UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR ~~15 (d)~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 27, 2012~~May 4, 2013



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR ~~15 (d)~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~transition~~Transition period from ________ to _________

Commission file number 1-11084

KOHL’S CORPORATION

(Exact name of registrant as specified in its charter)



Wisconsin		39-1630919
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin		53051
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (262) 703-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~November 24, 2012~~June 1, 2013 Common Stock, Par Value $0.01 per Share, ~~230,010,006~~221,470,296 shares outstanding.

Table of Contents

KOHL’S CORPORATION

INDEX

Table of Contents

PART I. ~~FINANANCIAL~~FINANCIAL INFORMATION

Item 1. Financial Statements

KOHL’S CORPORATION

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS

(In Millions)


	October 27, 2012			January 28, 2012			October 29, 2011
	(Unaudited)			(Audited)			(Unaudited)			May 4, 2013			February 2, 2013			April 28, 2012
Assets										(Unaudited)			(Audited)			(Unaudited)
Current assets:
Cash and cash equivalents	$	550		$	1,205		$	760		$	518		$	537		$	1,029
Merchandise inventories	4,818			3,199			4,130			3,961			3,748			3,454
Income taxes receivable	—			—			105
Deferred income taxes	124			109			128			138			122			119
Other	281			299			257			294			312			277
Total current assets	5,773			4,812			5,380			4,911			4,719			4,879
Property and equipment, net	9,009			8,905			8,918			8,822			8,872			8,961
Long-term investments	90			153			158			58			53			156
Other assets	256			261			263			259			261			266
Total assets	$	15,128		$	14,131		$	14,719		$	14,050		$	13,905		$	14,262

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,429		$	1,233		$	2,080		$	1,452		$	1,307		$	1,609
Accrued liabilities	1,094			1,130			1,025			1,023			986			1,132
Income taxes payable	48			133			—			117			137			80
Current portion of capital lease and financing obligations	100			94			95			107			105			98
Total current liabilities	3,671			2,590			3,200			2,699			2,535			2,919
Long-term debt	2,492			2,141			2,141			2,492			2,492			2,141
Capital lease and financing obligations	1,986			2,009			2,003			1,938			1,956			2,008
Deferred income taxes	395			423			445			368			362			421
Other long-term liabilities	478			460			459			532			512			473
Shareholders’ equity:
Common stock	4			4			4			4			4			4
Paid-in capital	2,423			2,339			2,313			2,463			2,454			2,359
Treasury stock, at cost	(6,848		)	(5,977		)	(5,597		)	(7,354		)	(7,243		)	(6,284		)
Accumulated other comprehensive loss	(48		)	(53		)	(52		)	(40		)	(45		)	(50		)
Retained earnings	10,575			10,195			9,803			10,948			10,878			10,271
Total shareholders’ equity	6,106			6,508			6,471			6,021			6,048			6,300
Total liabilities and shareholders’ equity	$	15,128		$	14,131		$	14,719		$	14,050		$	13,905		$	14,262

See accompanying Notes to ~~Condensed~~ Consolidated Financial Statements

Table of Contents

KOHL’S CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In Millions, Except per Share Data)


	Three Months Ended				Nine Months Ended				Three Months Ended
	October 27, 2012		October 29, 2011		October 27, 2012		October 29, 2011		May 4, 2013		April 28, 2012
Net sales	$	4,490	$	4,376	$	12,937	$	12,786	$	4,199	$	4,243
Cost of merchandise sold (exclusive of depreciation shown separately below)	2,778		2,688		8,059		7,784		2,671		2,719
Gross margin	1,712		1,688		4,878		5,002		1,528		1,524
Operating expenses:
Selling, general, and administrative	1,077		1,071		3,055		3,066		997		1,002
Depreciation and amortization	210		202		620		583		214		201
Operating income	425		415		1,203		1,353		317		321
Interest expense, net	80		75		243		223		83		82
Income before income taxes	345		340		960		1,130		234		239
Provision for income taxes	130		129		351		419		87		85
Net income	$	215	$	211	$	609	$	711	$	147	$	154

Net income per share:
Basic:
Basic	$	0.92	$	0.80	$	2.56	$	2.58	$	0.66	$	0.63
Average number of shares	233		264		238		276
Diluted:
Diluted	$	0.91	$	0.80	$	2.54	$	2.56	$	0.66	$	0.63
Average number of shares	235		265		240		278

Dividends declared and paid per share	$	0.32	$	0.25	$	0.96	$	0.75	$	0.35	$	0.32

See accompanying Notes to Consolidated Financial Statements

KOHL’S CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME

(Unaudited)

(In Millions)

Three Months Ended Nine Months Ended
October 27,
2012 October 29,
2011 October 27,
2012 October 29,
2011
Net income $ 215
$ 211
$ 609
$ 711
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investments 3
(2 ) 3
15
Interest rate derivatives:
Unrealized loss arising during period —
(15 ) —
(30 )
Reclassification adjustment for interest expense included in net income 1
—
2
—
Other comprehensive income (loss) 4
(17 ) 5
(15 )
Comprehensive income $ 219
$ 194
$ 614
$ 696



	Three Months Ended
	May 4, 2013		April 28, 2012
Net income	$	147	$	154
Other comprehensive income, net of tax:
Unrealized gains on investments	4		2
Reclassification adjustment for interest expense on interest rate derivative included in net income	1		1
Other comprehensive income	5		3
Comprehensive income	$	152	$	157

See accompanying Notes to ~~Condensed~~ Consolidated Financial Statements

Table of Contents

KOHL’S CORPORATION

~~CONDENSED~~ CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(In Millions, Except per Share Data)

Common Stock Paid-In Treasury Stock
Accumulated
Other
Comprehensive
Retained
Shares Amount Capital Shares Amount Income Earnings Total
Balance at January 28, 2012 358
$ 4
$ 2,339
(111 ) $ (5,977 ) $ (53 ) $ 10,195
$ 6,508
Comprehensive income 5
609
614
Stock options and awards 2
—
90
—
—
—
90
Net income tax impact from
exercise of stock options
—
—
(6 ) —
—
—
(6 )
Dividends paid ($0.96 per share) —
—
—
2
—
(229 ) (227 )
Treasury stock purchases —
—
—
(18 ) (873 ) —
—
(873 )
Balance at October 27, 2012 360
$ 4
$ 2,423
(129 ) $ (6,848 ) $ (48 ) $ 10,575
$ 6,106



