Kohl's Reports Fourth Quarter and Full Year Fiscal 2021 Financial Results

  • Fourth quarter diluted earnings per share of $2.20 exceeds expectations
  • Record full year 2021 adjusted diluted earnings per share of $7.33, eclipsing previous high of $5.60 in 2018
  • Repurchased $548 million of shares in the quarter and $1.355 billion of shares in 2021
  • Expects full year 2022 net sales to increase 2% to 3% as compared to 2021, operating margin to be in the range of 7.2% to 7.5% and earnings per share to be in the range of $7.00 to $7.50
  • Increasing the quarterly dividend by 100%, which equates to an annual dividend of $2.00 per share, and planning to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an accelerated share repurchase (ASR) program executed in Q2 2022

MENOMONEE FALLS, Wis.--()--Kohl’s Corporation (NYSE:KSS) today reported results for the quarter and year ended January 29, 2022.

 

Three Months

Twelve Months

($ in millions, except per share data)

2021

2020

Change

2021

2020

Change

Total revenue

$

6,499

 

$

6,141

 

 

5.8

%

$

19,433

 

$

15,955

 

 

21.8

%

Net sales(1)

 

5.8

%

 

(10.1

)%

 

 

 

22.9

%

 

(20.4

)%

 

 

 

Gross margin

 

33.2

%

 

32.0

%

 

124 bps

 

 

38.1

%

 

31.1

%

700 bps

 

Selling, general, and administrative expenses

$

1,687

 

$

1,603

 

 

5.2

%

$

5,478

 

$

5,021

 

 

9.1

%

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

299

 

$

343

 

 

(13

)%

$

938

 

$

(163

)

 

100

%+

Diluted earnings (loss) per share

$

2.20

 

$

2.20

 

 

0

%

$

6.32

 

$

(1.06

)

 

100

%+

Non-GAAP(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net (loss) income

$

299

 

$

346

 

 

(14

)%

$

1,089

 

$

(186

)

 

100

%+

Adjusted diluted (loss) earnings per share

$

2.20

 

$

2.22

 

 

(1

)%

$

7.33

 

$

(1.21

)

 

100

%+

(1)

Represents change in Net sales vs. prior year period.

(2)

Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non- GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing, and other costs, and Gain on sale of real estate if applicable.

“In 2021, we delivered all-time record earnings per share, significantly ahead of our expectations. Our operating margin of 8.6% exceeded our 2023 goal two years ahead of plan, a direct result of our efforts to restructure the business to be more profitable. We remain extremely confident in the future growth and cash flow generation of our business, and in 2022 will build on our momentum as we further scale key initiatives such as Sephora,” said Michelle Gass, Kohl’s chief executive officer.

“We continue to see a lot of value in our company. We are reinforcing our commitment to driving shareholder value by doubling our dividend and planning on repurchasing at least $1.0 billion in shares in 2022. We look forward to sharing more details on our strategy and key initiatives, as well as our financial and capital allocation plans at our Investor Day event on March 7, 2022,” said Gass.

2022 Financial Outlook

For the full year 2022, the Company currently expects the following:

  • Net sales is expected to increase 2% to 3% as compared to the prior year
  • Operating margin is expected to be in the range of 7.2% to 7.5%
  • Earnings per share is expected to be in the range of $7.00 to $7.50, excluding any non-recurring charges

2022 Capital Allocation Outlook

For the full year 2022, the Company currently expects the following:

  • Capital expenditures: approximately $850 million, including expansion of its Sephora partnership and store refresh activity
  • Dividend: On February 28, 2022, Kohl’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.50 per share. The dividend is payable March 30, 2022 to shareholders of record at the close of business on March 16, 2022.
  • Share repurchase program: Kohl’s Board of Directors approved a $3.0 billion share repurchase authorization and the Company plans to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an ASR program executed in Q2 2022.

Fourth Quarter 2021 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 9:00 am ET on March 1, 2022. A webcast of the conference call and the related presentation materials will be available via the Company's web site at investors.kohls.com, both live and after the call.

2022 Investor Day

On March 7, 2022, the Company will host a virtual investor day presentation from 9:00 am ET to 12:00 pm ET. Management will provide an update on its strategy and key initiatives and an overview of its financial plan. Webcast details and related presentation material will be available on the Company's web site at investors.kohls.com, both live and after the event.

