Kohl’s Isn’t the Only One Sitting on a Real Estate Bonanza. This 'Must Own' Is Too
Newfangled meme stock Kohl’s jumped 37% on Tuesday, but other retailer names would like a word.
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Shares of Kohl’s KSS jumped 37.8% on Tuesday, as the Menomonee Falls, Wisconsin-based retailer caught the attention of meme stock traders.
Meme stock traders first gained prominence in the early days of the Covid-19 pandemic, taking a less cerebral, more visceral approach to the stock market. Working in unison, they were able to boost names like GameStop GME and AMC Entertainment AMC in 2021.
Early that year, Kohl’s was trading in the low $60’s. Earlier this year, the stock traded at $6.
Meme stock traders tend to pick heavily shorted, low-priced stocks with questionable futures. Kohl’s certainly fits that bill, as the retailer is closing 27 stores across 15 states this year.
Anecdotally, the Kohl’s nearest to me is still open, but has fallen into disarray over the past few years. The decline in quality is startling.
Meme Traders Could Be Right
What if I told you the meme traders might actually have a point about Kohl's?
Kohl’s could be sitting on a real estate bonanza. The company owns about 35% of its 1,165 locations, as well as 10 million square feet of e-commerce fulfillment centers and warehouses. .
Even after Tuesday’s wild ride, Kohl’s shares have a market capitalization of just $1.61 billion. One conservative estimate puts the value of Kohl’s real estate holdings at $5 billion, or about 3x the stock’s market cap.
Still, Kohl’s finished well off its highs on Tuesday, as seen below. Is it possible that traders have already found a better retail/real estate play?
Kohl’s Is Not Alone — Enter Macy’s
Kohl’s isn’t the only retailer with significant real estate holdings. Macy’s M real estate holdings are estimated to be worth anywhere from $5 billion to $14 billion. Macy’s shares jumped 6.5% thanks to the move in Kohl’s, and closed at a three-month high.
The company’s famed Herald Square location in NYC, a full square block between 34th and 35th streets spanning from 6th Avenue to 7th Avenue, could be worth $1 billion alone. Macy’s shares have a market cap of just $3.5 billion.
The One to Own
Perhaps the most impressive name in the retail/real estate discussion is Dillard’s DDS. The Little Rock, Arkansas-based retailer owns over 90% of its stores, and 100% of its distribution facilities.
Dillard’s shares also caught a bid on Tuesday, gaining 4.3% to close at a five-month high.
Over the years, Dillard’s has aggressively bought back its own shares. Here’s a look at the decline in Dillard’s shares outstanding over the past 15 years:
Dillard’s is my favorite play in retail. The combination of share buybacks and company owned real estate make this stock a must-own.
Dillard’s shares returned 288% in 2021, 31.9% in 2022, 24.8% in 2023, and 6.9% in 2024. Shares of the retailer have gained 7.5% year to date. Dillard's is scheduled to report earnings on August 7.
At the time of publication, Ponsi was long DDS.