	Common Stock			Paid-In Capital			Treasury Stock					Accumulated Other Comprehensive Loss				Retained Earnings
	Shares	Amount		Paid-In Capital			Shares		Amount			Accumulated Other Comprehensive Loss				Retained Earnings			Total
Balance at February 2, 2013	360	$	4	$	2,454		(138	)	$	(7,243	)		$	(45	)	$	10,878		$	6,048
Comprehensive income	—	—		—			—		—				5			147			152
Stock options and awards	1	—		18			—		—				—			—			18
Net income tax impact from stock-based compensation	—	—		(9		)	—		—				—			—			(9		)
Dividends paid ($0.35 per common share)	—	—		—			—		1				—			(77		)	(76		)
Treasury stock purchases	—	—		—			(2	)	(112		)		—			—			(112		)
Balance at May 4, 2013	361	$	4	$	2,463		(140	)	$	(7,354	)		$	(40	)	$	10,948		$	6,021

See accompanying Notes to ~~Condensed~~ Consolidated Financial Statements

Table of Contents

KOHL’S CORPORATION

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Millions)


	Nine Months Ended						Three Months Ended
	October 27, 2012			October 29, 2011			May 4, 2013			April 28, 2012
Operating activities
Net income	$	609		$	711		$	147		$	154
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	620			583			214			201
Share-based compensation	37			43			9			12
Excess tax benefits from share-based compensation	(3		)	(2		)	(1		)	(1		)
Deferred income taxes	(46		)	146			(13		)	(14		)
Other non-cash revenues and expenses	26			19			11			(1		)
Changes in operating assets and liabilities:
Merchandise inventories	(1,613		)	(1,091		)	(210		)	(236		)
Other current and long-term assets	30			(1		)	21			17
Accounts payable	1,196			942			145			376
Accrued and other long-term liabilities	(62		)	(16		)	11			(37		)
Income taxes	(91		)	(238		)	(29		)	(54		)
Net cash provided by operating activities	703			1,096			305			417
Investing activities
Acquisition of property and equipment	(641		)	(755		)	(135		)	(177		)
Sales of investments in auction rate securities	68			143			1			1
Other	5			(20		)	11			—
Net cash used in investing activities	(568		)	(632		)	(123		)	(176		)
Financing activities
Treasury stock purchases	(883		)	(1,956		)	(109		)	(325		)
Dividends paid	(227		)	(207		)	(77		)	(77		)
Proceeds from issuance of debt	350			646
Deferred financing costs	(3		)	(8		)
Interest rate hedge payment	—			(48		)
Long-term debt payments	—			(400		)
Proceeds from financing obligations	7			12			—			3
Capital lease and financing obligation payments	(87		)	(69		)	(24		)	(27		)
Proceeds from stock option exercises	50			47			8			8
Excess tax benefits from share-based compensation	3			2			1			1
Net cash used in financing activities	(790		)	(1,981		)	(201		)	(417		)
Net decrease in cash and cash equivalents	(655		)	(1,517		)	(19		)	(176		)
Cash and cash equivalents at beginning of period	1,205			2,277			537			1,205
Cash and cash equivalents at end of period	$	550		$	760		$	518		$	1,029
Supplemental information:
Interest paid, net of capitalized interest	$	207		$	205		$	61		$	52
Income taxes paid	490			512			128			155
Non-Cash Investing and Financing Activities
Property and equipment acquired through capital lease and financing obligations	$	60		$	57
Property and equipment acquired through additional liabilities							$	23		$	27

See accompanying Notes to ~~Condensed~~ Consolidated Financial Statements

~~Table of Contents~~

KOHL’S CORPORATION

NOTES TO ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

~~(Unaudited)~~

1. Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for fiscal year end financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and related footnotes included in our Form 10-K for the fiscal year ended ~~January 28, 2012~~February 2, 2013 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission on March ~~16, 2012.~~22, 2013.

Due to the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. In addition, quarterly results of operations may be impacted by the timing and amount of sales and costs associated with the opening of new stores.

We operate as a single business unit.

WeTo conform to the current year presentations, we have corrected the presentation of $3730 million of ~~short-term~~ deferred ~~tax assets~~revenues that were previously recorded as ~~long-term deferred tax liabilities~~a reduction to merchandise inventory as of ~~both~~ ~~January~~April 28, ~~2012~~2012. ~~and October 29, 2011.~~

2. Debt

Long-term debt consists of the following non-callable and unsecured senior debt:


	October 27, 2012					January 28, 2012					October 29, 2011					May 4, 2013 and February 2, 2013					April 28, 2012
Maturing	Effective Rate		Out- standing			Effective Rate		Out- standing			Effective Rate		Out- standing			Effective Rate		Out- standing			Effective Rate		Out- standing
	(Dollars in Millions)															(Dollars in Millions)
2017	6.31	%	$	650		6.31	%	$	650		6.31	%	$	650		6.31	%	$	650		6.31	%	$	650
2021	4.81	%	650			4.81	%	650			4.81	%	650			4.81	%	650			4.81	%	650
2023	3.25	%	350			—		—			—		—			3.25	%	350			—		—
2029	7.36	%	200			7.36	%	200			7.36	%	200			7.36	%	200			7.36	%	200
2033	6.05	%	300			6.05	%	300			6.05	%	300			6.05	%	300			6.05	%	300
2037	6.89	%	350			6.89	%	350			6.89	%	350			6.89	%	350			6.89	%	350
Total senior debt	5.63	%	2,500			6.01	%	2,150			6.01	%	2,150			5.63	%	2,500			6.01	%	2,150
Unamortized debt discount			(8		)			(9		)			(9		)			(8		)			(9		)
Long-term debt			$	2,492				$	2,141				$	2,141				$	2,492				$	2,141

~~In September 2012, we issued~~ ~~$350 million~~ of ~~3.25%~~ ~~notes with~~ ~~semi-annual interest payments beginning February 2013. The notes mature on February 1, 2023.~~

~~Table of Contents~~

3. Fair Value Measurements

ASC No. 820, “Fair Value Measurements and Disclosures,” requires fair value measurements be classified and disclosed in one of the following ~~three~~pricing categories:



Level 1:		Financial instruments with unadjusted, quoted prices listed on active market exchanges.

Level 2:		Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.

Level 3:		Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.

