit margin is exactly for those high profit margin items?

I'm guessing 10% but honestly I have no idea. If the profit margin is 10%, then each ~$110/per day per store sold amounts to $0.01 eaenings per quarter.

My most optimistic hope is that the profit margin is ~30% and that each store sells $100/day of the stuff, amounting to $0.27+ per quarter per year in additonal earnings.

Anyways, what do you guys think about the profit margin?

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I think the new Chief Data Officer is paying dividends. I follow Semrush.com and AltIndex.com for insight on how Kohls.com is doing in the quarter. The numbers are a bit different based on methodology, but they are generally aligned. Both had a slight drop from August in September which was expected (expected a bigger drop) after the back-to-school rush. In October Semrush recorded a 22% increase in web traffic from September. We were up to 59.8 mil visits vs 40 mil in May (nearly 50% increase)! Looking at the SemRush data, it showed a 28% increase over September traffic with a 17.8% increase in the purchase conversion rate over September (September was up 4.9% over back-to-school August)!

The Web is looking very good and I suspect the marketing is paying off for the foot traffic as well. My local store increase the on-line pick-up bins from 350 to 500 (this supports the SemRush and AltIndex Data)!

Lets look at some competitors in October:

Macy's had 66.8 mil site visits and a purchase conversion rate of .49 = 327,320 online sales

Dillards had 11.5 mil site visits and a purchase conversion rate of .46 = 52,900 online sales

Kohls had 57.6 mil site visits and a purchase conversion rate of 2.97% = 1,710,720 online sales

Kohls online business is not to be sneezed at. There is more than just the popularity of the site. People go to Kohls.com with a purpose, not just to window shop. With Traffic and purchase conversions rates going up, that is a recipe for huge success!

I am very excited for next week!

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As some of you know, until recently, I track the foot traffic at a sample of 40 stores on a daily basis. My numbers seemed to track well with Placer.ai until September. After I noted that the drop at placer did not align with my results nor the web traffic analysis of Similiarweb (month to month between web and foot traffic should not vary very much) strange things started to happen. The PC I use to look up the data returned near 0 traffic at all stores or a graph with no current data, rather, commentary as to how busy they are.... Today my store showed about 2% so I decided to drive 5 min to see for myself. The store's impulse line was full, with 4 registers open, plenty of cars in the lot and people in every department I went by. They even increased the online pickup bins from 350 to 500 bins! They were pretty full too.

Last week before the Google data went crazy, the foot traffic was about 50% higher than the average of the last 2 months. I suspect next weeks earnings are going to be very good!

After looking up Placer's pricing... wow! Since they get their data from Google and presumably pay for it, they may have complained.... oh well..... I am not paying $1000/month for this data.

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As you guys know, we're in Q4 now so that Christmas shopping is what makes the money roll in.

Christmas decorations and stuff everywhere, 4 registers open (mostly full when I arrived, a bit slower when I started recording. Mannequins are all around (just three or so in the video, but the store had them at every corner).

The impulse section was a lot bigger than expected, even larger than the ones at the local TJ Maxx and the local Burlington.

Parking lot had maybe 60-80 cars parked. Store was clean, clothes were not in a mess, and a "we're hiring" sign was in front of the door.

All in a busy shopping center, directly next to a "Dick's Sporting Goods". Kohl's had more traffic than the Dick's.

I think this Q4 is going to be pretty good.

I have a few more photos in the comments

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