Kohl’s Corporation Reports Third Quarter Financial Results

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MENOMONEE FALLS, Wis.–(BUSINESS WIRE)–Kohl’s Corporation (NYSE:KSS) today reported results for the three and
nine month periods ended October 29, 2016.

    Three Months     Nine Months
($ in millions)     2016     2015     Change     2016     2015     Change
Sales $ 4,327     $ 4,427     (2.3)% $ 12,481     $ 12,817     (2.6)%
Comparable store sales (1.7 )% 1.0 % (2.4 )% 0.8 %
Gross margin 37.1 % 37.1 % 2 bp 37.4 % 37.7 % (26) bp
Selling, general, and administrative expenses $ 1,080 $ 1,099 (2)% $ 3,074 $ 3,120 (1)%
Reported
Net income $ 146 $ 120 22% $ 303 $ 377 (20)%
Diluted earnings per share $ 0.83 $ 0.63 32% $ 1.68 $ 1.92 (13)%
 
Excluding Non-Recurring Items
Net income $ 142 $ 144 (1)% $ 420 $ 484 (13)%
Diluted earnings per share     $ 0.80       $ 0.75       7%     $ 2.33       $ 2.46       (5)%
 

Kevin Mansell, Kohl’s chairman, chief executive officer and president,
said, “We are pleased to see continued improvement in our sales trends.
Our back-to-school season was strong, followed by a soft September, and
progressive improvement throughout October. We are encouraged by these
trends as we enter the Holiday season. Our teams did an excellent job
managing inventory. Expenses were also well-controlled as substantially
all teams outperformed their plans.”

Capital Structure

On November 9, 2016, the Kohl’s Board of Directors declared a quarterly
cash dividend on the Company’s common stock of $0.50 per share. The
dividend is payable December 21, 2016 to shareholders of record at the
close of business on December 7, 2016.

Kohl’s Board of Directors also increased the Company’s outstanding share
purchase authorization under its existing share repurchase program to
$2.0 billion. Kohl’s expects to repurchase shares in open market
transactions, subject to market conditions, over the next three years.

Store Update

Kohl’s ended the quarter with 1,155 Kohl’s stores, 12 FILA Outlet
stores, and three Off/Aisle clearance centers in 49 states, compared
with 1,166 Kohl’s stores at the same time last year.

Earnings Guidance Update

The company reaffirmed its prior fiscal 2016 diluted earnings per share
guidance of $3.12 to $3.32 per diluted share. Excluding impairments,
store closing and other costs, fiscal 2016 diluted earnings per share is
expected to be $3.80 to $4.00.

Third Quarter 2016 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 8:30 am ET on
November 10, 2016. The phone number for the conference call is (800)
230-1074. Replays of the call will be available for 30 days by dialing
(800) 475-6701. The conference ID for both the live call and the replay
is 386530. The conference call and replays are also accessible via the
Company’s web site at http://corporate.kohls.com/investors/events-and-presentations.

Cautionary Statement Regarding Forward-Looking
Information

This press release contains “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Kohl’s
intends forward-looking terminology such as “believes,” “expects,”
“may,” “will,” “should,” “anticipates,” “plans,” or similar expressions
to identify forward-looking statements. Such statements are subject to
certain risks and uncertainties, which could cause Kohl’s actual results
to differ materially from those anticipated by the forward-looking
statements. These risks and uncertainties include, but are not limited
to, those described in Item 1A in Kohl’s Annual Report on Form 10-K,
which is expressly incorporated herein by reference, and other factors
as may periodically be described in Kohl’s filings with the SEC.

About Kohl’s

Kohl’s (NYSE: KSS) is a leading specialty department store with more
than 1,100 stores in 49 states. With a commitment to inspiring and
empowering families to lead fulfilled lives, the company offers amazing
national and exclusive brands, incredible savings and inspiring shopping
experiences in-store, online at Kohls.com
and via mobile devices. Committed to its communities, Kohl’s has raised
nearly $300 million for children’s initiatives nationwide through its
Kohl’s Cares® cause merchandise program, which operates under Kohl’s
Cares, LLC, a wholly-owned subsidiary of Kohl’s Department Stores, Inc.
For additional information about Kohl’s philanthropic and environmental
initiatives, visit www.Kohls.com/Cares.
For a list of store locations and information, or for the added
convenience of shopping online, visit www.Kohls.com.

