3 Catalysts For Kohl's As A Recovery Play

Department store Kohl's Corporation KSS is well-positioned to take advantage of pent-up demand for discretionary items, according to BofA Securities. The firm upgrade Kohl's stock from 

Kohl's Recovery Prospects: Kohl's boasts three catalysts that position itself to win market share in a post-COVID-19 environment, analyst Brian Callen wrote in a note.

1. Management deserves credit for implementing product changes, including rationalizing categories like women's simplifies its product portfolio but also adds depth. A focus on active, casual, outdoor categories, the addition of Sephora beauty shops, among others will drive traffic and attract new customers.
2. Consumers should benefit from higher stimulus actions after the Democrats gained control of all three branches of government.
3. Management took the opportunity to review its entire capital spend and expenses to lower costs wherever it can. Management has also targeted $100 million in annual savings moving forward that will help offset investments in pricing and promotional activity.

These three initiatives should also help Kohl's reinstate a dividend payment to investors and reduce debt leverage from 8.5 times in fiscal 2020 to 3.2 times in 2021 and 2.9 times in 2022.

KSS Price Action: Shares of Kohl's were trading higher by nearly 3% to $42.23 at publication time.

Photo credit: MB298, via Wikimedia Commons