Market Overview

Kohl's Corporation Reports Financial Results

Share:
  • Comparable sales decrease 2.9%
  • Diluted earnings per share of $1.51
  • Adjusted diluted earnings per share(1) of $1.55
  • Affirms adjusted annual diluted earnings per share(1) guidance of $5.15 to $5.45

Kohl's Corporation (NYSE:KSS) today reported results for the quarter ended August 3, 2019.

 

Three Months

 

Six Months

 

($ in millions, except per share data)

 

2019

 

2018

 

Change

 

 

2019

 

2018

 

Change

 

Total revenue

$

4,430

 

$

4,570

 

 

(3.1

)%

$

8,517

 

$

8,778

 

 

(3.0

)%

Comparable sales

 

(2.9

)%

 

3.1

%

 

 

 

 

(3.2

)%

 

1.8

%

 

 

 

Gross margin

 

38.8

%

 

39.5

%

(72) bps

 

 

37.9

%

 

38.3

%

(41) bps

 

Selling, general, and administrative expenses

$

1,269

 

$

1,272

 

 

(0.2

)%

$

2,544

 

$

2,532

 

 

0.5

%

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

241

 

$

292

 

 

(17

)%

$

303

 

$

368

 

 

(18

)%

Diluted earnings per share

$

1.51

 

$

1.76

 

 

(14

)%

$

1.89

 

$

2.21

 

 

(15

)%

Non-GAAP(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

247

 

$

292

 

 

(15

)%

$

345

 

$

399

 

 

(14

)%

Diluted earnings per share

$

1.55

 

$

1.76

 

 

(12

)%

$

2.15

 

$

2.40

 

 

(10

)%

(1) Excludes Impairments, store closing and other costs in 2019 and Loss on extinguishment of debt in 2018.

Michelle Gass, Kohl's chief executive officer, said, "We are pleased to report that our business strengthened as we progressed through the second quarter. Comparable sales were better than the first quarter and improved during the period, turning positive during the last six weeks of the second quarter with 1% growth. This positive trend has continued into August driven by a successful start to the back-to-school season. We are confident that our upcoming brand launches, program expansions, and increased traffic from the Amazon returns program will incrementally contribute to our performance during the balance of the year and beyond."

Dividend

On August 13, 2019, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.67 per share. The dividend is payable September 25, 2019 to shareholders of record at the close of business on September 11, 2019.

Guidance

The Company affirms its adjusted annual earnings per diluted share guidance of $5.15 to $5.45, which excludes $0.26 per diluted share related to Impairments, store closing and other costs recognized in the first six months of 2019.

Second Quarter 2019 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 9:00 am ET on August 20, 2019. The phone number for the conference call is (800) 398-9397. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID is 468136. 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, including 2019 earnings guidance. 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. Forward-looking statements relate to the date initially made, and Kohl's undertakes no obligation to update them.

About Kohl's

Kohl's (NYSE:KSS) is a leading omnichannel retailer with more than 1,100 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, Kohl's offers amazing​​ national and exclusive brands, incredible savings and an easy shopping experience in our stores, online at Kohls.com and on Kohl's mobile app. ​Since its founding, Kohl's has given more than $700 million to support communities nationwide, with a focus on family health and wellness. For a list of store locations or to shop online, visit Kohls.com. For more information about Kohl's impact in the community or how to join our winning team, visit Corporate.Kohls.com or follow @KohlsNews on Twitter.

 

 

KOHL'S CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

Three Months Ended

Six Months Ended

(Dollars in Millions, Except per Share Data)

August 3,

2019

August 4,

2018

August 3,

2019

August 4,

2018

Net sales

$

4,169

 

$

4,310

 

$

7,990

 

$

8,263

 

Other revenue

 

261

 

 

260

 

 

527

 

 

515

 

Total revenue

 

4,430

 

 

4,570

 

 

8,517

 

 

8,778

 

Cost of merchandise sold

 

2,550

 

 

2,605

 

 

4,965

 

 

5,101

 

Gross margin rate

 

38.8

%

 

39.5

%

 

37.9

%

 

38.3

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

1,269

 

 

1,272

 

 

2,544

 

 

2,532

 

As a percent of total revenue

 

28.6

%

 

27.8

%

 

29.9

%

 

28.8

%

Depreciation and amortization

 

228

 

 

241

 

 

458

 

 

483

 

Impairments, store closing and other costs

 

7

 

 

-

 

 

56

 

 

-

 

Operating income

 

376

 

 

452

 

 

494

 

 

662

 

Interest expense, net

 

53

 

 

65

 

 

105

 

 

135

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

-

 

 