~~Our cash and cash equivalents are classified as a Level 1 pricing category. The carrying value of our cash and cash equivalents approximates fair value because maturities are three months or less.~~

KOHL’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes our financial instruments:



		May 4, 2013				February 2, 2013				April 28, 2012
	Pricing Category	Cost		Fair Value		Cost		Fair Value		Cost		Fair Value
		(In Millions)
Cash and cash equivalents	Level 1	$	518	$	518	$	537	$	537	$	1,029	$	1,029
Long-term investments	Level 3	83		58		84		53		192		156
Debt	Level 1	2,492		2,802		2,492		2,702		2,141		2,435

Our long-term investments consist primarily of investments in auction rate securities (“ARS”). ~~The par value of our long-term investments was~~ ~~$124 million~~ ~~as of~~ ~~October 27, 2012~~, ~~$193 million~~ ~~as of~~ ~~January 28, 2012~~ ~~and~~ ~~$195 million~~ ~~as of October 29, 2011. The estimated fair value of these securities was~~ ~~$90 million~~ ~~as of~~ ~~October 27, 2012~~, ~~$153 million~~ ~~as of~~ ~~January 28, 2012~~ ~~and~~ ~~$158 million~~ ~~as of October 29, 2011.~~

~~All ARS are classified as a Level 3 pricing category.~~ The fair value for our ARS were based on third-party pricing models which utilized a discounted cash flow model for each of the securities as there was no recent activity in the secondary markets in these types of securities. This model used a combination of observable inputs which were developed using publicly available market data obtained from independent sources and unobservable inputs that reflect our own estimates of the assumptions that market participants would use in pricing the investments. Observable inputs include interest rate currently being paid, maturity and credit ratings.

Unobservable inputs include expected redemption date and discount rate. We assumed a seven-year redemption period in valuing our ARS. We intend to hold our ARS until maturity or until we can liquidate them at par value. Based on our other sources of income, we do not believe we will be required to sell them before recovery of par value. In some cases, holding the security until recovery may mean until maturity, which ranges from ~~2016~~2037 to ~~2041. The weighted-average maturity date is~~ ~~2034~~2039. The discount rate was calculated using the closest match available for other insured asset backed securities. Discount rates ranged from ~~2.91%~~6.57% to ~~13.41%~~9.47%. The weighted-average discount rate was ~~7.72%~~7.64%. A market failure scenario was employed as recent successful auctions of these securities were very limited. Assuming a longer redemption period and a higher discount rate would result in a lower fair market value. Similarly, assuming a shorter redemption period and a lower discount rate would result in a higher fair market value.

The following table presents a rollforward of our long-term investments:


	Nine Months Ended
	October 27, 2012			October 29, 2011			May 4, 2013			April 28, 2012
	(In Millions)						(In Millions)
Balance at beginning of year	$	153		$	277		$	53		$	153
Sales	(68		)	(143		)	(1		)	(1		)
Unrealized gains	5			24			6			4
Balance at end of quarter	$	90		$	158
Balance at end of period							$	58		$	156

~~Our senior debt is classified as a Level 1 pricing category and had an estimated fair market value of~~ ~~$2.9 billion~~ at ~~October 27, 2012~~, ~~$2.4 billion~~ at ~~January 28, 2012~~ ~~and~~ ~~$2.5 billion~~ ~~at October 29, 2011.~~

4. Stock-Based Compensation

The following table summarizes our stock-based compensation expense:



	Three Months Ended
	May 4, 2013		April 28, 2012
	(In Millions)
Stock options	$	3	$	5
Restricted shares	6		7
Total stock-based compensation expense	$	9	$	12

~~Table of Contents~~KOHL’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~4. Share-Based Compensation~~

We currently grant share-based compensation, including options to purchase shares of our common stock and nonvested stock to employees and outside directors, pursuant to the Kohl’s Corporation 2010 Long-Term Compensation Plan. Annual grants of stock options and nonvested stock are generally made to eligible employees in the first quarter of the fiscal year. Grants to newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the year. Grants of stock options and nonvested stock are generally made to eligible outside directors upon their initial election to the Board of Directors and annually upon each such director’s re-election.

~~The Black-Scholes option valuation model was used to estimate the fair value of each option award during the first~~ ~~nine months~~ ~~of the respective fiscal year based on the following assumptions:~~

2012 2011
Dividend yield 2.6% 1.8%
Volatility 33.7% 33.0%
Risk-free interest rate 1.0% 2.1%
Expected life in years 5.5 5.5
Weighted average fair value at grant date $11.84 $14.60

The following table summarizes ~~our stock option activity for the first~~ ~~nine months~~ of ~~2012~~ ~~and~~ ~~2011~~:

stock-based compensation grants:

2012 2011
Shares
Weighted
Average
Exercise
Price
Shares
Weighted
Average
Exercise
Price
(Shares in Thousands)
Balance at beginning of year 16,564
$ 53.41
17,869
$ 53.17
Granted 1,387
49.15
1,008
52.61
Exercised (1,218 ) 40.17
(1,098 ) 43.20
Forfeited/expired (832 ) 60.80
(854 ) 62.27
Balance at end of quarter 15,901
$ 53.66
16,925
$ 53.32



	Three Months Ended
	May 4, 2013		April 28, 2012
	(In Thousands)
Stock options granted	414		916
Restricted shares, excluding shares earned in lieu of cash dividends, granted	654		731
Total stock-based compensation grants	1,068		1,647
Weighted average fair value at grant date:
Stock options	$	10.18	$	11.80
Restricted shares	$	46.39	$	48.60

~~The following table summarizes our nonvested stock activity for the first~~ ~~nine months~~ of ~~2012~~ ~~and~~ ~~2011~~:

2012 2011
Shares
Weighted
Average
Grant
Date Fair
Value
Shares
Weighted
Average
Grant
Date Fair
Value
(Shares in Thousands)
Balance at beginning of year 1,946
$ 51.11
1,116
$ 49.30
Granted 1,001
49.00
1,175
52.35
Vested (482 ) 49.89
(283 ) 49.61
Forfeited (149 ) 49.93
(37 ) 51.35
Balance at end of quarter 2,316
$ 50.53
1,971
$ 51.04

~~Share-based compensation expense for both stock options and nonvested stock awards totaled~~ ~~$13 million~~ ~~for the~~ ~~three months endedOctober 27, 2012~~, ~~$14 million~~ ~~for the~~ ~~three months ended~~ ~~October 29, 2011,~~ ~~$37 million~~ ~~for the~~ ~~nine months endedOctober 27, 2012~~ ~~and~~ ~~$43 million~~ ~~for the~~ ~~nine months ended~~ ~~October 29, 2011. At~~ ~~October 27, 2012, we had approximately~~ ~~$169 million~~ ~~of unrecognized share-based compensation expense (before forfeitures and capitalization), which is expected to be recognized over a weighted average period of~~ ~~3.4~~ ~~years.~~

~~Table of Contents~~

5. Contingencies

We are involved in various legal matters arising in the normal course of business. In the opinion of management, the outcome of such proceedings and litigation will not have a material adverse impact on our consolidated financial statements.

