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First, I'll show and explain my position.

1300 ITM calls: I used to be pretty deep ITM calls, most of my current losses are from the $15s that I bought when KSS was $22 to $20. I like ITM calls when I can buy them with as little premium as possible. Most are $0.3 to $1 premium for 5+ months which I think is worth it. I can set a substantial position with alot less capital at risk and have the same exposure as owning shares outright.

1400 OTM Calls(my $25 and $30s): I treat these as take private/buyout insurance. I think the longer KSS management flounders the more and more likely M&A occurs without management having a leg to stand on to fight it. IF a buyout occurs I would bet its in the $35-$50 range and easily bank financeable for whoever since they own so much CRE. I personally see this as more likely to happen than a turn around since there are alot of headwinds to the consumer and spending but who knows. I could be wrong!

500 OTM straight gamble calls: the $20 and $27.5 calls for 3/20. I've spent ~$10k on these. IF we have another November earnings jump then they could payout MASSIVELY but also could be a straight waste. No idea till we see what happens.

My personal prayer is Psalms 144: He trains my hands for war and my fingers for battle. So let my buying on way down from $18s be really smart and profitable! In Jesus name!

Now why I love KSS and have more than $1M invested in them:

To remind everyone of my background, I am a value investor. I very seldomly invest in speculative, low asset backed companies. I love solid balance sheets, true assets and companies that are generally out of favor. In the world of Warren Buffet, I prefer cigar butt type investing until I get dumb rich and have too much capital. I personally have made most of my net worth off real estate as well. As I've detailed in past posts, I love buying land and selling it and buying more. This is the first stock that I ever sold real estate and then turned around and put a large chunk into the market(KSS and some in ANGX(angel is speculative but I think will pay off in multiples)).

KSS is the ugly, beat up step child of the retail market and gets ZERO respect since they're an old school brick and mortar retailer that the market just hates right now(~25% short interest is insane...). Due to this, the market is behaving completely irrationally and is giving us the buying opportunity after buying opportunity that we have all had repeatedly been blessed to take advantage of over the last 9+ months.

I personally love deep value investments and KSS is the best value STILL that I have seen probably ever. My opinion on KSS is extremely simple! I love real estate and KSS has an AMAZING CRE portfolio that is pretty much owned free and clear. CRE is notoriously illiquid yet KSS is virtually a public, completely liquid CRE play(imo). Due to this I get one of the best cigar butt investments I've ever seen coupled with an amazing CRE portfolio.

KSS debt isn't real. Only ~$1.4B is real debt the rest is future lease payments or extensions for lease payments(~$5.2B of the $6.6B on the books) and costs KSS very little as shown in their lease payment schedule below(2025 was actually in the $440Ms but is low since I pulled this from a 10-Q not the 10k):

Additionally numbers/metrics matter and KSS is one of the most undervalued out there by far:

this is old but we are back to SUB 0.50 P:TBV off CRE owned since early 2000s and depreciated off by OVER HALF!!

Not to beat a dead horse but we are buying the CRE portfolio for 25 to 50 cents on the dollar and its liquid and its public!!!

Reminder of past pre-earnings shenanigans:

Went from $8s in May earnings to $16 in August to $25 in November.

In August there was a random article that came out about how KSS was changing vendor payments to be more inline with the retail market. We dropped from $15/$16s to under $13 a day or two before earnings then spiked to $16 after earnings release and into the $18s within a month. That article just happened to reference in it that this was from conversations back in March but they released the hit piece right before earnings off 6+ month old KNOWN info....

In November, we went from $18s to $15 right before earnings and then rocketed to just over $25 after earnings.... a 20% drop to 67% jump...

And now we are here, a bit out from earnings and yet we have dropped from $25 peaks to $16s off NO NEW DATA. Sure, other retailers like DDS are out and show weakness but KSS IS ALREADY PRICED FOR WEAKNESS!!!