Cautionary Statement Regarding Forward-Looking Information and Non-GAAP Measures

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The Company 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 the Company's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, risks described more fully in Item 1A in the Company's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in the Company's filings with the SEC. Forward-looking statements relate to the date initially made, and Kohl’s undertakes no obligation to update them.

In this press release, the Company provides information regarding adjusted net income (loss) and adjusted diluted earnings (loss) per share, which are not recognized terms under U.S. generally accepted accounting principles (“GAAP”) and do not purport to be alternatives to net income as a measure of operating performance. A reconciliation of adjusted net income (loss) and adjusted diluted earnings (loss) per share is provided in this release. The Company believes that the use of these non-GAAP financial measures provides investors with enhanced visibility into its results with respect to the impact of certain costs. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.

About Kohl's

Kohl’s (NYSE: KSS) is a leading omnichannel retailer. With more than 1,100 stores in 49 states and the online convenience of Kohls.com and the Kohl's App, Kohl's offers amazing national and exclusive brands at incredible savings for families nationwide. Kohl’s is uniquely positioned to deliver against its strategy and its vision to be the most trusted retailer of choice for the active and casual lifestyle. Kohl’s is committed to progress in its diversity and inclusion pledges, and the company's environmental, social and corporate governance (ESG) stewardship. 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 OPERATIONS

(Unaudited)

 

 

Three Months Ended

Twelve Months Ended

(Dollars in Millions, Except per Share Data)

January 29,
2022

January 30,
2021

January 29,
2022

January 30,
2021

Net sales

$

6,220

 

$

5,879

 

$

18,471

 

$

15,031

 

Other revenue

 

279

 

 

262

 

 

962

 

 

924

 

Total revenue

 

6,499

 

 

6,141

 

 

19,433

 

 

15,955

 

Cost of merchandise sold

 

4,155

 

 

4,000

 

 

11,437

 

 

10,360

 

Gross margin rate

 

33.2

%

 

32.0

%

 

38.1

%

 

31.1

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

1,687

 

 

1,603

 

 

5,478

 

 

5,021

 

As a percent of total revenue

 

26.0

%

 

26.1

%

 

28.2

%

 

31.5

%

Depreciation and amortization

 

207

 

 

218

 

 

838

 

 

874

 

Impairments, store closing, and other

 

 

 

4

 

 

 

 

89

 

(Gain) on sale of real estate

 

 

 

 

 

 

 

(127

)

Operating income (loss)

 

450

 

 

316

 

 

1,680

 

 

(262

)

Interest expense, net

 

65

 

 

70

 

 

260

 

 

284

 

Loss on extinguishment of debt

 

 

 

 

 

201

 

 

 

Income (loss) before income taxes

 

385

 

 

246

 

 

1,219

 

 

(546

)

Provision (benefit) for income taxes

 

86

 

 

(97

)

 

281

 

 

(383

)

Net income (loss)

$

299

 

$

343

 

$

938

 

$

(163

)

Average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

134

 

 

154

 

 

146

 

 

154

 

Diluted

 

136

 

 

156

 

 

148

 

 

154

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.23

 

$

2.23

 

$

6.41

 

$

(1.06

)

Diluted

$

2.20

 

$

2.20

 

$

6.32

 

$

(1.06

)

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

(Unaudited)

 

 

Three Months Ended

Twelve Months Ended

(Dollars in Millions, Except per Share Data)

January 29,
2022

January 30,
2021

January 29,
2022

January 30,
2021

Net income (loss)

 

 

 

 

 

 

 

 

 

GAAP

$

299

 

$

343

 

$

938

 

$

(163

)

Impairments, store closing, and other

 

 

 

4

 

 

 

 

89

 

(Gain) on sale of real estate

 

 

 

 

 

 

 

(127

)

Loss on extinguishment of debt

 

 

 

 

 

201

 

 

 

Income tax impact of items noted above

 

 

 

(1

)

 

(50

)

 

15

 

Adjusted (non-GAAP)(1)

$

299

 

$

346

 

$

1,089

 

$

(186

)

Diluted earnings (loss) per share

 

 

 

 

 

 

 

 

 

GAAP

$

2.20

 

$

2.20

 

$

6.32

 

$

(1.06

)

Impairments, store closing, and other

 

 

 

0.03

 

 

 

 

0.58

 

(Gain) on sale of real estate

 

 

 

 

 

 

 

(0.82

)

Loss on extinguishment of debt

 

 

 

 

 

1.35

 

 

 

Income tax impact of items noted above

 

 

 

(0.01

)

 

(0.34

)

 

0.09

 

Adjusted (non-GAAP)(1)

$

2.20

 

$

2.22

 

$

7.33

 

$

(1.21

)

(1)

Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non- GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing, and other costs, and Gain on sale of real estate if applicable.