6. Net Income Per Share

The ~~calculations of the numerator and denominator for~~following table summarizes our basic and diluted net income per share ~~are summarized as follows:~~

calculations:


	Three Months Ended				Nine Months Ended				Three Months Ended
	October 27, 2012		October 29, 2011		October 27, 2012		October 29, 2011		May 4, 2013		April 28, 2012
	(In Millions)								(In Millions)
Numerator—Net income	$	215	$	211	$	609	$	711	$	147	$	154
Denominator—Weighted average shares:
Basic	233		264		238		276		222		243
Impact of dilutive employee stock options	2		1		2		2		1		2
Diluted	235		265		240		278		223		245
Antidilutive shares	9		12		13		10		12		12

109

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following discussion, all references to “the quarter” and “the ~~third~~first quarter” are for the 13-week fiscal periods ended ~~October 27, 2012~~May 4, 2013 and ~~October 29, 2011 and all references to “year to date” are for the~~ ~~39-week~~ ~~fiscal periods ended~~ ~~October 27,~~April 28, 2012 ~~and October 29, 2011.~~.

The following discussion should be read in conjunction with our ~~Condensed~~ Consolidated Financial Statements and the related notes included elsewhere in this report, as well as the financial and other information included in our ~~2011~~2012 Annual Report on Form 10-K (our ~~“2011~~“2012 Form 10-K”). The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could materially differ from those discussed in these forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those discussed elsewhere in this report and in our ~~2011~~2012 Form 10-K (particularly in “Risk Factors”).

Executive Summary

Total sales for the quarter decreased 1.0% and comparable store sales decreased 1.9% from the first quarter of 2012. The decrease in comparable store sales reflects lower selling prices per unit and fewer transactions, partially offset by higher units per transaction. E-Commerce revenues increased 31% and contributed 210 basis points to our comparable store sales.

Despite lower sales, our diluted earnings per share increased 5% to $0.66 in the first quarter of 2013. Net income was ~~$215~~$147 million (~~$0.91~~ ~~per diluted share)~~ for the current year quarter ~~compared to~~ ~~$211~~and $154 million (~~$0.80~~ ($0.63 per diluted share) in the prior year quarter. ~~Year to date, net income was~~ ~~$609 million~~ (~~$2.54~~ ~~per diluted share) in 2012 compared to~~ ~~$711 million~~ (~~$2.56~~ ~~per diluted share) in 2011.~~

~~Total sales for~~Partially offsetting the ~~third~~ ~~quarter were~~ ~~$4.5 billion~~ ~~this year,~~ ~~an increase~~ of ~~2.6%~~ ~~over the~~ ~~third~~ ~~quarter of 2011. Year to date, total~~lower sales were ~~$12.9 billion~~, ~~an increase~~ of ~~1.2%~~ ~~over last year. Comparable store sales~~ ~~increased1.1%~~ ~~for the quarter and~~ ~~decreased0.5%~~ ~~year to date. For the quarter, the~~a 47 basis point increase in comparable store sales was driven by higher average unit retail and units per transaction, partially offset by fewer transactions. The decrease in comparable store sales for the year reflects lower units per transaction and fewer transactions, partially offset by higher average unit retail. E-Commerce sales ~~increased49.6%~~ ~~for the quarter and~~ ~~41.0%~~ ~~year to date.~~

~~Gross~~gross margin as a percent of ~~net~~ sales ~~decreased~~44 ~~basis points from the~~ ~~third~~ ~~quarter of 2011~~ and ~~143~~ ~~basis points from the first~~ ~~nine months~~ of 2011 as we focused on improving value for our customer during the current year. Selling, general and administrative expenses as a percent of net sales improved, or “leveraged,” in both periods. Stores, especially payroll, provided the most significant leverage. Advertising and corporate expenses also leveraged for the quarter.strong expense management.

We operated ~~1,146~~1,155 stores as of ~~October 27, 2012~~May 4, 2013 and ~~1,127~~1,134 stores as of ~~October 29, 2011. Selling square footage was~~ ~~83 million~~ at ~~October 27,~~April 28, 2012 ~~and~~ ~~81 million~~ ~~at October 29, 2011.~~. We opened 21nine new stores ~~including one relocated store, and closed one store~~ during the first ~~nine months~~quarter of ~~2012. We~~2013 and plan to open ~~12 stores in 2013 including nine~~three more stores in the ~~Spring and three in the Fall. Substantially all of the new stores will be “small” stores with less than 64,000 square feet of retail space. We remodeled 50 stores this year and expect~~Fall season. Additionally, we plan to remodel 30 stores in ~~2013. We have temporarily reduced our remodel program until we have final results from tests we are doing in our home and beauty areas. We will make changes to our remodels based on~~ the ~~results of these tests and expect to accelerate our remodel program back to a normalized run rate of 100 stores per year in 2014.~~Fall season.

Results of Operations

Net ~~Sales~~sales.

Net sales decreased $44 million, or ~~increased2.6%~~1.0% ~~from~~ , to $~~$4.4~~4.2 billion in the ~~third~~first quarter of ~~2011 to~~ ~~$4.5 billion~~2013 ~~in the~~ ~~third~~ ~~quarter of 2012. Year to date, net sales~~ ~~increased1.2%~~ ~~from~~ ~~$12.8 billion~~ ~~for the first~~ ~~nine months~~ ~~of 2011 to~~ ~~$12.9 billion~~ ~~for the first~~ ~~nine months~~ ~~of 2012.~~. On a comparable store basis, sales decreased ~~increased1.1%~~1.9% for the ~~quarter and~~ ~~decreased~~ ~~0.5% year to date.~~quarter. We define comparable store sales as sales from stores (including relocated and remodeled stores) open throughout the full current and prior fiscal periods and from E-Commerce.

The following table summarizes the changes in sales ~~changes were due to~~during the ~~following:~~quarter:


	Quarter					Year to Date					$			%
	(Dollars in millions)										(Dollars in Millions)
Comparable store sales:	$			%		$			%
Stores	$	(50	)	(1.2	)%	$	(285	)	(2.4	)%	$	(160	)	(4.0	)%
E-Commerce	98			49.6		228			41.0		78			31.2
Total	48			1.1		(57		)	(0.5	)	(82		)	(1.9	)
Sales from new stores	66			—		208			—
Net sales	$	114		2.6	%	$	151		1.2	%
New stores and other revenues											38			—
Decrease in net sales											$	(44	)	(1.0	)%

Drivers of the changes in comparable store sales during the quarter were as follows:



Selling price per unit	(1.1	)%
Units per transaction	2.4
Average transaction value	1.3
Number of transactions	(3.2	)
Comparable store sales	(1.9	)%

The decrease in selling price per unit was due to lower prices and higher penetration of clearance merchandise, partially offset by higher selling prices on regular-priced merchandise. Units per transaction increased during the quarter as customers purchased more items in response to the lower prices. The number of transactions declined, primarily as weather negatively impacted customer visits early in the quarter.

