Kohl's Corporation Reports Fourth Quarter and Fiscal 2011 Financial Results

• 2011 diluted EPS increases 17%

• Dividend increases 28% to $0.32 per share

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Kohl’s Corporation (NYSE:KSS) today reported results for the quarter and year ended January 28, 2012.

Fourth Quarter Results

Kohl’s Corporation reported fourth quarter diluted earnings per share increased 9% to $1.81. Net income for the quarter decreased 8% to $455 million, compared to $494 million ($1.66 per diluted share) a year ago. Net sales were $6.0 billion, a decrease of 0.3 percent from the prior year quarter. Comparable store sales for the quarter decreased 2.1%.

Fiscal 2011 Results

For the year, diluted earnings per share increased 17% to $4.30 and net income increased 4% to $1,167 million. Net sales were $18.8 billion, an increase of 2.2%. Comparable store sales increased 0.5%.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “I am pleased that 2011 was another year of profitability and earnings per share growth for our shareholders. With the commitment of each of our 140,000 associates, we were able to navigate a difficult holiday sales season through strong expense and inventory management. We achieved a major milestone in 2011 with our E-Commerce business reporting $1 billion in revenues. We are starting 2012 with considerable brand excitement, with the launch of Rock and Republic, continued excitement from our Jennifer Lopez and Marc Anthony brands, and expansion of the successful ELLE and Simply Vera Vera Wang brands into new categories.”

The Company increased its free cash flow (a non-GAAP financial measure) by 27% to $1.1 billion and returned approximately $2.6 billion to shareholders in 2011 with its first-ever dividend and share repurchases.

Quarterly Dividend Declared

On February 22, 2012, Kohl's Board of Directors declared a quarterly cash dividend of $0.32 per share of Kohl’s common stock; a $0.07 per share and 28% increase over previous quarterly dividends. The dividend is payable March 28, 2012 to shareholders of record at the close of business on March 7, 2012.

Store Update

Kohl’s opened 40 stores during 2011 and now has 1,127 stores in 49 states, compared with 1,089 stores at the same time last year. The Company remodeled 100 stores in 2011.

Earnings Guidance

The Company issued its initial guidance for fiscal 2012. Based on assumptions of a total sales increase of 4.5% and a comparable store sales increase of 2%, the Company expects earnings per diluted share of $4.75 for the year. For the first fiscal quarter, the Company expects earnings per diluted share of $0.60 based on assumptions of a total sales increase of 3% and a comparable store sales increase of 1%.

Fourth Quarter 2011 Earnings

Kohl’s will host a fourth quarter earnings conference call at 8:30 am ET on February 23, 2012. The phone number for the conference call is [phone] and the conference ID is 41360705. Replays of the call will be available for 30 days by dialing [phone] or [phone] and referencing Conference ID 41360705. The conference call is also accessible via the Company's web site at http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm.

Free Cash Flow

Free cash flow is a non-GAAP financial measure which we define as net cash provided by operating activities and proceeds from financing obligations (which generally represent landlord reimbursements of construction costs) less acquisition of property & equipment and capital lease & financing obligation payments. Free cash flow should be evaluated in addition to, and not considered a substitute for, other financial measures such as net income and cash flow provided by operations. We believe that free cash flow represents our ability to generate additional cash flow from our business operations.

The following table reconciles net cash provided by operating activities (a GAAP measure) to free cash flow (a non-GAAP measure) for fiscal 2011.

(in millions)
Net cash provided by operating activities	$	2,143
Acquisition of property & equipment		(927	)
Capital lease & financing obligation payments		(91	)
Proceeds from financing obligations		14
Free cash flow	$	1,139

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 Kohl’s targeted sales, earnings and other operating metrics. 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/A, 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 (NYSE: 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. Kohl’s operates 1,127 stores in 49 states with a commitment to environmental leadership. 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.

KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
Subject to Reclassification
		Three Months						Twelve Months
		Ended						Ended
		Jan. 28,			Jan. 29,			Jan. 28,			Jan. 29,
		2012			2011			2012			2011
					(Restated)
Net sales		$	6,018		$	6,038		$	18,804		$	18,391
Cost of merchandise sold			3,841			3,815			11,625			11,359
Gross margin			2,177			2,223			7,179			7,032
Operating expenses:
	Selling, general and administrative		1,178			1,173			4,243			4,190
	Depreciation and amortization		194			189			778			750
Operating income			805			861			2,158			2,092
Interest expense, net			76			71			299			304
Income before income taxes			729			790			1,859			1,788
Provision for income taxes			274			296			692			668
Net income		$	455		$	494		$	1,167		$	1,120
Basic net income per share		$	1.82		$	1.68		$	4.33		$	3.69
Average number of shares			251			295			270			304
Diluted net income per share		$	1.81		$	1.66		$	4.30		$	3.66
Average number of shares			252			297			271			306
As a percent of net sales:
	Gross margin		36.2	%		36.8	%		38.2	%		38.2	%
	Selling, general and
	administrative expenses		19.6	%		19.4	%		22.6	%		22.8	%
	Operating income		13.4	%		14.3	%		11.5	%		11.4	%
	Net income		7.6	%		8.2	%		6.2	%		6.1	%

KOHL'S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars In Millions)
(Unaudited)
Subject to Reclassification
			Jan. 28,		Jan. 29,
			2012		2011
Assets
Current assets:
	Cash and cash equivalents		$	1,205	$	2,277
	Merchandise inventories			3,199		3,036
	Deferred income taxes			72		77
	Other			299		252
		Total current assets		4,775		5,642
Property and equipment, net				8,905		8,692
Long-term investments				153		277
Other assets				261		238
		Total assets	$	14,094	$	14,849
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable		$	1,233	$	1,138
	Accrued liabilities			1,130		1,030
	Income taxes payable			133		127
	Current portion of long-term debt			-		400
	Current portion of capital lease
		and financing obligations		94		86
		Total current liabilities		2,590		2,781
Long-term debt				2,141		1,494
Capital lease and financing obligations				2,009		2,018
Deferred income taxes				386		256
Other long-term liabilities				460		450
Shareholders' equity				6,508		7,850
		Total liabilities and shareholders' equity	$	14,094	$	14,849

KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Subject to Reclassification
		2011			2010
Operating activities
Net income		$	1,167		$	1,120
Adjustments to reconcile net income to net cash
provided by operating activities:
	Depreciation and amortization		778			750
	Share-based compensation		57			66
	Excess tax benefits from share-based compensation		2			3
	Deferred income taxes		144			39
	Other non-cash revenues and expenses		39			35
	Changes in operating assets and liabilities:
	Merchandise inventories		(158	)		(107	)
	Other current and long-term assets		(42	)		(50	)
	Accounts payable		96			(50	)
	Accrued and other long-term liabilities		61			13
	Income taxes		(1	)		(63	)
Net cash provided by operating activities			2,143			1,756
Investing activities
Acquisition of property and equipment			(927	)		(801	)
Sales of investments in auction rate securities			145			42
Other			(20	)		2
Net cash used in investing activities			(802	)		(757	)
Financing activities
Treasury stock purchases			(2,311	)		(1,004	)
Long-term debt payments			(400	)		-
Capital lease and financing obligation payments			(91	)		(84	)
Proceeds from financing obligations			14			27
Proceeds from issuance of debt			646			-
Interest rate hedge payment			(48	)		-
Deferred financing costs			(8	)		-
Proceeds from stock option exercises			58			75
Dividends paid			(271	)		-
Excess tax benefits from share-based compensation			(2	)		(3	)
Net cash used in financing activities			(2,413	)		(989	)
Net (decrease) increase in cash and cash equivalents			(1,072	)		10
Cash and cash equivalents at beginning of year			2,277			2,267
Cash and cash equivalents at end of year		$	1,205		$	2,277