Shares of U.S. retailer Kohl’s jumped almost 43% yesterday, November 25. Such sharp moves are more typical of "meme rallies," but this time it was driven by "actual good news," as the company’s quarterly results exceeded Wall Street expectations, and the retailer raised its profit guidance for the full-year 2025.
Details
Kohl’s shares rose almost 43% to $22.40 apiece on the New York Stock Exchange on November 25. According to MarketWatch data, this was the largest single-day increase in the company’s history. The previous record came on July 22, when the stock rose 37.6% amid the latest meme rally. In premarket trading today, November 26, the shares were down roughly 1% as of this writing.
This time, the rally was prompted by “actual good news,” as MarketWatch wrote: Kohl's quarterly report. Net revenue fell 2.8% year over year in the third quarter to $3.4 billion, and adjusted EPS reached $0.10 per share. Both indicators exceeded Wall Street forecasts. It was the third consecutive quarterly revenue beat after 13 straight quarters of misses, MarketWatch noted. Analysts had expected revenue of $3.32 billion and a per-share loss of $0.16.
The strong results allowed Kohl’s to raise its guidance for the full year. While the retailer had previously projected a 5-6% decline in net sales, the new range is 3.5-4.0%. Expected earnings have been upgraded to $1.25-1.45 per share from the earlier range of $0.50-0.80 per share.
Kohl’s is pleased with its third-quarter performance, but it continues to operate in an environment where customers are becoming more selective and increasingly focused on value, CEO Michael Bender said on the earnings call, as quoted by MarketWatch.
Context
Kohl’s released the results one day after Bender was named CEO. He had served as interim CEO for more than six months. He replaced Ashley Buchanan, who led the company for less than four months. During Buchanan’s tenure, the stock fell 47%, and shares jumped 9% on the day his resignation was announced, MarketWatch wrote. It noted that one of the reasons for the rally was the company’s weak financial performance under his leadership. For example, Kohl’s reported a 4.1% year-over-year decline in net revenue to $3 billion in the first quarter.
Stock performance
Since the beginning of the year, Kohl’s shares have risen nearly 60%. However, Wall Street remains cautious about the company’s prospects, according to MarketWatch data. The stock carries seven “hold” ratings, six “sell,” and only two “buy.”
David Silverman, a senior director at Fitch Ratings, said in emailed commentary yesterday to MarketWatch 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... 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.
