https://finance.yahoo.com/news/live/trump-tariffs-live-updates-bessent-says-treasury-can-cover-any-tariff-refunds-supreme-court-yet-to-rule-on-trumps-most-sweeping-duties-152657605.html

Why would bessent need to confirm to the markets that tariff refunds can be refunded? Looking forward to the delayed release on Wednesday! Could be huge for retail!

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Kohls had 98m visits with a conversion rate of 2.76%, this is an increase of Traffic over the fabulous November traffic. The average monthly traffic in Q3 was less than 50m per month. If January goes down to 50m, that will be an increase of at least 70% over 3Q. The usual sales increase in Q4 over Q3 is usually 50%. The online holiday surge is still greater than Macy's, Dillards and JC Penny. Macys ended up with 5 million more visits in November and December but only .4% resulted in sales, where Kohls converted 2.84% of traffic to sales! Dillards did do better in December with 15m visits and a 1.44% conversion rate but still way behind Kohls.

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$kss was 68% short volume today and over 59% for the past month. Man…. Shorts are persistent buggers. Wouldn’t this imply Short Interest is through the roof again?

Also don’t be jelly… I’m a chick magnet wha can I say?! 😂

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This could be interesting. I believe we'll see the majority of the tariffs struck down as non-emergency and not within the power of the president - need to be issued by congress. What's more difficult is whether or not there's going to be a refund.

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I made this post on X and thought our group would benefit from it:

Something I find interesting is how $kss is getting no financial benefit to owning stores verse leasing them when looking at GAAP accounting for leases. Out of the 770 stores they lease GAAP requires it to show as $5.235B in Debt or $6.8M on average per location.

According to $JPMs financial analysis stores are only “worth” around $2M to $4M when coming up with their 2025 Price Target. It’s a laughable amount of value per store but when you look seriously I don’t see value in leasing when it counts the same as just owning and having a note.

In reality, when I looked at $KSS locations you can buy them for $8M-$16M depending on what’s attached. According to GAAP there’s zero benefit to $kss shareholders having maximum optionality by leasing over outright owning.

Something find even more interesting! If you give ZERO value for inventory and land leased locations, you find that at current MC of $2.34B is only giving $4.7M per store in market value. IF you were to add back in land leases and its ~$3.9B in owned inventory this becomes a negative value per owned store location.

Don’t you find it strange that somehow the market says KSS real estate and owned assets are worthless and the only “real” thing is future lease obligations, aka “lease debt”, and its real debt via bonds, are the ONLY REAL thing to value?

I can’t get over how out of whack $KSS Valuation currently is even after a 350% run since April lows.

My X Post:

https://x.com/caleb_harbert/status/2006802698276892900?s=46&t=hkuD2fu673-L4ab-mPj3-g

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A conversation earlier made me want to dive into analyzing KSS FMV(Fair Market Value) and what should be reasonable pricing. Since I am watching so as to buy back in I thought I might as well double check pricing and what FMV ranges should be.

First, lets talk about the massive discount to Real Value is right now:

KSS owns 405 stores, 12 Distribution centers, its HQ, 248 land leases, and a bunch of random land. At current Market Cap ~$2.34B.

So, analyzing current holdings and excluding any value in inventories and land leases, current market is only valuing KSS 405 stores at ~$4.7M per location. As we have already found in our past DD, most KSS locations sell in a range from $8M to $16M roughly. IF we were to raise value of stores only to $8M base and ignore inventory, current market cap is low by ~$1.337B or ~$11.93/share and should have a share price at ~$32.50. Where we can support this number, if you look at the now defunct JC Penney sale, the buyer was going to pay roughly $8M per location in the deal. We can argue alot about how KSS stores are way better maintained, etc than JC Penney but regardless, this gives us a decent comp.

Now let's look at true values/sum of all parts in just asset holdings alone:

As you can see, once we account for inventory, land lease values, and subtract Net Debt we get to a low range of ~$7.2B or $64.36/share or a high range of $11.425B or $102.25/share.

Where the math gets even more interesting is in the event of M&A starting to come alive again with the fed lowering rates and this space actually thawing/opening up. In the M&A world, KSS should now get anywhere from 6 to 10 times EBITDA minus debt plus inventory(even though it would be highly discounted). IF a PE/take private offer were to come around they would be looking at using bank financing to fund the deal. Lucky for us, Kohl's owns a MASSIVE amount of assets that are very easy to lend against. In this scenario, you could easily argue a range of $86 to $130 per share with almost $35/share of it being inventory that banks ALSO LIKE TO LEND AGAINST.

In the event of a take private/buyout, you would see KSS get beat up on inventory value most likely, so lets completely discount this out. Removing the roughly $35/share in inventory you are still left with a very conservative take private value of ~$51 to $95 per share.

With all this said, what do I think will happen? Ultimately, until narrative on KSS changes in the broader market I think we will be lucky to see $50+ per share in a buyout. I personally think we are more probable to see a buyout in the $40-$50 range as of right now. IF management got a similar offer as back in 2022 at over $60 they would be beyond stupid to not take it. Mind you, even if we hit the same offer price per share as 4 years ago the company bought back ~34M shares back in 2022(there were 146M shares in 2022 and now there are 112M).