Connect with Kohl’s:

Facebook (http://www.facebook.com/Kohls)

Twitter (http://twitter.com/Kohls)

Google+ (http://plus.google.com/+Kohls)

Pinterest (http://pinterest.com/Kohls)

Instagram (http://instagram.com/Kohls)

YouTube (http://www.youtube.com/Kohls)

 
 
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
         
Three Months Ended Nine Months Ended
October 29, October 31, October 29, October 31,
2016 2015 2016 2015
Net sales $ 4,327 $ 4,427 $ 12,481 $ 12,817
Cost of merchandise sold 2,720   2,784   7,812   7,990  
 
Gross margin 1,607 1,643 4,669 4,827
 
Operating expenses:
Selling, general, and administrative 1,080 1,099 3,074 3,120
Depreciation and amortization 232 236 700 695
Impairments, store closing and other costs (6 )   186    
 
Operating income 301 308 709 1,012
 
Interest expense, net 76 81 233 248
Loss on extinguishment of debt   38     169  
 
Income before income taxes 225 189 476 595
Provision for income taxes 79   69   173   218  
 
Net income $ 146   $ 120   $ 303   $ 377  
 
Basic net income per share $ 0.82 $ 0.63 $ 1.68 $ 1.93
Average number of shares 177 191 180 196
 
Diluted net income per share $ 0.83 $ 0.63 $ 1.68 $ 1.92
Average number of shares 177 192 180 197
 
As a percent of net sales:
Gross margin 37.1 % 37.1 % 37.4 % 37.7 %
Selling, general and administrative expenses 25.0 % 24.8 % 24.6 % 24.3 %
Operating income 7.0 % 7.0 % 5.7 % 7.9 %
Net income 3.4 % 2.7 % 2.4 % 2.9 %
 
Excluding non-recurring items*
Net income $ 142 $ 144 $ 420 $ 484
Diluted net income per share $ 0.80 $ 0.75 $ 2.33 $ 2.46
As a percent of net sales:
Operating income 6.8 % 7.0 % 7.2 % 7.9 %
Net income     3.3 %   3.3 %   3.4 %   3.8 %
 

*Excludes impairments, store closing and other costs in 2016 and
Loss on extinguishment of debt in 2015.

 
 
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
       
October 29,
2016
October 31,
2015

Assets

Current assets:
Cash and cash equivalents $ 597 $ 501
Merchandise inventories 4,721 5,254
Other 336 312
 
Total current assets 5,654 6,067
 
Property and equipment, net 8,203 8,499
Other assets 219 228
 
Total assets $ 14,076 $ 14,794
 

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $ 2,097 $ 2,141
Accrued liabilities 1,235 1,244
Income taxes payable 66 28
Short-term debt 400
Current portion of capital lease
and financing obligations 128 126
 
Total current liabilities 3,526 3,939
 
Long-term debt 2,794 2,792
Capital lease and financing obligations 1,702 1,817
Deferred income taxes 298 216
Other long-term liabilities 649 556
Shareholders’ equity 5,107 5,474
 
Total liabilities and shareholders’ equity $ 14,076 $ 14,794
 
 
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
      Nine Months Ended
October 29,
2016
  October 31,
2015
Operating activities
Net income $ 303 $ 377
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 700 695
Share-based compensation 31 36
Excess tax benefits from share-based compensation (4 ) (10 )
Deferred income taxes 40 (84 )
Loss on extinguishment of debt 169
Impairments, store closing and other costs 57
Other non-cash revenues and expenses 20 23
Changes in operating assets and liabilities:
Merchandise inventories (679 ) (1,433 )
Other current and long-term assets 20 74
Accounts payable 846 630
Accrued and other long-term liabilities 23 (6 )
Income taxes (77 ) (64 )
Net cash provided by operating activities 1,280   407  
 
Investing activities
Acquisition of property and equipment (591 ) (551 )
Other 7   3  
Net cash used in investing activities (584 ) (548 )
 
Financing activities
Treasury stock purchases (441 ) (789 )
Shares withheld for taxes on vested restricted shares (15 ) (26 )
Dividends paid (270 ) (264 )
Proceeds from issuance of debt, net 1,088
Net borrowings under credit facilities 400
Reduction of long-term borrowings (1,085 )
Premium paid on redemption of debt (163 )
Capital lease and financing obligation payments (95 ) (83 )
Proceeds from stock option exercises 6 146
Excess tax benefits from share-based compensation 4 10
Proceeds from financing obligations 5   1  
Net cash used in financing activities (806 ) (765 )
 
Net decrease in cash and cash equivalents (110 ) (906 )
Cash and cash equivalents at beginning of period 707   1,407  
Cash and cash equivalents at end of period $ 597   $ 501  

Contacts

Kohl’s Corporation
Investor Relations:
Wes McDonald,
Chief Financial Officer, (262) 703-1893
or
Media:
Jen
Johnson, VP Corporate Communications, (262) 703-5241