Kohl's (KSS +4.73%) experienced a rough go of it during the first half of 2025. Alongside poorly received quarterly results and outlook, as well as a dividend cut, the company also had to contend with a scandal involving its then-CEO. These issues put major pressure on shares.
But then, starting around mid-year, things began to look a lot more promising. At first, shares surged due to meme enthusiasm, as speculators piled into the heavily shorted retailer, making it one of the top meme stocks. Then, shares have more or less held onto these gains, as better-than-expected quarterly results give credence to the company's turnaround taking shape.
Although the stock has been rangebound as of late, a new rally may be just around the corner. Here's why.
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"Meme momentum," positive surprises fuel a Kohl's rebound
The Kohl's rebound may have started with full force during July, but it was the release of Kohl's second-quarter 2025 results in August that confirmed there was substance to the bull case. Although Kohl's net sales fell 5.1% year over year, to $3.3 billion, this figure well exceeded sell-side analyst estimates calling for $3.33 billion in net sales.
Better yet, the company also reported a year-over-year increase in operating income, as well as improvements in adjusted net income. Adjusted earnings per share (EPS) of $0.44 also came in ahead of forecasts calling for adjusted EPS of $0.30. Alongside these positive surprises within the earnings releases, Kohl's also unveiled positive improvements to full-year guidance.
Admittedly, there's little in the way of news explicitly indicating further improvements ahead, but there may be some signs that Kohl's strong Q2 2025 results were not a "one and done" event.
Just in time for the holiday shopping season
For Kohl's shares, a resurgence of bullishness may be just around the corner, in time for the holiday shopping season. Kohl's will release fiscal results for the company's fiscal third quarter pre-market on Nov. 25.
Several factors suggest that results may exceed expectations. As I noted last month, Citigroup analyst Paul Lejuez has previously noted that improved same-store sales comps and increased web traffic strongly suggest that Kohl's will report better-than-expected results in both Q3 and fourth-quarter 2025.
Following last January's 10% reduction in Kohls' corporate workforce, coupled with store closures, margins may be in for additional improvement during the fiscal quarter. Atop improved results, Kohl's could also provide further upbeat updates to guidance. All this could lead to an extremely bullish response from investors.
NYSE: KSS
Key Data Points
Should you buy Kohl's stock?
Beyond the potential for Kohl's to add to its mid-year gains, don't forget the long-term opportunity still at hand with this stock. The company still owns a lot of real estate. Valuation estimates range widely, from $2 billion to as much as $8 billion, but monetizing just some of this property could go a long way toward moving the needle for the stock, which has a market cap of around $1.7 billion.
Before, Kohl's value trap reputation scared away many investors. However, if results continue to improve, the company could be able to finally shake off this "status," enabling the stock to keep climbing. With this in mind, you may want to consider it a buy, ahead of next week's earnings release.
