KSS reported earnings Thursday with one of the largest short positions in US retail still firmly in place — and the stock answering back with a 3.4% drop on Tuesday before the numbers arrived.
The short story here is genuine conviction, not noise. Bears hold 26.1% of the free float — essentially unchanged from the 26.5% flagged in Monday's earnings preview — and have been very slowly trimming, down about 4.3% over the past month and 2.6% on the week. The absolute level remains extreme. What has shifted meaningfully is borrow availability: it has loosened further to 333% of outstanding short interest, up from 315% earlier in the week and well above the 52-week low of 57%. That means new shorts can enter with zero friction, while existing holders face no squeeze threat from a tight lending pool. Cost to borrow is a negligible 0.47%, up only slightly on the week and down sharply from over 0.62% in late July. Options positioning has eased from Monday's elevated levels — the put/call ratio is 1.03, still modestly above its 20-day average of 1.00, but the z-score has fallen to roughly one standard deviation, suggesting some of the pre-earnings hedging demand has come off.
The Street remains largely on the sidelines or outright negative. JP Morgan's Matthew Boss raised his price target to $17 from $15 on August 18, while maintaining an Underweight rating — a tentative acknowledgment of slightly improved conditions without any change in direction. Morgan Stanley reinstated coverage in July with an Underweight and a $15 target. Goldman Sachs and BofA Securities both carry Sell or Underperform ratings. The sole bullish outlier is Citigroup, which upgraded to Buy in June with a $22 target — a view that looks isolated against the pack. The consensus rating is Hold, with a mean price target of $18.17, barely above Tuesday's close of $17.68. The ORTEX short score of 65.3 ranks in the bottom decile of the universe on this measure, reinforcing how entrenched the bearish thesis has become. EPS forward momentum is weak, ranking in the 6th percentile for one-year forward estimates, and the dividend score at 94 is a vestigial artifact — last paid a dividend in May 2022.
The bear case is well-documented: declining foot traffic, margin pressure from commodity costs, and a core low-to-middle-income customer base that continues to trade down or away entirely. The one data point bulls can point to is the May earnings reaction, when the stock jumped 11% on the day and 23% over the following five sessions — a reminder that in a name with 26% short interest, a surprise to the upside can move fast. Closest peer M fell 2.8% on the week, while DDS gained 9% — the divergence suggests the department-store sector is not moving as one block, and KSS's underperformance is stock-specific rather than sector-driven.
The next focus is the actual earnings numbers and management commentary on the consumer outlook — with 26% of the float still short and borrow conditions loose, the size of any post-print move will tell you whether the bears are finally right or whether another short-covering rally is in the making.
See the live data behind this article on ORTEX.
Open KSS on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
