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They told investors the upgrade follows TD Cowen’s meeting with Kohl’s CEO.
“We are making this decision early with some proof points as we believe the new CEO has practical retail ideas that are well positioned to work after many years of insufficient change,” explained analysts.
“Our take is that Tom Kingsbury, who was officially appointed CEO in early February and was former CEO of BURL from 2008 to 2019, has a practical merchant background and is leveraging this experience to drive positive change.”
The analysts pointed to new home decor & gifting product, improved fashion execution, a simplified promotional strategy, and pragmatic store layout revisions as reasons they believe the company can “drive healthier and more consistent traffic and faster inventory turns.”
They said Kohl’s valuation is attractive, adding that they have identified a $5+ FY27 EPS opportunity.
“We raise our FY24 estimates on conviction that the new merchandise could add a +LSD% lift to the comp outlook, drive store productivity and leverage on occupancy, along with an SG&A leverage on fewer Sephora build-outs to arrive at an EPS of $3.60 compared to the Street’s $2.98,” analysts said.