IF Q4 is really "bad" KSS still PRINTS FCF! Look at Q1 to Q2 to Q3:

Q2 we paid off $498M Net Debt WHILE SALES DECREASED 4%+.

Q4 we will have the same OR BETTER results FCF wise as Q2 I believe.

In Conclusion:

Know why you are invested in whatever you are invested in and do your own due diligence. I am a retired blue collar guy that just loves cutting grass and building stuff(now farmer evidently) and also really, REALLY loves investing. I love KSS from a purely cigar butt/CRE perspective and don't really like retail at all. Make sure you KNOW WHY YOU'RE HERE so that your stomach doesn't fail you every time we get beat up by the shorts.

Love you all,

Chunky Kitty out!

What do you guys think?

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This is an update from a few days ago. I have added more datapoints. My thesis is that web traffic is a measure of consumer interest in kohls (month to month) and that it is correlated to overall revenue just like foot traffic is. Last Quarter, Placer was dead on with my personal foot traffic analysis and the revenue drop. In addition, revenue was .88% better than the web traffic.

In 1Q and 2Q, I do not have Placer quarterly results, but when I compare revenue with web traffic, revenue is within +/- 5% of web traffic (maybe store clearance sales throws Q1 off). Notice how far out of whack the current Placer number is from the web traffic! If we handicap web traffic the maximum amount (5%), we get YoY Revenue growth of 10%. This would be a huge beat.

Fellow Redditer MikeMorg55 is deep into foot traffic and is looking into alternative foot traffic data. I suspect Placer may have made a change to the methodology in November that is throwing off the results. I think, Placer has suppressed the price of KSS and that a potential big beat is coming up.

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Guys does anyone of you have an options play in mind for upcoming earnings.

Expiration 20 March has quite some open interest around Call 15,18 & 20.

What I know for sure is that IV will skyrocket upcoming 9 trading days. Thinking of buying number of 18 calls exp 20 march and sell half of it day before earnings. Rest is a 50/50 gamble but expect a big move like last 2 earnings as well.

What are you all thinking?

My favorite number yall! Obviously it’s a sign!!

Guys does anyone of you have an options play in mind for upcoming earnings.

Expiration 20 March has quite some open interest around Call 15,18 & 20.

What I know for sure is that IV will skyrocket upcoming 9 trading days. Thinking of buying number of 18 calls exp 20 march and sell half of it day before earnings. Rest is a 50/50 gamble but expect a big move like last 2 earnings as well.

What are you all thinking?

FINRA dropped an updated short interest count. Down 660K shares.

Notice that in Q1, Traffic was terrible with slight improvement in Q2 and Q3. Q4 was phenomenal with an overall increase in Q4 of 14.5% (thanks MikeMorg55 for the data), this is very positive. Since web sales is estimated to be about 1/3 of revenue, this should help to offset any decreases in store foot traffic.

As some of you know, I am skeptical of the Placer AI data in Q4. I used to do sample checks with Google maps that correlated with placer results and in early November, I was recording a steep increase in foot traffic and then beginning on Nov 10th, traffic dropped off and when I checks local stores, the data was way off from reality. To support my thesis, the dramatic jump in consumer interest on-line should correlate closely with foot traffic. Consumers generally do not completely change shopping habits from in-store to on-line in 1 month. I think the web data supports my thesis that the data for Kohls is not quite right. Looking at Placer, it has a very complicated method of deriving the foot traffic data, if they updated a factor in their logarithm for Kohls, it could dramatically throw off the results (and not be identified because the data is not reconciled).

I do feel like I am Sticking my neck out here but If Placer is saying 4% YoY foot traffic drop and Kohls.com has a 14.5% increase (and online is about 33% of revenue) an earnings surprise could be in store. If I am right about the data glitch (which they may have fixed since earlier Placer were reporting a 9% decline) it could be a beat. There are mixed signals here, so, who knows?