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~~Drivers~~

Sales in the Midwest, Mid-Atlantic and Northeast, which are our most weather-sensitive regions, were negatively impacted by colder than normal temperatures in the early months of the ~~changes~~quarter. When the weather normalized, we saw notable sales improvements in these regions. The West was the strongest region and was the only region which reported a positive comparable sales increase during the quarter. The Midwest, Northeast, Southeast and South Central regions all reported mid-single digit decreases and the Mid-Atlantic region reported a high-single digit decrease in comparable store ~~sales were as follows:~~

Quarter
Year to
Date
Average unit retail 0.6 % 3.9 %
Units per transaction 1.0
(2.2 )
Average transaction value 1.6
1.7
Number of transactions (0.5 ) (2.2 )
Comparable store sales 1.1 % (0.5 )%

The increases in average unit retail are the result of changes in our pricing strategy. During the Fall of 2011, we increased our prices as we passed higher apparel costs on to our customers. During 2012, we reduced our prices, but they remained higher than 2011. Year to date, units per transaction and number of transactions declined in part due to insufficient inventory levels in the first several months of the year to meet the sales demand which resulted from the price reductions.sales.

~~By line of business, Men's, Footwear, and Children's all outperformed the company average~~E-Commerce revenue increased 31% to $330 million for the quarter. Footwear was the strongest category led by athletic shoes. Men's had strong sales in casual sportswear and pants, basics and active wear. Toys was the strongest category in the Children's business. Home reported slightly higher comparable store sales on strength in bedding, electrics and bath. In the Women's business, active, contemporary and classic sportswear and intimates reported the strongest sales growth. As we expected, the juniors' business was again challenging. In Accessories, sterling silver jewelry was the strongest category, while handbags, small leather accessories and bath and beauty also outperformed the company.

~~Year-to-date, Men's was the strongest line of business and was led by basics and casual sportswear and pants. Footwear also reported an~~The increase in year-to-date comparable store sales on increases in both women's and athletic shoes. Accessories were essentially flat and were led by sterling silver. Women's, Home and Children's reported low single-digit comparable store sales declines. Women's had strength in active and fitness apparel and contemporary sportswear. Juniors was challenging. In Children's, toys was the strongest category. Bath and bedding were the strongest Home categories.

From a regional perspective, all regions were slightly positive to slightly negative for the quarter with no significant variations between the regions. The South Central region was the strongest region. Year to date, the Midwest and South Central reported the strongest comparable store sales with slightly positive increases. Comparable stores sales in the Northeast, Mid-Atlantic, Southeast and West regions declined low single-digits year to date.

~~Private and exclusive brand penetration increased approximately~~ ~~150~~ ~~basis points to~~ ~~53%~~ ~~of sales for the quarter and approximately~~ ~~220~~ ~~basis points to~~ ~~54%~~ year to date. Most of the penetration increase was a result of new exclusive brands which include Jennifer Lopez, Marc Anthony, Princess Vera Wang and Rock & Republic. FILA Sport, Lauren Conrad, and Chaps also generated notably higher penetration for the quarter.

~~E-Commerce sales~~ ~~increased~~ ~~approximately~~ ~~50%~~ ~~for the quarter to~~ ~~$295 million~~ ~~and~~ ~~41%~~ to ~~$782 million~~ ~~year to date. The sales growth~~ is primarily due to ~~an increase in the number of on-line~~increased transactions. The increases are the result of our investments in this business including digital marketing to drive traffic to the site and the availability of additional merchandise offerings.

By line of business, all categories reported modest sales declines. Increased sales in basics and other non-seasonal merchandise were more than offset by lower sales in seasonal merchandise categories. Home, Accessories and Footwear reported sales declines that were better than the company average. Home reported strong sales in electrics and luggage. In the Footwear business, athletic shoes reported the largest sales increase. Bath & beauty, watches and sterling silver jewelry reported the largest sales increases in the Accessories business. Sales declines in the Women's business were consistent with the company average. In Women's, the active and fitness category reported the largest sales increase. Sales in the Men's and Children's businesses decreased more than the company average. In Men's, the tailored and dress category reported the strongest sales. Children's reported consistent sales decreases across all apparel categories.

Gross ~~Margin~~margin.

Increase/(Decrease)
(Dollars in Millions) 2012 2011 $ %
Quarter $ 1,712
$ 1,688
$ 24
1 %
Year to date 4,878
5,002
(124 ) (2 )%
Gross margin as a percent of sales
Quarter 38.1 % 38.6 %
Year to date 37.7 % 39.1 %

Gross margin includes the total cost of products sold, including product development costs, net of vendor payments other than reimbursement of specific, incremental and identifiable costs; inventory shrink; markdowns; freight expenses associated with moving merchandise from our vendors to our distribution centers; shipping and handling expenses of E-Commerce sales; and terms cash discount. Our gross margin may not be comparable with that of other retailers because we include distribution

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center costs in selling, general and administrative expenses while other retailers may include these expenses in cost of merchandise sold.

Gross margin increased $4 million to $1.5 billion for the quarter. The following table summarizes gross margin as a percent of sales by channel:



	Stores		E-Commerce		Total
2013
Merchandise margin	37.1	%	36.6	%	37.0	%
Shipping impact	—		(8.1	)	(0.6	)
Gross margin	37.1	%	28.5	%	36.4	%

2012
Merchandise margin	36.5	%	35.8	%	36.5	%
Shipping impact	—		(9.2	)	(0.6	)
Gross margin	36.5	%	26.6	%	35.9	%

Increase (Decrease)
Merchandise margin	57 bp		76 bp		57 bp
Shipping impact	—		108		(10	)
Gross margin	57 bp		184 bp		47 bp

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The following table summarizes the drivers of the changes in gross margin as a percent of sales:

Quarter Year to Date
2011 Gross Margin 38.57 % 39.13 %
Increase (decrease) due to:
    Merchandise Margin:
          Stores (0.32 )% (1.29 )%
          E-Commerce 0.05 % 0.04 %
    E-Commerce shipping (0.17 )% (0.17 )%
    Total Decrease (0.44 )% (1.42 )%
2012 Gross Margin 38.13 % 37.71 %



Merchandise margin:
Stores	52		bp
E-Commerce	5
E-Commerce shipping	(10	)
Total increase	47		bp

The ~~decreases~~increases in ~~store~~ merchandise margin reflect ~~higher apparel~~lower costs ~~especially in the first six months of 2012, which were only partially offset by higher selling prices.~~and reduced inventory shortage. The ~~decreases~~decrease in gross margin attributable to E-Commerce shipping ~~reflect larger shipping losses as well as~~is due to growth in this ~~business.~~

