We came across a bullish thesis on Kohl’s Corporation (KSS) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on KSS. Kohl’s Corporation (KSS)’s share was trading at $14.15 as of Dec 12th. KSS’s trailing and forward P/E were 6.37 and 8.58 respectively according to Yahoo Finance.
A customer shopping in a department store, browsing through racks of clothing.
Kohl’s (KSS), a once-prominent midcap retailer, finds itself undervalued with a market capitalization of $1.64 billion against a revenue run rate of $16.5 billion, reflecting a meager price-to-sales ratio of 0.1x. This valuation disparity stems from both macroeconomic challenges and internal mismanagement. While the consumer discretionary sector suffered in 2024, a middle-class recovery in 2025 could significantly benefit Kohl’s, as shoppers return to in-person experiences. The narrative that online shopping will dominate retail is overly simplistic, as many consumers still value the tactile, experiential nature of physical shopping—a dynamic Kohl’s is well-positioned to capitalize on if it can resolve its internal issues.
Kohl’s recent struggles can be traced back to strategic missteps following the departure of former CEO Michelle Gass in 2023. Her initiatives, including omnichannel growth, private-label brand development, and a partnership with Sephora, brought innovation but were disrupted when interim CEO Tom Kingsbury reversed key strategies. This resulted in branded merchandise crowding out proprietary products and alienating core customers. Despite his errors, Kingsbury showed humility in addressing missteps and implementing corrective measures, such as reinstating popular offerings like the jewelry counter and petite clothing line for the critical holiday season. The new partnership with Babies R Us also represents a promising avenue to attract younger customers, filling a void left by the bankruptcy of Buy Buy Baby.
With Ashley Buchanan, former CEO of Michael’s, now at the helm, Kohl’s faces a pivotal moment. While Buchanan’s track record remains unclear, his alignment with Kohl’s current strategy offers hope for continuity and refinement. Investor optimism hinges on whether Buchanan can successfully build on corrective actions while imprinting his leadership vision. Kohl’s substantial cash flow potential, estimated at $700 million next quarter due to holiday sales and inventory adjustments, provides financial flexibility to address its $1.2 billion in long-term debt, including $353 million maturing in 2025. However, its $2 annual dividend, exceeding 2024 earnings estimates of $1.50 per share, could come under scrutiny as the company balances shareholder returns with debt reduction.
Kohl’s has a remarkable turnaround opportunity, especially in a recovering consumer discretionary sector. A return to its 2021 market capitalization of $9 billion—or even its 2015 peak of $15 billion—could yield multi-bagger returns. While risks remain, including the possibility of a dividend cut and macroeconomic uncertainties, Kohl’s resilience through past challenges positions it as a compelling contrarian investment with substantial upside potential.
Kohl’s Corporation (KSS) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held KSS at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of KSS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than KSS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.