What happened

Shares of Kohl's (NYSE:KSS) were gaining today as optimism built for the department-store chain's second-quarter earnings report, due out tomorrow morning. The stock's rise today came amid a bullish day for the market, as the S&P 500 closed up 1.2% on positive remarks on trade with China from President Trump, along with news that Germany may be considering a stimulus package to lift its economic growth.  

Kohl's finished the session up 5.9%.

The entrance to a Kohl's department store

Image source: Kohl's.

So what 

Retail stocks like Kohl's have been highly sensitive to China trade news, as nearly all of them import a significant percentage of their inventory from the mass producer of everything from apparel to electronics. 

Tomorrow's earnings report, however, was probably the biggest driver of today's gains. Despite a weak quarter, from Macy's, investors seem hopeful that Kohl's will turn in solid numbers when it reports second-quarter results. 

One potential catalyst for the company is its expanding relationship with Amazon.com; Kohl's began accepting Amazon returns at all of its stores as of early July. Some research, including a study by inMarket, has indicated that Kohl's is seeing an increase in the number of visits and in the amount of time spent inside its stores, a sign the company may be getting a sales boost from the new partnership with Amazon.

Tomorrow will offer investors their first glance of the impact of the Amazon strategy.

Now what 

Of course, today's gains could be for naught if Kohl's delivers a weak quarter tomorrow. Analysts see revenue falling 2.5% to $4.2 billion, and for earnings per share to slip from $1.76 a year ago to $1.53. Keep those numbers in mind after the retailer posts its second-quarter results tomorrow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.