Kohl's Corporation Reports Second Quarter Financial Results

Kohl's Corporation Reports Second Quarter Financial Results

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)-- Kohl's Corporation (NYS: KSS) . Kohl's Corporation today reported results for the quarter and year-to-date period ended August 3, 2013.

Quarter

Year to Date

($ in millions)

2013

2012

Change

2013

2012

Change

Sales

$

4,289

$

4,205

2.0%

$

8,488

$

8,447

0.5%

Comparable store sales

0.9

%

(2.7

)%

-

(0.5

)%

(1.3

)%

-

Net income

$

231

$

240

(4)%

$

378

$

394

(4)%

Diluted earnings per share

$

1.04

$

1.00

4%

$

1.70

$

1.63

4%

Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "We are pleased with our progress in the second quarter. Sales improved significantly over the first quarter and our gross margin improved over last year. Expenses were well-managed and we ended the quarter with inventory per store up mid-single digits while funding our E-Commerce growth. I would like to thank each of our associates for their contribution to our results."


Dividend

On August 13, 2013, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.35 per share. The dividend is payable September 25, 2013 to shareholders of record at the close of business on September 11, 2013.

Store Update

Kohl's ended the quarter with 1,155 stores in 49 states, compared with 1,134 stores at the same time last year. The Company opened nine new stores during the first quarter of 2013 and expects to open three new stores and remodel 30 stores in the Fall.

Earnings Guidance

The Company provided initial guidance for the fiscal quarter ending November 2, 2013 of $0.83 to $0.92 per diluted share. The guidance is based on total sales growth of 1 to 3 percent and comparable store sales growth of 0 to 2 percent. The Company also updated its annual earnings per share guidance from $4.15 - $4.45 to $4.15 to $4.35.

Second Quarter 2013 Earnings Conference Call

Kohl's will host a second quarter earnings conference call at 8:30 am ET on August 15, 2013. The phone number for the conference call is (706) 902-0486. Replays of the call will be available for 30 days by dialing (855) 859-2056 or (404) 537-3406. The conference ID for both the live call and the replay is 94952764. The conference call and replays are 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 sales and 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 1,155 stores in 49 states. In support of the communities it serves, Kohl's has raised more than $231 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, join the discussion on Facebook (http://www.facebook.com/kohls) or Twitter (http://twitter.com/Kohls) or get inspired on Pinterest (http://pinterest.com/kohls/) and Instagram (http://instagram.com/kohls).

KOHL'S CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In Millions, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

August 3,

July 28,

August 3,

July 28,

2013

2012

2013

2012

Net sales

$

4,289

$

4,205

$

8,488

$

8,447

Cost of merchandise sold

2,613

2,563

5,284

5,281

Gross margin

1,676

1,642

3,204

3,166

Operating expenses:

Selling, general, and administrative

1,000

975

1,997

1,977

Depreciation and amortization

225

210

439

411

Operating income

451

457

768

778

Interest expense, net

84

80

167

162

Income before income taxes

367

377

601

616

Provision for income taxes

136

137

223

222

Net income

$

231

$

240

$

378

$

394

Basic net income per share

$

1.05

$

1.01

$

1.71

$

1.64

Average number of shares

220

238

221

240

Diluted net income per share

$

1.04

$

1.00

$

1.70

$

1.63

Average number of shares

222

239

222

242

As a percent of net sales:

Gross margin

39.1

%

39.0

%

37.7

%

37.5

%

Selling, general and

administrative expenses

23.3

%

23.2

%

23.5

%

23.4

%

Operating income

10.5

%

10.9

%

9.0

%

9.2

%

Net income

5.4

%

5.7

%

4.5

%

4.7

%

KOHL'S CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Millions)

(Unaudited)

August 3,

July 28,

2013

2012

Assets

Current assets:

Cash and cash equivalents

$

592

$

600

Merchandise inventories

3,856

3,521

Deferred income taxes

150

109

Other

284

260

Total current assets

4,882

4,490

Property and equipment, net

8,891

9,010

Long-term investments

58

102

Other assets

266

254

Total assets

$

14,097

$

13,856

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

1,396

$

1,531

Accrued liabilities

1,065

1,001

Income taxes payable

75

24

Current portion of capital lease

and financing obligations

147

94

Total current liabilities

2,683

2,650

Long-term debt

2,492

2,141

Capital lease and financing obligations

1,948

1,997

Deferred income taxes

381

411

Other long-term liabilities

540

469

Shareholders' equity

6,053

6,188

Total liabilities and shareholders' equity

$

14,097

$

13,856

KOHL'S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

(Unaudited)

Six Months Ended

August 3,

July 28,

2013

2012

Operating activities

Net income

$

378

$

394

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

439

411

Share-based compensation

27

24

Excess tax benefits from share-based compensation

(2

)

(3

)

Deferred income taxes

(12

)

(13

)

Other non-cash revenues and expenses

18

8

Changes in operating assets and liabilities:

Merchandise inventories

(103

)

(300

)

Other current and long-term assets

22

40

Accounts payable

89

298

Accrued and other long-term liabilities

(20

)

(166

)

Income taxes

(74

)

(111

)

Net cash provided by operating activities

762

582

Investing activities

Acquisition of property and equipment

(284

)

(429

)

Sales of investments in auction rate securities

1

51

Other

13

2

Net cash used in investing activities

(270

)

(376

)

Financing activities

Treasury stock purchases

(279

)

(623

)

Dividends paid

(153

)

(153

)

Proceeds from financing obligations

4

Capital lease and financing obligation payments

(52

)

(61

)

Proceeds from stock option exercises

46

19

Excess tax benefits from share-based compensation

2

3