What happened
Clothing retailer Kohl's (KSS 5.21%) was surging higher on Friday, up as much as 9.4% at 10:49 a.m. ET. In late-day trading, it was still up about 5% to $29.80 at 3:30 p.m. ET.
The market was up early on a positive jobs report but tumbled lower in the afternoon as all three major indexes were down on Friday at 3:30 p.m. ET. But Kohl's had its own catalyst pushing it higher.
So what
The Labor Department reported Friday morning that the economy had gained about 315,000 jobs, which was on pace with expectations. That bit of good news was soon eclipsed by some bad news, as Russia's state-owned oil firm Gazprom announced midday that it halted gas flows into Germany through its Nord Stream 1 pipeline due to equipment issues.
But that didn't eclipse Kohl's good news, as several news organizations reported Friday that Oak Street Real Estate Capital made an offer to buy $2 billion worth of its stores and Kohl's would lease them back from the private equity firm.
NYSE: KSS
Key Data Points
This reported deal comes just a little more than a month after a deal to sell to the Franchise Group, a retail holding company, fell through.
Now what
Like most retailers, Kohl's has struggled this year as inflation has taken a bite out of sales. The stock price reflects that, down some 39% as of Sept. 2. With the Federal Reserve raising interest rates to tame runaway inflation, it could slow down the economy and put a dent in discretionary spending.
If this deal with Oak Street goes through, it's a good short-term play for Kohl's to monetize its real estate, but it still has to lease back the stores. It could improve liquidity and cash to invest in its future growth, but we won't know until the deal is done -- if it gets done.
Meanwhile, while the environment isn't great for Kohl's in the near term, it is very cheap right now, trading at around 5 times earnings.