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in Millions)

January 29,
2022

January 30,
2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

1,587

 

$

2,271

 

Merchandise inventories

 

3,067

 

 

2,590

 

Other

 

369

 

 

974

 

Total current assets

 

5,023

 

 

5,835

 

Property and equipment, net

 

7,304

 

 

6,689

 

Operating leases

 

2,248

 

 

2,398

 

Other assets

 

479

 

 

415

 

Total assets

$

15,054

 

$

15,337

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

1,683

 

$

1,476

 

Accrued liabilities

 

1,340

 

 

1,270

 

Current portion of:

 

 

 

 

 

 

Finance leases and financing obligations

 

118

 

 

115

 

Operating leases

 

145

 

 

161

 

Total current liabilities

 

3,286

 

 

3,022

 

Long-term debt

 

1,910

 

 

2,451

 

Finance leases and financing obligations

 

2,133

 

 

1,387

 

Operating leases

 

2,479

 

 

2,625

 

Deferred income taxes

 

206

 

 

302

 

Other long-term liabilities

 

379

 

 

354

 

Shareholders' equity

 

4,661

 

 

5,196

 

Total liabilities and shareholders' equity

$

15,054

 

$

15,337

 

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Twelve Months Ended

(Dollars in Millions)

January 29,
2022

January 30,
2021

Operating activities

 

 

 

 

Net income (loss)

$

938

 

$

(163

)

Adjustments to reconcile net income (loss) to net cash provided

by operating activities:

 

 

 

 

Depreciation and amortization

 

838

 

 

874

 

Share-based compensation

 

48

 

 

40

 

Deferred income taxes

 

(92

)

 

18

 

Impairments, store closing, and other costs

 

 

 

64

 

(Gain) on sale of real estate

 

 

 

(127

)

Loss on extinguishment of debt

 

201

 

 

 

Non-cash inventory costs

 

 

 

187

 

Non-cash lease expense

 

139

 

 

149

 

Other non-cash expenses

 

12

 

 

22

 

Changes in operating assets and liabilities:

 

 

 

 

Merchandise inventories

 

(467

)

 

768

 

Other current and long-term assets

 

569

 

 

(813

)

Accounts payable

 

206

 

 

270

 

Accrued and other long-term liabilities

 

21

 

 

199

 

Operating lease liabilities

 

(142

)

 

(150

)

Net cash provided by operating activities

 

2,271

 

 

1,338

 

Investing activities

 

 

 

 

Acquisition of property and equipment

 

(605

)

 

(334

)

Proceeds from sale of real estate

 

35

 

 

197

 

Net cash used in investing activities

 

(570

)

 

(137

)

Financing activities

 

 

 

 

Proceeds from issuance of debt

 

500

 

 

2,097

 

Deferred financing costs

 

(8

)

 

(19

)

Treasury stock purchases

 

(1,355

)

 

(8

)

Shares withheld for taxes on vested restricted shares

 

(27

)

 

(22

)

Dividends paid

 

(147

)

 

(108

)

Reduction of long-term borrowings

 

(1,044

)

 

(1,497

)

Premium paid on redemption of debt

 

(192

)

 

 

Finance lease and financing obligation payments

 

(125

)

 

(105

)

Proceeds from financing obligations

 

15

 

 

9

 

Proceeds from stock option exercises

 

1

 

 

 

Other

 

(3

)

 

 

Net cash provided by (used in) financing activities

 

(2,385

)

 

347

 

Net increase (decrease) in cash and cash equivalents

 

(684

)

 

1,548

 

Cash and cash equivalents at beginning of period

 

2,271

 

 

723

 

Cash and cash equivalents at end of period

$

1,587

 

$

2,271

 

 

Contacts

Investor Relations:
Mark Rupe, (262) 703-1266, mark.rupe@kohls.com

Media:
Jen Johnson, (262) 703-5241, jen.johnson@kohls.com

Contacts

Investor Relations:
Mark Rupe, (262) 703-1266, mark.rupe@kohls.com

Media:
Jen Johnson, (262) 703-5241, jen.johnson@kohls.com