Kohl's Corp. (Kohl's (KSS)) shares shot up more than 19% on Thursday after the department store chain reported first-quarter results that beat Wall Street's expectations. The move was turbocharged by an extremely high level of short interest, which acted like rocket fuel on the stock's upward trajectory.

Let's start with the numbers. Kohl's reported an adjusted loss of $0.13 per share for the quarter, which sounds bad until you realize analysts were expecting a loss of $0.19 per share. Revenue came in at $3.167 billion, well above the $2.991 billion consensus estimate. Comparable sales—a key retail metric—declined 1.1% year over year. But here's the thing: that 1.1% drop was actually Kohl's best comparable-sales performance in more than four years. The company has been tightening costs and improving how it executes in stores and online, and it's starting to show.

Gross margin ticked up 4 basis points to 39.9%, a modest improvement. Operating income fell to $46 million from $60 million a year earlier, and operating margin slipped to 1.4%. But the company ended the quarter with $429 million in cash and no borrowings under its asset-based lending facility, so it's not in a desperate position.

Now, about that stock move. Kohl's has a short float of 25.762 million shares, representing nearly 32% of its publicly traded float. That's a huge number of investors betting against the stock. When the company reported better-than-expected results, those short sellers got caught in a squeeze. As the stock rose, they had to buy shares to cover their positions, which pushed the price even higher. It's a classic short squeeze, and it explains why the stock jumped 19% in a single day.

CEO Michael Bender acknowledged that customers are still feeling the pinch from higher costs on essentials like gas, food, and utilities. "We're focused on helping shoppers stretch their dollars by offering sharper prices, stronger quality, and more stylish merchandise, especially in apparel," Bender said. He also noted that the company sees opportunity in balancing national brands with its own proprietary labels across apparel, home, and other categories.

Speaking of private labels, they're doing well. Private-brand comparable sales rose 6% year over year, driven by strength in juniors apparel and women's sportswear brands like SO, LC Lauren Conrad, and Sonoma. Digital sales increased 4%, while store sales declined as transaction volumes softened. Management said it's simplifying its assortment by reducing SKU complexity while expanding key product categories to improve both store execution and digital conversion.

On the dividend front, Kohl's board declared a quarterly cash dividend of $0.125 per share on May 20, payable June 24 to shareholders of record as of June 10. That's a small but steady return for investors.

Looking ahead, Kohl's affirmed its fiscal 2026 outlook. The company expects adjusted earnings of $1.00 to $1.60 per share, compared with the analyst consensus of $1.36. It also maintained its sales forecast of $15.216 billion to $15.527 billion, above Wall Street's estimate of $14.756 billion. Comparable sales for the full year are expected to range from a 2% decline to flat growth.

At the time of publication, Kohl's shares were trading at $15.40, up 19.10% on the day. Whether the stock can hold those gains depends on whether the company can keep delivering better results and whether the short sellers decide to stay away.