Kohl’s Corporation (KSS): A Bull Case Theory

Published on August 4, 2025 at 1:37 pm by Ricardo Pillai in News, Stock Analysis

We came across a bullish thesis on Kohl’s Corporation on Valueinvesting subreddit by Friendly-Excuse400. In this article, we will summarize the bulls’ thesis on KSS. Kohl’s Corporation’s share was trading at $12.83 as of July 28^th. KSS’s trailing and forward P/E were 11.77 and 80.00, respectively according to Yahoo Finance.

Jim Cramer on Kohls Corp (KSS): “ It's Going to Make Money”

A close-up on a fashionable pair of the company’s footwear, the details revealed in sharp focus.

Kohl’s Corporation (KSS) appears poised for a sharp recovery in revenues and profitability, supported by structural shifts in the U.S. retail landscape. June department store sales rose 0.6%, a trend expected to accelerate as two major catalysts play out: the May closure of the de minimis loophole for Chinese imports and the pass-through of newly enacted tariffs.

The loophole had enabled platforms like Temu, SHEIN, and Chinese vendors on Amazon Marketplace to undercut U.S. retailers with untaxed, low-cost goods, siphoning an estimated $100 billion in sales from domestic retailers over the past three years. With the loophole closed, these sellers now face the same tariffs U.S. retailers pay, neutralizing their pricing advantage and allowing U.S. department stores to recapture market share while protecting margins.

Tariffs themselves are expected to bolster reported revenues as costs are largely passed on to consumers. For KSS, revenue could rise by $2 billion over the next year; at a 40% gross margin and a 23% tax rate, operating profits and free cash flow could increase by over $600 million, translating to earnings of $5.50 per share. Shares, last trading at $9.39, are heavily shorted, with 53 million shares sold short out of a 111 million float, magnifying potential upside.

KSS remains deeply undervalued, trading far below its $35 book value, which likely understates its real estate portfolio. As a profitable, cash-generative operator positioned to benefit from renewed revenue growth, KSS offers significant rerating potential amid structural tailwinds and a crowded short trade.

Previously, we covered a bullish thesis on Kohl’s Corporation by Hugo Navarro in March 2025, highlighting undervaluation, strong cash flows, and CEO Buchanan’s turnaround strategy. The stock has appreciated about 43% since, as fundamentals improved. The thesis remains valid given an attractive valuation. Friendly-Excuse400 shares a similar view but emphasizes structural retail tailwinds from tariffs and the de minimis loophole closure.