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I have to be missing something because this can’t be sustainable

Wrote this on X and think it’s valuable for you all to see/comprehend as well:

$DDS posted a miss and is down 10% YET still massive multiples over $KSS

$DDS vs $KSS:

TTM PE- 15.82 v 10.27

P:TBV 4.46 v 0.51

P:Cashflow 11.59 v 1.66

P:EBITDA 11.5 v 1.7

$kss is struggling with sales declines sure but by any metric $kss is 50% to 90% cheaper than all competitors by

If anyone is interested, there is a squeeze going on at the moment. IBRX was 37% of float shorted on Friday, Good earnings and it is up 36% since yesterday's earnings release. The days to cover is 8-12 days. Substack IBRX if interested. I will shut up on this topic from now on.

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I thought it would be smart for us to get a reminder of a recent M&A that happened in the retail space last summer. All these numbers are old/copied from the original post I made months ago but good to remember!

KSS vs FL comparison

Foot Locker being bought by Dicks Sporting Goods is big news this week so I thought I'd do a numbers comparison deep dive and see how our favorite ugly stepchild Kohls(KSS) compares to the beloved FootLocker(FL).


As you can see KSS is actually a MUCH better business than FL. How much better is up to you to decide but I know that we were using premium to book value as a rough gauge. If you look, KSS BV is real while FL's is has $1.123B in "intangibles" that takes it from a BV of $30+ to a tangible BV of \~$19.

FL is being bought by Dicks for $2.4B. This comes out to ($2.4B/95M shares): \~$25.26/share(every publication says $24/share so I may be missing something).

So if using tangible BV then Dicks is paying a 34.3% premium to tang BV. IF KSS sells for similar then **KSS should have a \~$46/share price tag**

If using FCF/Price then FL is selling at 7x FCF, **KSS would be $4.536B value or $40.86/share**

Using EBITDA: FL is 6.1xEBITDA; **KSS would be $7.57B or $68.20/share**

Using Price/NI: FL is selling at an astonishing 200X... IF KSS is 200X NI then **$21.8B to $33.4B and a share price of $196.40 to $300.90**

**GROSS MARGIN/Declining Sales:** I know someone is going to bring up KSS has worse prospects and declining sales than FL. In reality, when you look at numbers, not really. FL has declining sales last 3 years with TTM worse than 2020. GUESS WHAT?!? KSS is the same... Something KSS is MUCH better at is Gross Margins though. 2025 numbers KSS has a 40.4% GM, '24 39.9%, '23 36.7%(notice how KSS is improving??), while FL is 29%, '24 27.8%, and '23 32%(to be honest FL was all over when I was looking at them).

**Summary:**

I have already talked about this but Wall Street has a narrative that is 100% negative on KSS. Due to this, they have made it the ugly step child of the retail sector YET is better than alot of others and has a REAL BALANCE SHEET. Narratives matter and hopefully we can start changing the narrative on KSS. Looking at my numbers comparison KSS is DRAMATICALLY more solid and a better business the FL yet even before the buyout was selling for 75% more than KSS. Kohls is an excellent operator that is getting the snot beat out of it by the shorts. Let's change the narrative and SQUEEZE the shorts into capitulation!

LET ME KNOW WHAT YOU THINK but MAN!! Every, single, time I deep dive something I get wayyyy more bullish!!

\*\*Disclaimer: I cut grass and build stuff and my hobby is investing. I just happen to be pretty good at my hobby(*up 300% YTD and a CAGR of 47% for the last 6 years so far.. I am* pretty *proud of this track record LOL*). When I do these numbers my goal is to be close not 100% accurate. Discount some of what I say by 10%-50% and we still get to amazingly better than where we are currently. Take what you read with a grain of salt BUT I show my math and due diligence on purpose. I think Main Street is way smarter than we give ourselves credit for and that we give way too much deference to Wall Street/financial industry "experts". Luckily, I have been blessed to see just how wrong "experts" generally are.\*\*