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Trimming a Retail Play

Higher energy costs will remain a headwind, so I'm going to let the dust settle a bit here.
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I am going to right-size the Kohl's (KSS) position, selling 200 shares at $50.78 after you receive this Alert. Shares are up today and after lowering this to a Three in the Weekly Update, I will make this a smaller position.

Internally, the company is doing all the right things: increasing its private label brands, investing in e-commerce initiatives, improving signage and using its cash for buybacks and dividends (it implemented a dividend for the first time in its history in February). Shares at 12x earnings are cheap, and the company should put up earnings growth in the low double digits. But the consumer is clearly pulling back due to the higher energy prices, which (even if temporary) will be a drag to the retail group. The company has several planned promotions under way that should increase store traffic, but they will take time to play out. So I'll reduce this bet somewhat and wait for the dust to settle or for the shares to reach a lower point.

After my trade, I'll own 1,700 shares of KSS, or 2.86% of the portfolio.

Regards,

Jim Cramer, Stephanie Link, and the Research Team

DISCLOSURE: At the time of publication, Cramer was long KSS.

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James J. Cramer is a Markets Commentator for TheStreet and CNBC, as well as co-founder of TheStreet. TheStreet is a publisher. Cramer graduated magna cum laude from Harvard College, where he was president of The Harvard Crimson. After receiving his J.D. in 1984 from Harvard Law School, he joined Goldman Sachs, where he worked in sales and trading. In 1987, he left Goldman to start his own hedge fund. While he worked at his fund, Cramer helped start Smart Money for Dow Jones and then, in 1996, he founded TheStreet.com.

Stephanie Link is the director of research & vice president of strategy for TheStreet. She is the co-portfolio manager for Action Alerts PLUS and works daily on the strategy and stock picks chosen for the portfolio. Stephanie is also responsible for recruiting talent for the paid sites including options, technicians and fundamental contributors. Prior to joining TheStreet, Link worked on Wall Street for 16 years. She spent nine years at the Prudential Equity Group as a managing director in U.S. institutional sales and as the New York sales manager covering top national accounts. She was the managing director of equity research in her final year at the firm. Prior to that position, she worked at Dean Witter as an institutional sales person for six years. Link's investment specialties include large-cap core stocks as well as value ideas.