~~The following table summarizes gross margin~~business, partially offset by ~~channel:~~

Quarter Year to Date
Stores E-Commerce Total Kohl's Stores E-Commerce Total Kohl's
2012
Merchandise margin 38.7 % 39.6 % 38.7 % 38.3 % 37.9 % 38.3 %
Shipping impact —
(9.1 )% (0.6 )% —
(9.2 )% (0.6 )%
Gross margin 38.7 % 30.5 % 38.1 % 38.3 % 28.7 % 37.7 %

2011
Merchandise margin 39.0 % 39.2 % 39.0 % 39.6 % 38.2 % 39.5 %
Shipping impact —
(9.7 )% (0.4 )% —
(9.0 )% (0.4 )%
Gross margin 39.0 % 29.5 % 38.6 % 39.6 % 29.2 % 39.1 %

Increase (Decrease)
Merchandise margin (32 ) bp 45 bp (27 ) bp (129 ) bp (29 ) bp (125 ) bp
Shipping impact —
53 bp (17 ) bp —
(26 ) bp (17 ) bp
Gross margin (32 ) bp 98 bp (44 ) bp (129 ) bp (55 ) bp (142 ) bp

lower shipping losses. E-Commerce decreased our gross margin rate by approximately 6070 basis points for ~~both~~ the ~~quarter and year to date periods in 2012. This~~quarter. Our E-Commerce business currently has a lower gross margin than our stores due to the mix of products sold on-line and free or related shipping promotions. As our E-Commerce business grows, it also has a more significant impact on our overall gross margin results.

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Selling, ~~General~~general and ~~Administrative Expenses~~administrative expenses.

Increase / (Decrease)
(Dollars in Millions) 2012 2011 $ %
Quarter $ 1,077
$ 1,071
$ 6
0.6 %
Year to date 3,055
3,066
(11 ) (0.4 )%
SG&A as a percent of net sales
Quarter 24.0 % 24.5 %
Year to date 23.6 % 24.0 %



							Decrease
	2013			2012			$			%
	(Dollars in Millions)
Selling, general, and administrative expenses	$	997		$	1,002		$	(5	)	(1	)%
As a percent of net sales	23.7		%	23.6		%

Selling, general and administrative expenses (“SG&A”) include compensation and benefit costs (including stores, headquarters, buying and merchandising and distribution centers); ~~rent expense and other~~ occupancy and operating costs of our retail, distribution and corporate facilities; freight expenses associated with moving merchandise from our distribution centers to our retail stores and among distribution and retail facilities; advertising expenses, offset by vendor payments for reimbursement of specific, incremental and identifiable costs; net revenues from our Kohl’s credit card operations; and other administrative ~~costs.~~revenues and expenses. SG&A also includes the costs incurred prior to new store openings, such as advertising, hiring and training costs for new employees, processing and transporting initial merchandise, and rent expense. We do not include depreciation and amortization in SG&A. The classification of these expenses varies across the retail industry.

~~Store~~SG&A decreased $5 million, or 1%, for the quarter. The decrease in SG&A reflects lower store payroll, remodel costs and marketing expenses and higher net revenues from our credit card operations. These decreases were partially offset by higher distribution center, information technology ("IT") and fixed store costs. SG&A as a percent of sales ~~decreased~~,increased, or ~~“leveraged,”~~"deleveraged," by approximately 10 basis points for the quarter.

Store payroll costs continued to be well-managed despite volatility in our sales during ~~both periods~~the quarter. Remodel costs declined as all 2013 remodels will occur in the Fall. Rent-related and other fixed store costs deleveraged due to ~~continued implementation of electronic signs and strong payroll management. Fixed costs generally were flat as a percentage of sales during both periods. Corporate operations~~the lower than planned sales.

Advertising reported significant leverage ~~in both periods,~~during the quarter, primarily due to ~~lower incentive costs. Remodel costs were also lower~~temporary reductions in ~~the year-to-date period~~spending as we ~~remodeled 50 stores this year and 100 stores last year.~~refocus our spending to increase the impact of our marketing investments.

Distribution centers did not leverage ~~in either~~during the period due to growth in our E-Commerce business. ~~Information technology~~IT costs also did not leverage due to continued investments in our technology infrastructure. We continue to improve our efficiency in E-Commerce fulfillment which reported significant leverage as a percent of E-Commerce sales.

Net revenues from our credit card operations ~~decreased~~ $1increased approximately $10 million for the ~~quarter and increased~~ ~~$30 million~~ ~~year~~quarter. The increase was the result of higher finance charge revenues due to ~~date. Higher~~higher average receivables ~~contributed~~and higher late fees due to ~~higher revenues~~growth in ~~both periods. Year to date, a more favorable revenue sharing percentage pursuant to~~ the ~~current Capital One program agreement also contributed to the~~ ~~increase~~ ~~in net credit card revenues.~~portfolio. Offsetting these increases ~~in both periods~~ were higher costs associated with a new credit card servicing platform.

~~Advertising leveraged for the quarter, but not year to date. The decrease in the quarter is primarily due to incremental spending in 2011 to support the Jennifer Lopez and Marc Anthony brand launches.~~

~~Depreciation and Amortization~~

Increase
(Dollars in Millions) 2012 2011 $ %
Quarter $ 210
$ 202
$ 8
4 %
Year to date 620
583
37
6 %

~~Amortization of computer hardware and software costs contributed to the increase in both periods. Depreciation related to new and remodeled stores also contributed to the year-to-date increase.~~

~~Operating Income~~

Increase (Decrease)
(Dollars in Millions) 2012 2011 $ %
Quarter $ 425
$ 415
$ 10
2 %
Year to date 1,203
1,353
(150 ) (11 )%
Operating income as a percent of sales
Quarter 9.5 % 9.5 %
Year to date 9.3 % 10.6 %

~~As a result of the above factors, operating income as a percent of net sales~~ ~~decreased~~ ~~approximately~~ 10 ~~basis points for the quarter and~~ ~~130~~ ~~basis points year to date.~~

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~~Interest Expense, Net~~

Other Expenses.

