Kohl's enjoys meme-stock-style rally, but this time it's based on actual good news

By Tomi Kilgore and Bill Peters

The strong earnings report and stock surge come on Michael Bender's second day as the company's CEO, and as discount retailers are enjoying a rising sales tide

The fundamentals of a blowout Kohl's earnings report are driving the day's dramatic gains.

Kohl's Corp. (KSS) investors were enjoying a meme-like stock rally Tuesday, after the department-store chain surprised investors by reporting a third-quarter profit and a big sales beat, as consumers continued to hunt for bargains.

Shares rocketed more than 35% on Tuesday.

Kohl's reported the results a day after the retailer named interim CEO Michael Bender as its official chief executive, following a more than six-month period of service on an interim basis. They also helped confirm that turnaround efforts are taking hold.

"While these results are encouraging, we continue to operate in an environment where our customers are becoming increasingly choiceful as their discretionary income remains pressured," Bender said on Kohl's earnings call. "This is especially notable in our low- to middle-income consumers as well as in our younger customers. These customers are becoming increasingly savvy and are seeking more value.

"We expect this customer behavior to continue into the fourth quarter as we believe the macroeconomic environment will remain uncertain," he added.

Bender was named interim CEO on May 1 after then-CEO Ashley Buchanan was fired for cause after less than four months on the job. Naming the new CEO in May seemed to provide the jolt the company needed, as it came about two weeks after the stock closed at a 30-year low.

Read: Retailers try to downplay worries about lower-income shoppers, as bargains reign supreme

Kohl's stock on Tuesday was headed for its biggest one-day gain since it rocketed 37.6% on July 22, 2025, when shares were caught up in a meme-stock frenzy. The stock has now more than tripled - up 244.7% - since it closed at the 30-year low of $6.13 on April 16.

But Tuesday's rally was based on actual good news. Net income fell 63.6% to $8 million, but adjusted earnings per share, which excludes nonrecurring items, of 10 cents beat the average analyst estimate compiled by FactSet for a per-share loss of 16 cents.

And while net sales declined 2.9% to $3.41 billion, that was above the FactSet consensus of $3.32 billion, marking the third straight quarterly beat following a 13-quarter streak of misses. And the margin of the latest beat was the widest since the second quarter of 2021, according to FactSet data.

The company saw increased buying from Kohl's card users, which saw sales improve by five percentage points from the previous quarter. "This demonstrates important progress we're making with re-engaging our core customers," Bender said.

Comparable sales, or sales at stores open more than a year, were down 1.7%, but that beat the FactSet consensus of a 3.7% decline.

"These results are a direct reflection of the progress we are making against our 2025 initiatives, reinforcing our confidence as we continue to move in the right direction," Bender said.

Among the stronger product categories, Bender said, women's apparel showed "significant improvement" from the previous quarter, led by an acceleration in the juniors business. He said sales also benefited from the "denim trend"; a continued positive performance in petites; and demand for accessories, which includes its Sephora and jewelry departments.

Along with inflation stresses, Kohl's last year said it wasn't offering enough of the lower-cost private brands that its customers wanted, after it focused more on its Sephora outlets and other areas of the business. The company has said it lost some focus on its core customers' needs as it chased newer customers.

But signs emerged in August that those private brands were helping. On Tuesday, Bender said brands like Lauren Conrad, Simply Vera Vera Wang, Tek Gear and Flex helped both Kohl's women's and men's businesses.

For the full fiscal year, Kohl's on Tuesday raised its guidance ranges for adjusted EPS to between $1.25 and $1.45 from between 50 cents and 80 cents; for sales growth to decline 3.5% to 4% from a decline of 5% to 6%; and for comparable sales to decrease 2.5% to 3% from a decrease of 4% to 5%.

With Tuesday's rally, Kohl's stock has now climbed more than 50% in 2025, while the S&P 500 index SPX had advanced 14.8%.

Elsewhere in retail, discounters have been enjoying a wave of bargain hunting among shoppers - and not just those in the lower-income cohort who have been most pressured by stubborn inflation and a softening labor market. Recent earnings reports from off-price and discount retailers, such as TJ Maxx parent TJX Cos. (TJX) and Walmart Inc. (WMT), showed that even consumers from higher-income households are looking to cut costs.

David Silverman, a senior director at Fitch Ratings, said in emailed commentary on Tuesday that the declines at Kohl's appeared to be moderating. But he said difficulties remained.

"Kohl's faces numerous headwinds, including external challenges like consumer sentiment volatility and the impact of tariffs on apparel prices and profitability, and its own execution issues with merchandising, value perception and customer service," he said.

"The company has outlined priorities to address its internally caused setbacks, and the modest topline progress seen in [the third quarter] may be a sign of early success," he added.

See: U.S. consumer mood hasn't been this gloomy since 2020

-Tomi Kilgore -Bill Peters

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11-25-25 1343ET

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