42

 

Income before income taxes

 

323

 

 

387

 

 

389

 

 

485

 

Provision for income taxes

 

82

 

 

95

 

 

86

 

 

117

 

Net income

$

241

 

$

292

 

$

303

 

$

368

 

Average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

159

 

 

165

 

 

160

 

 

165

 

Diluted

 

159

 

 

166

 

 

161

 

 

166

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.52

 

$

1.77

 

$

1.90

 

$

2.23

 

Diluted

$

1.51

 

$

1.76

 

$

1.89

 

$

2.21

 

 

ADJUSTED NET INCOME AND DILUTED EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

Three Months Ended

 

Six Months

 

(Dollars in Millions, Except per Share Data)

August 3,

2019

August 4,

2018

August 3,

2019

August 4,

2018

Net income

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

241

 

$

292

 

$

303

 

$

368

 

Impairments, store closing and other costs

 

6

 

 

-

 

 

42

 

 

-

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

-

 

 

31

 

Adjusted (non-GAAP)

$

247

 

$

292

 

$

345

 

$

399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

1.51

 

$

1.76

 

$

1.89

 

$

2.21

 

Impairments, store closing and other costs

 

0.04

 

 

-

 

 

0.26

 

 

-

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

-

 

 

0.19

 

Adjusted (non-GAAP)

$

1.55

 

$

1.76

 

$

2.15

 

$

2.40

 

 

KOHL'S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in Millions)

August 3,

2019

August 4,

2018

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

625

 

$

1,066

 

Merchandise inventories

 

3,656

 

 

3,572

 

Other

 

397

 

 

404

 

Total current assets

 

4,678

 

 

5,042

 

Property and equipment, net

 

7,276

 

 

7,635

 

Operating leases

 

2,428

 

 

-

 

Other assets

 

160

 

 

238

 

Total assets

$

14,542

 

$

12,915

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

1,330

 

$

1,404

 

Accrued liabilities

 

1,199

 

 

1,174

 

Income taxes payable

 

34

 

 

70

 

Current portion of:

 

 

 

 

 

 

Finance leases and financing obligations

 

119

 

 

122

 

Operating leases

 

158

 

 

-

 

Total current liabilities

 

2,840

 

 

2,770

 

Long-term debt

 

1,855

 

 

2,273

 

Finance leases and financing obligations

 

1,270

 

 

1,537

 

Operating leases

 

2,647

 

 

-

 

Deferred income taxes

 

254

 

 

188

 

Other long-term liabilities

 

221

 

 

660

 

Shareholders' equity

 

5,455

 

 

5,487

 

Total liabilities and shareholders' equity

$

14,542

 

$

12,915

 

 

KOHL'S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Six Months Ended

(Dollars in Millions)

August 3,

2019

August 4,

2018

Operating activities

 

 

 

 

 

 

Net income

$

303

 

$

368

 

Adjustments to reconcile net income to net cash provided

by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

458

 

 

483

 

Share-based compensation

 

27

 

 

50

 

Deferred income taxes

 

41

 

 

(25

)

Impairments, store closing and other costs

 

45

 

 

-

 

Loss on extinguishment of debt

 

-

 

 

42

 

Non-cash lease expense

 

75

 

 

-

 

Other non-cash expenses

 

3

 

 

13

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Merchandise inventories

 

(175

)

 

(24

)

Other current and long-term assets

 

29

 

 

89

 

Accounts payable

 

143

 

 

133

 

Accrued and other long-term liabilities

 

(177

)

 

(88

)

Income taxes

 

(8

)

 

6

 

Operating lease liabilities

 

(88

)

 

-

 

Net cash provided by operating activities

 

676

 

 

1,047

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Acquisition of property and equipment

 

(439

)

 

(312

)

Other

 

-

 

 

6

 

Net cash used in investing activities

 

(439

)

 

(306

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Treasury stock purchases

 

(254

)

 

(165

)

Shares withheld for taxes on vested restricted shares

 

(27

)

 

(21

)

Dividends paid

 

(214

)

 

(202

)

Reduction of long-term borrowings

 

(6

)

 

(528

)

Premium paid on redemption of debt

 

-

 

 

(35

)

Finance lease and financing obligation payments

 

(60

)

 

(64

)

Proceeds from financing obligations

 

13

 

 

-

 

Proceeds from stock option exercises

 

2

 

 

32

 

Net cash used in financing activities

 

(546

)

 

(983

)

Net decrease in cash and cash equivalents

 

(309

)

 

(242

)

Cash at beginning of period

 

934

 

 

1,308

 

Cash at end of period

$

625

 

$

1,066

 

 

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