Increase
(Dollars in Millions) 2012 2011 $ %
Quarter $ 80
$ 75
$ 5
7 %
Year to date 243
223
20
9 %



							Increase
	2013			2012			$		%
	(Dollars in Millions)
Depreciation and amortization	$	214		$	201		$	13	6	%
Interest expense, net	83			82			1		1	%
Provision for income taxes	87			85			2		2	%
Effective tax rate	37.0		%	35.5		%

The increase in depreciation and amortization is primarily due to technology investments across the company. The increase in interest expense is primarily due to the ~~$650 million of long-term~~September 2012 debt ~~issued~~issuance. The increase in ~~October 2011.~~

~~Provision for Income Taxes~~

Increase (Decrease)
(Dollars in Millions) 2012 2011 $ %
Quarter $ 130
$ 129
$ 1
1 %
Year to date 351
419
(68 ) (16 )%

~~Our~~the effective tax rate ~~was~~ ~~37.8%~~for the ~~three months ended both~~ ~~October 27, 2012~~ ~~and October 29, 2011,~~ ~~36.6%~~ ~~for the~~ ~~nine months endedOctober 27, 2012~~ ~~and~~ ~~37.1%~~ ~~for the~~ ~~nine months ended~~ ~~October 29, 2011. The decrease in the year-to-date rate~~quarter was primarily due to favorable settlements of state tax audits induring the first ~~six months~~quarter of ~~the year.~~

2012.

Seasonality and Inflation

Our business, like that of most retailers, is subject to seasonal influences, with the major portion of sales and income typically realized during the second half of each fiscal year, which includes the back-to-school and holiday seasons. Approximately 15% of annual sales typically occur during the back-to-school season and 30% during the holiday season. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. In addition, quarterly results of operations are impacted by the timing and amount of sales and costs associated with the opening of new stores.

Although we expect that our operations will be influenced by general economic conditions, ~~affecting consumers,~~ including rising food, fuel and energy prices, we do not believe that inflation has had a material effect on our results of operations. However, there can be no assurance that our business will not be affected by such factors in the future. ~~We experienced 10-15% increases in apparel costs in 2011.~~ In 2012, we saw modest increases in apparel costs in the first six months and mid-single-digit decreases in the last six months of the year. In 2013, we expect to see modest decreases in apparel costs.

Financial Condition and Liquidity

Our primary ongoing cash requirements are for capital expenditures ~~in connection with our expansion~~for new stores, remodels and ~~remodeling programs~~IT spending and for seasonal and new store inventory purchases. Share repurchases and dividend payments to shareholders are currently ~~another~~other significant ~~usage~~usages of cash. These payments are discretionary and can be discontinued at any time should we require cash for other uses. Our primary sources of funds ~~for our business activities~~ are cash ~~flow~~flows provided by operations, short-term trade credit and our lines of credit. Short-term trade credit, in the form of extended payment terms for inventory purchases, often represents a significant source of financing for merchandise inventories. Seasonal cash needs ~~to purchase inventory for the November and December holiday selling season~~ may be met by cash on hand and/or the line of credit available under our revolving credit facility. Our working capital and inventory levels typically build throughout the fall, peaking during the November and December holiday selling season.

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							Increase (Decrease) in Cash											Increase (Decrease) in Cash
(Dollars in Millions)	2012			2011			$			%
												2013			2012			$			%
Net cash provided by (used in):												(Dollars in Millions)
Operating activities	$	703		$	1,096		$	(393	)	(36	)%	$	305		$	417		$	(112	)	(27	)%
Investing activities	(568		)	(632		)	64			10	%	(123		)	(176		)	53			30	%
Financing activities	(790		)	(1,981		)	1,191			60	%	(201		)	(417		)	216			52	%

Operating Activities. Operating activities generated $~~$703~~305 million of cash in ~~2012,~~2013, compared to $~~$1.1 billion~~417 million in ~~2011. The decrease in cash provided by operating activities was primarily due to increased inventory purchases in 2012.~~2012.

Merchandise inventory, excluding E-Commerce, increased ~~13%~~10% over April 28, 2012 to ~~$4.0~~$3.2 million per store ~~as of~~ ~~October 27, 2012~~ ~~compared to $3.5 million per store as of October 29, 2011. Inventory units per store, excluding E-Commerce, as of~~ ~~October~~ ~~2012 were 14% higher than~~ ~~October~~ ~~2011 and 3% higher than~~ ~~October~~ ~~2010,~~ as we increased inventory during ~~2012~~2013 to more normalized levels. Accounts payable as a percent of inventory of ~~50.5%~~was 36.7% at ~~October 27,~~May 4, 2013, compared to 46.6% at April 28, 2012 ~~was comparable~~. The decrease is primarily due to ~~50.4%~~inventory turn deterioration and lower accounts payable balances, as we reduced our receipts at ~~October 29, 2011.~~the end of the quarter in reaction to slower seasonal sales at the beginning of the quarter.

Investing Activities. Net cash used in investing activities reflects a ~~$114~~$42 million decrease in capital spending primarily due to ~~lower spending on~~fewer remodels and new stores, partially offset by higher technology spending. ~~Lower capital spending was offset by a $75 million decrease in proceeds from auction rate security sales. We expect capital spending of approximately $800 million in fiscal 2012.~~

Financing Activities. Financing activities used cash of $201 million in 2013 and $~~790~~417 million in 2012 ~~and~~ ~~$2.0 billion~~ in ~~2011~~.

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We paid cash for treasury stock purchases ~~settled during the first nine months~~ of $109 million in 2013 and $325 million in 2012 of .~~$883 million~~ ~~and~~ ~~$2.0 billion~~ ~~in the first nine months of~~ ~~2011~~. The shares were purchased as part of our share repurchase program. In November 2012, our Board of Directors increased the share repurchase authorization under our existing share repurchase program by $3.2 billion, to $3.5 billion. We expect to repurchase shares in open market transactions, subject to market conditions, over the next three years.

We repaid long-term debt of $300 million in March 2011 and $100 million in October 2011. In October 2011, we issued $650 million of 4.00% notes with semi-annual interest payments beginning in May 2012. In September 2012, we issued $350 million of 3.25% notes with semi-annual interest payments beginning in February 2013.

~~Year to date, we~~We paid cash dividends of $~~$227~~77 million~~, or~~ in both ~~$0.96~~2013 ~~per common share, in 2012~~ and ~~$207 million, or~~ ~~$0.75~~ ~~per common share in~~ ~~2011~~2012. On ~~November 7, 2012,~~May 15, 2013, our board of directors declared a quarterly cash dividend of ~~$0.32~~$0.35 per common share. The dividend is payable ~~December~~June 26, ~~2012~~2013 to shareholders of record at the close of business on ~~December 5, 2012.~~June 12, 2013.