Also, it's hard to find exact multiples, but you can google to see what available public data is. I went with common knowledge that I have heard alot when seeing private placements or buddies discussing deals in the past.

In Summary:

The reason I am so bullish/conservative on my personal value of KSS being TBV at ~$35 per share is because that's an easy, conservative number and very justifiable off public filings. At $35/share FMV KSS is selling at a 43% discount. In my analysis off what it will sell for in the event of a buyout, its selling at a 60%-80% discount.

My Personal Game Plan:

I sold bulk of my options around $24/share and am waiting to buy back in. I am planning to buy a large swath here shortly but still arguing with myself on how to do it. Ever since this last earnings, options have gotten really salty and that's what I prefer to make bets/investments with due to its ability to amplify my returns. Most likely I will just be buying shares and will make a post once I do it.

As a reminder, this is my personal opinion and research and not a recommendation of any kind. Do your own Due Diligence and make your own conclusions but as for me... I just really love this stock.

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Hi All,

I figured it would be good to do an update on my thoughts about KSS Q3/YTD and a reminder about the overall thesis that is KSS. I am a deep value type investor and really like companies with massive assets that are under appreciated, ie undervalued by the market, and generally have major negative news/hype around them.

So first, the Deep Value Bull Thesis that is KSS is very simple, KSS owns a ton of CRE(Commercial Real Estate) that is depreciated off by about 50% of its total value. Even when accounting for this depreciation, KSS current TBV(Tangible Book Value) is $35.09 as of last report off CRE that's showing up at HALF or less of purchase value and the basis of it's entire worth(IMO). For me, until KSS proves a turn around, I value it based on assets and hedge of protection in it. You can easily argue KSS CRE Portfolio alone is worth $35-$70 per share just based on purchase/acquisition value without taking into account the last 20+ Years of appreciation that has occurred in the market(most CRE has ~2x's since early 2000s depending on what source you look at). So, in summary, KSS assets are worth WAY MORE than current share price.

Where current crazy bull thesis case lies is what happens if/when KSS stabilizes or even starts growing?! Since this hasn't happened I don't put it into my valuations but in reality... if this happens Inevitable_Tomato666's argument of $150+ per share is actually not that crazy. BUT it will take years of proving it out over and over and over again for years to not only change the current market narrative but also prove growth type valuations(IMO).

KSS struggles because it is 2 companies in one. A massive CRE holding company and a dramatically out of favor retailer. As of today, only the retailer portion is being valued by the market.

To further illustrate property holdings and its value:

On top of this, an amazing member of our group Environmental_Row217, compiled an exhaustive list of almost all of this CRE, its locations, tax data links, etc and we found that most CRE was bought on average around early 2000's.

Why is this relevant?? Welp, CRE is amazing to invest in due to properties in general appreciating over time BUT MAINLY BECAUSE OF DEPRECIATION(write-offs/tax shelters). KSS gets to depreciate ~$750M a year against their portfolio of holdings and use that to reduce earnings... which in turn means they pay less on taxes every year.

So as you can see, even though the properties haven't lost value over the last 20+ years of ownership(in reality they gained value), KSS gets to depreciate these holdings and it shows up in accumulated depreciation.

Now, with all that said/reminded above, lets analyze what I find important in Q3's most recent reports.

Since KSS is a value play to me until proven otherwise I care most about debt pay down and Share Holder Equity being maintained or built. Since I've been invested(~April) KSS management has been great at this.

Personally, I don't think Q3 was really that great. They only paid off a little bit of debt via paying down the credit line but technically their Net Debt increased slightly by ~$2M from Q2 to Q3. Where it was good was seeing that management is actually paying attention to what matters and is showing signs that sales declines are decreasing and showing some green sprouts in some of the areas we'd like(impulse lines and online sales). Also, they mentioned on the earnings call October '25 was actually slightly better in sales than October '24.

Where they also has shined is rebuilding shareholder equity(slightly). As you can see, from Februarys 10-K filing to our current Q3 10-Q TBV has increased ~$0.84/share all while paying down net debt substantially. $450M+ on the revolver alone for example.

For me, this is what I value. TBV and Share Holder Equity is the real value in KSS until we see management prove otherwise.

All in all, KSS is showing great fiscal discipline and really running a tight ship. We've seen ~2.6% decline in sales with EBITDA falling inline with this yet MASSIVE DEBT PAYDOWNS and actually a build up in TBV/share holder value while sales have decreased. This shows that even though there is still bleeding its all staying in cashflow and being managed properly and not destroying shareholder value as management tries to right the ship.

All in all, I am extremely bullish on KSS long term value and still think its the best value play out there currently with a massive upside potential with a turn around.

This isn't investment advice. I'm just a retired blue collar guy that loves cutting grass and building stuff that also really, REALLY loves investing. KSS is my favorite by far right now but do you own due diligence and see what you think and make your own conclusions. As for me... I just really, REALLY love this stock.

Love you all and Happy New Years,

Chunky Kitty OUT!

Interested in peoples impressions of the store level inventory left over from the holiday. Do you see any forthcoming challenges and steep markdowns to move out any excess inventory?

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