Kohl's Corporation Reports Third Quarter Financial Results

Kohl's Corporation Reports Third Quarter Financial Results

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)-- Kohl's Corporation (NYS: KSS) . Kohl's Corporation today reported results for the fiscal periods ended October 27, 2012.

Kohl's Corporation reported third quarter diluted earnings per share increased 14% to $0.91 per diluted share. Net income was $215 million compared to $211 million ($0.80 per diluted share) a year ago. Net sales were $4.5 billion, an increase of 2.6% for the quarter. Comparable store sales for the quarter increased 1.1%.

Year to date, net income was $609 million ($2.54 per diluted share) compared to $711 million ($2.56 per diluted share) a year ago. Net sales were $12.9 billion, an increase of 1.2%. Year-to-date comparable store sales decreased 0.5%.

Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "Our sales performance in the third quarter was consistent with our expectations, while our gross margin results were better than expected. Thanks to our dedicated teams, expenses were again well-managed. We have made noticeable investments in Holiday inventory - both in depth and content - and the in-store experience. Our stores are festive and fun to shop. We are also very excited about our expanded gift strategy and our ability to offer great products at great values."

Capital Structure

On November 7, 2012, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.32 per share. The dividend is payable December 26, 2012 to shareholders of record at the close of business on December 5, 2012.

Kohl's Board of Directors also increased the Company's share repurchase authorization under its existing share repurchase program by $3.2 billion, to $3.5 billion. The Company 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 1,146 stores in 49 states, compared with 1,127 stores at the same time last year. During the year, the Company opened 21 new stores, including 1 relocated store, closed 1 store and completed 50 remodels.

Earnings Guidance

The Company provided initial guidance for the fiscal quarter ending February 2, 2013 of $2.00 to $2.08 per diluted share. The guidance is based on total sales growth of 7 to 8 percent and comparable store sales growth of 3 to 4 percent and includes expected fourth quarter share repurchases of $300 million. After incorporating its third quarter results and fourth quarter outlook, the Company now expects to earn $4.52 to $4.60 per diluted share for fiscal 2012 versus its previous guidance of $4.50 to $4.65 per diluted share.

Third Quarter 2012 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 8:30 am ET on November 8, 2012. The phone number for the conference call is (706) 902-0486 and the conference ID is 15140640. Replays of the call will be available for 30 days by dialing (855) 859-2056 or (404) 537-3406 and referencing Conference ID 15140640. The conference call is also accessible via the Company's web site at http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm.

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, including guidance on the Company's targeted earnings. 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

Based in Menomonee Falls, Wis., Kohl's (NYS: KSS) is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. With a commitment to environmental leadership, Kohl's operates 1,146 stores in 49 states. In support of the communities it serves, Kohl's has raised more than $208 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 a list of store locations and information, or for the added convenience of shopping online, visit www.Kohls.com, or join the discussion on Facebook http://www.facebook.com/kohls or Twitter http://twitter.com/Kohls.

(In Millions, except per share data)
Subject to Reclassification
Three MonthsNine Months
Oct 27,Oct 29,Oct 27,Oct 29,
Net sales$4,490$4,376$12,937$12,786
Cost of merchandise sold2,778 2,688 8,059 7,784 
Gross margin1,7121,6884,8785,002
Operating expenses:
Selling, general, and administrative1,0771,0713,0553,066
Depreciation and amortization210 202 620 583 
Operating income4254151,2031,353
Interest expense, net80 75 243 223 
Income before income taxes3453409601,130
Provision for income taxes130 129 351 419 
Net income$215 $211 $609 $711 
Basic net income per share$0.92$0.80$2.56$2.58
Average number of shares233264238276
Diluted net income per share$0.91$0.80$2.54$2.56
Average number of shares235265240278
As a percent of net sales:
Gross margin38.1%38.6%37.7%39.1%
Selling, general and
administrative expenses24.0%24.5%23.6%24.0%
Operating income9.5%9.5%9.3%10.6%
Net income4.8%4.8%4.7%5.6%
(In Millions)
Subject to Reclassification
Oct 27,Oct 29,


Current assets:
Cash and cash equivalents$550$760
Merchandise inventories4,8184,130
Income tax receivable105
Deferred income taxes124128


Total current assets5,7735,380
Property and equipment, net9,0098,918
Long-term investments90158
Other assets256 263
Total assets$15,128 $14,719

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable$2,429$2,080
Accrued liabilities1,0941,025
Income taxes payable48
Current portion of capital lease
and financing obligations100 95
Total current liabilities3,6713,200
Long-term debt2,4922,141
Capital lease and financing obligations1,9862,003
Deferred income taxes395445
Other long-term liabilities478459
Shareholders' equity6,106 6,471
Total liabilities and shareholders' equity$15,128 $14,719
(In Millions)
Subject to Reclassification
Nine Months Ended
Oct 27,Oct 29,
Operating activities
Net income$609$711
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization620583
Share-based compensation3743
Excess tax benefits from share-based compensation(3)(2)
Deferred income taxes(46)146
Other non-cash revenues and expenses2619
Changes in operating assets and liabilities:
Merchandise inventories(1,613)(1,091)
Other current and long-term assets30(1)
Accounts payable1,196942
Accrued and other long-term liabilities(62)(16)
Income taxes(91)(238)
Net cash provided by operating activities703 1,096 
Investing activities
Acquisition of property and equipment(641)(755)
Sales of investments in auction rate securities68143
Other5 (20)
Net cash used in investing activities(568)(632)
Financing activities
Treasury stock purchases(883)(1,956)
Dividends paid(227)(207)
Proceeds from issuance of debt350646
Deferred financing costs(3)(8)
Long-term debt payments(400)
Interest rate hedge payments(48)
Proceeds from financing obligations712
Capital lease and financing obligation payments(87)(69)
Proceeds from stock option exercises5047
Excess tax benefits from share-based compensation3 2 
Net cash used in financing activities(790)(1,981)
Net decrease in cash and cash equivalents(655)(1,517)
Cash and cash equivalents at beginning of period1,205 2,277 
Cash and cash equivalents at end of period$550 $760 

Kohl's Corporation
Investor Relations:
Wes McDonald, Senior Executive Vice President and Chief Financial Officer
(262) 703-1893
Vicki Shamion, Senior Vice President - Public Relations
(262) 703-1464

KEYWORDS:   United States  North America  Wisconsin


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