Kohl's Stock Pops 20% as Turnaround Shows Real Signs of Life

This article first appeared on GuruFocus.

Kohl's (KSS, Financials) is finally getting some turnaround traction. The retailer crushed earnings expectations and raised its full-year outlook, sending shares up 20%.

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Earnings per share for Q2 hit $0.56, nearly double the $0.29 Wall Street was looking for. Sales still dipped, but less than feared, with comparable sales down 4.2% versus a 5% decline expected.

Kohl's credited leaner inventories, tighter spending, and stronger demand for items like Levi's baggy jeans and store-brand products. CFO Jill Timm said they're well-positioned heading into the holidays.

The company is also seeing a lift from Sephora, now in all 1,100+ stores, and pulling back orders from brands raising prices after new tariffs.

Kohl's stock has been beaten up in recent years, but these results have calmed fears of a collapse. Analysts say short sellers may be starting to bail.

Still, the retailer is walking a fine linestuck between discounters and luxury chains, with value messaging that needs to land.

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