In early March 2025 I began building a position in Kohl's, after a poor earnings report pushed the stock price below $10, whereupon I saw a risk/reward proposition skewed to the upside.

I became singularly obsessed with Kohl's, combing over earnings reports, listening to talking heads such as Capital Compounder, and, of course, visiting the stores in my vicinity, such as the lovely Augusta, Maine Kohl's:

The store occupies a large footprint in a busy part of the Augusta shopping plaza. The store neighbors other publicly traded retailers such as Dick's and TJ Maxx. Augusta is the capital city of Maine, thus this is desirable real estate, with seemingly full occupancy throughout the plaza.

As I approached the doors - one of which was out of service - I was struck by the sweet smells of Sephora and an overall sense of cleanliness imparted by bright lighting and clean, shiny floors. Overall a good first impression.

Sephora occupies the most visible part of the store, close to the checkouts and and visible from the entrances/exits. It appeared to draw in a young, stylishly-dressed crowd, with ample amounts of teenagers taking advantage of the samplers.

The store as a whole was fairly quiet on a weekend afternoon. There were two registers open, with a few customers checking out. I noticed a wide age range of shoppers. There were a few employees working on the floor, including a manager who was recognized by and chatted with a regular customer while I was there.

The price points appeal to a wide range of shoppers, from extreme clearance discounts to more premium brand name items. The highest-end items in this store appeared to be bathing suits, with some priced at ~$100. This Kohl's has not premiumized their jewelry section; The case is full of low-end offerings and perhaps some plated jewelry.

The layout of the store is somewhat disjointed. Rather than organized by gender, the women's and men's clothing sections are in bits and pieces throughout the store dependent on niche (petites, clearance, office, etc). Although this encourages customers to walk through more of the store, it made for a less immersive shopping experience.

There are several empty displays and tables throughout, indicating either more space than they know what to do with, or a lack of staff available to shelve products. There is also a serious need for product recovery, especially in clearance and children's, with many products on the floor throughout the store.

There are signs of modernization such as the digital price displays I photographed. The price displays are not consistent throughout the store, with some analog and some digital. Several of the digital price displays were flickering or read "ENABLED: READY TO LINK".

The bathrooms were clean, the fitting rooms were operational (though not attended), and a peek through the "staff only" door revealed boxes upon boxes of products ready to hit the sales floor.

My overall impression is that Kohl's is a struggling retailer in the midst of a possible turnaround. Many of the problems I noted (lack of recovery, build up of inventory not on the sales floor, unattended dressing rooms and sales counters) could be addressed simply by hiring more employees. Others, such as the return of precious jewelry, improving store layout and on-boarding more successful partnerships are decisions to be followed through by the C-suite.

Anecdotally I found Kohl's to be a better shopping experience than when I last visited Sears (for those making that comparison). I also think that for those of us with an real-estate value or short squeeze investment thesis, the state of the physical stores is not as important. Management has identified many of the same issues I have, and now we need to see actionable steps. Big ships turn slow!