Kohl's Corporation Reports Second Quarter Financial Results

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

Kohl’s Corporation reported second quarter net income of $240 million ($1.00 per diluted share) compared to $299 million ($1.08 per diluted share) a year ago. Net sales were $4.2 billion, a decrease of 1.0 percent for the quarter. Comparable store sales for the quarter decreased 2.7 percent.

Year to date, net income was $394 million ($1.63 per diluted share) compared to $500 million ($1.76 per diluted share) a year ago. Net sales were $8.4 billion, an increase of 0.4 percent. Year-to-date comparable store sales decreased 1.3 percent.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “Our sales performance in the second quarter was disappointing. Our gross margin performance for the quarter, however, was better than expected. Our teams remain disciplined in their expense management and, again, delivered solid results. We accomplished our goal of improving inventory levels for the fall season and our sales improved considerably in July as units were received. As we look forward to the fall season, we are excited about the fashion content and level of newness in our assortments.”

Quarterly Dividend Declared

On August 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 September 26, 2012 to shareholders of record at the close of business on September 5, 2012.

Store Update

Kohl’s ended the quarter with 1,134 stores in 49 states, compared with 1,097 stores at the same time last year. During the first half of the year, the Company opened 9 new stores, including 1 relocated store, closed 1 store and completed 40 remodels. The company expects to open an additional 12 stores and complete an additional 10 remodels in September.

Earnings Guidance – Third Quarter

The Company provided initial guidance for the fiscal quarter ending October 27, 2012 of $0.83 to $0.89 per diluted share. The guidance is based on total sales growth of 1 to 3 percent and comparable store sales growth of flat to 2 percent and includes expected third quarter share repurchases of $300 million. After incorporating its second quarter results and third quarter outlook, the Company now expects to earn $4.50 to $4.65 per diluted share for fiscal 2012 versus its previous guidance of $4.75 per diluted share.

Second Quarter 2012 Earnings Conference Call

Kohl’s will host a second quarter earnings conference call at 8:30 am ET on August 9, 2012. The phone number for the conference call is (706) 902-0486 and the conference ID is 14680638. Replays of the call will be available for 30 days by dialing (855) 859-2056 or (404) 537-3406 and referencing Conference ID 14680638. 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 (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. With a commitment to environmental leadership, Kohl’s operates 1,134 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.

 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
Subject to Reclassification
         
Three Months Six Months
(13 Weeks) Ended (26 Weeks) Ended
July 28, July 30, July 28, July 30,
2012 2011 2012 2011
 
Net sales $ 4,205 $ 4,248 $ 8,447 $ 8,410
Cost of merchandise sold   2,563   2,520   5,281   5,095
 
Gross margin 1,642 1,728 3,166 3,315
 
Operating expenses:
Selling, general, and administrative 975 991 1,977 1,995
Depreciation and amortization   210   190   411   382
 
Operating income 457 547 778 938
 
Interest expense, net   80   72   162   148
 
Income before income taxes 377 475 616 790
Provision for income taxes   137   176   222   290
 
 
Net income $ 240 $ 299 $ 394 $ 500
 
 
Basic net income per share $ 1.01 $ 1.08 $ 1.64 $ 1.77
Average number of shares 238 276 240 282
 
Diluted net income per share $ 1.00 $ 1.08 $ 1.63 $ 1.76
Average number of shares 239 278 242 284
 
As a percent of net sales:
Gross margin 39.0% 40.7% 37.5% 39.4%
Selling, general and
administrative expenses 23.2% 23.3% 23.4% 23.7%
Operating income 10.9% 12.9% 9.2% 11.2%
Net income 5.7% 7.0% 4.7% 5.9%
 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
Subject to Reclassification
       
July 28, July 30,
2012 2011

Assets

Current assets:
Cash and cash equivalents $ 600 $ 1,169
Merchandise inventories 3,494 3,095
Deferred income taxes 109 115
Other   260   256
 
Total current assets 4,463 4,635
 
Property and equipment, net 9,010 8,876
Long-term investments 102 208
Other assets   254   255
 
Total assets $ 13,829 $ 13,974
 

Liabilities and Shareholders' Equity

 
Current liabilities:
Accounts payable $ 1,531 $ 1,345
Accrued liabilities 974 1,065
Income taxes payable 24 18
Current portion of long-term debt - 100
Current portion of capital lease
and financing obligations   94   89
 
Total current liabilities 2,623 2,617
 
Long-term debt 2,141 1,494
Capital lease and financing obligations 1,997 1,987
Deferred income taxes 411 338
Other long-term liabilities 469 460
Shareholders' equity   6,188   7,078
 
Total liabilities and shareholders' equity $ 13,829 $ 13,974
 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Subject to Reclassification
     
Six Months Ended
July 28, July 30,
2012 2011
Operating activities
Net income $ 394 $ 500
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 411 382
Share-based compensation 24 29
Excess tax benefits from share-based compensation (3 ) (1 )
Deferred income taxes (13 ) 42
Other non-cash revenues and expenses 8 13
Changes in operating assets and liabilities:
Merchandise inventories (291 ) (57 )
Other current and long-term assets 40 (14 )
Accounts payable 298 208
Accrued and other long-term liabilities (175 ) (108 )
Income taxes   (111 )   (114 )
 
Net cash provided by operating activities   582     880  
 
Investing activities
Acquisition of property and equipment (429 ) (479 )
Sales of investments in auction rate securities 51 97
Other   2     (1 )
 
Net cash used in investing activities   (376 )   (383 )
 
Financing activities
Treasury stock purchases (623 ) (1,166 )
Dividends paid (153 ) (142 )
Long-term debt payments - (300 )
Proceeds from financing obligations 4 8
Capital lease and financing obligation payments (61 ) (46 )
Proceeds from stock option exercises 19 43
Excess tax benefits from share-based compensation 3 1
Other   -     (3 )
 
Net cash used in financing activities   (811 )   (1,605 )
 
Net decrease in cash and cash equivalents (605 ) (1,108 )
Cash and cash equivalents at beginning of period   1,205     2,277  
 
Cash and cash equivalents at end of period $ 600   $ 1,169  

Contacts

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

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Contacts

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