~~Key Financial Ratios.~~ ~~Key financial ratios that provide certain measures of our liquidity are as follows:~~

October 27,
2012

January 28,
2012

October 29,
2011
Working capital (In Millions) $ 2,102
$ 2,222
$ 2,180
Current ratio 1.57:1
1.86:1
1.67:1
Debt/capitalization 42.8 % 39.5 % 39.6 %

~~The~~ ~~decrease~~ ~~in working capital and the current ratio as of~~ ~~October 27, 2012~~ ~~compared to October 29, 2011 reflects higher accounts payable and tax liabilities and lower cash due to share repurchases which were substantially offset by higher inventory levels. The~~ ~~increase~~ ~~in the debt/capitalization ratio reflects the issuance of $350 million of debt in September~~ ~~2012~~ ~~and lower capitalization, primarily due to share repurchases.~~

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~~Debt Covenant Compliance.~~ ~~As of~~ ~~October 27, 2012, we were in compliance with all debt covenants and expect to remain in compliance during fiscal 2012.~~

Dollars in Millions)
Total Debt $ 4,586
Permited Exclusions (8 )
Subtotal 4,578
Rent x 8 2,150
Included Indebtedness (A) $ 6,728

Net Worth 6,106
Investments (accounted for under equity method) —
Subtotal 6,106
Included Indebtedness 6,728
Capitalization (B) $ 12,834

Leverage Ratio (A/B) 0.52
Maximum permitted Leverage Ratio 0.70

Free Cash Flow. We generated free cash flow of $~~(18)~~146 million in ~~2012~~2013 compared to $~~284~~216 million in ~~2011~~2012. The decrease is primarily due to ~~higher inventory levels,~~lower cash from operating activities, partially offset by lower capital expenditures, as ~~we increased inventory during 2012 to~~discussed in more ~~normalized levels, which exceeded the related increase in accounts payable.~~detail above. 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 capital expenditures and capital lease and financing obligations. 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(a GAAP ~~measure,~~measure) to free cash flow a(a non-GAAP ~~measure.~~

measure).


							Increase			2013			2012
(In Millions)	2012			2011			(Decrease)
										(In Millions)
Net cash provided by operating activities	$	703		$	1,096		$	(393	)	$	305		$	417
Acquisition of property and equipment	(641		)	(755		)	114
Capital lease and financing obligation payments	(87		)	(69		)	(18		)
Acquisition of property & equipment										(135		)	(177		)
Capital lease & financing obligation payments										(24		)	(27		)
Proceeds from financing obligations	7			12			(5		)	—			3
Free cash flow	$	(18	)	$	284		$	(302	)	$	146		$	216

Key financial ratios. Key financial ratios that provide certain measures of our liquidity are as follows:



	May 4, 2013			April 28, 2012
Liquidity Ratios:
Working capital (In Millions)	$	2,212		$	1,960
Current ratio	1.82			1.67
Debt/capitalization	43.0		%	40.3		%

The increases in working capital and the current ratio as of May 4, 2013 compared to April 28, 2012 are due to higher inventory levels and lower accounts payable and accrued liabilities, partially offset by lower cash balances. The increase in the debt/capitalization ratio reflects the issuance of $350 million of debt in September 2012 and lower capitalization, primarily due to share repurchases.

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Debt Covenant Compliance. As of May 4, 2013, we were in compliance with all debt covenants and expect to remain in compliance during fiscal 2013.



	(Dollars in Millions)
Total Debt	$	4,545
Permitted Exclusions	(8		)

Subtotal	4,537
Rent x 8	2,162

Included Indebtedness	$	6,699

Net Worth	$	6,021
Investments (accounted for under equity method)	—

Subtotal	6,021
Included Indebtedness	6,699

Capitalization	$	12,720

Leverage Ratio (a)	0.53
Maximum permitted Leverage Ratio	0.70

(a) Included Indebtedness divided by Capitalization

Contractual Obligations

There have been no significant changes in the contractual obligations disclosed in our ~~2011~~2012 Form 10-K.

Off-Balance Sheet Arrangements

We have not provided any financial guarantees as of ~~October 27, 2012~~May 4, 2013. We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our liquidity or the availability of capital resources.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect reported amounts. Management has discussed the development, selection and disclosure of its estimates and assumptions with the Audit Committee of our Board of Directors. There have been no significant changes in the critical accounting policies and estimates discussed in our ~~2011~~2012 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in the market risks described in our ~~2011~~2012 Form 10-K.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (the ~~"Evaluation"~~“Evaluation”) at a reasonable assurance level as of the last day of the period covered by this Report.

Based upon the Evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at athe reasonable assurance level. Disclosure controls and procedures are defined by Rules 13a-15(e) ~~and 15d-15(e)~~ of the Securities Exchange Act of 1934 (the "Exchange Act") as controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to ourmanagement, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

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It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions, regardless of how remote.

(b) Changes in Internal Control Over Financial Reporting

During the quarter ended July 30, 2011, we identified a material weakness in our controls over the accounting for leases. The principal factor that contributed to this material weakness was the misinterpretation of complex accounting

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standards related to leases where we, as the lessee, are involved in asset construction pursuant to ASC 840, “Leases.” This material weakness resulted in a number of errors in our accounting for leases and contributed to the restatement in September 2011 of our Quarterly Report on Form 10-Q for the quarter ended April 30, 2011 and our Annual Report on Form 10-K for the fiscal year ended January 29, 2011.

To remediate this material weakness, we implemented remedial measures including a review of all of our leases to correct instances where we were not complying with generally accepted accounting principles (“GAAP”). In addition, we developed updated procedures to reflect the technical guidance for lease accounting and instituted additional management review to confirm the proper implementation of accounting standards going forward.

~~During August 2012, we performed the testing necessary to determine that the material weakness related to these controls has been remediated.~~ There were no ~~other~~ changes in our internal control over financial reporting during the quarter ended May 4, 2013 that have materially affected, or are reasonably likely to materially affect, ~~such controls.~~our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no significant changes in our risk factors from those described in our ~~2011~~2012 Form 10-K.

Forward-looking Statements

This report contains statements that may constitute forward-looking statements within the meaning of the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Those statements relate to developments, results, conditions or other events we expect or anticipate will occur in the future. Words such as “believes,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. Without limiting the foregoing, these statements may relate to future outlook, revenues, earnings, store openings, planned capital expenditures, market conditions, new strategies and the competitive environment. Forward-looking statements are based on our management’s then current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Item 1A of our ~~2011~~2012 Form 10-K, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made, and we undertake no obligation to update them. An investment in our common stock or other securities carries certain risks. Investors should carefully consider the risks as stated in our ~~2011~~2012 Form 10-K and other risks which may be disclosed from time to time in our filings with the SEC before investing in our securities.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We did not sell any securities during the quarter ended ~~October 27, 2012~~May 4, 2013 which were not registered under the Securities Act.

The following table contains information for shares repurchased and shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ restricted stock during the three fiscal months ended ~~October 27, 2012~~May 4, 2013:

Period
Total Number
of Shares
Purchased
During
Period

Average
Price
Paid Per
Share

Total Number
of Shares
Purchased as
Part of a
Publicly
Announced
Program

Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the
Program
(In millions)
July 29 – August 25, 2012 1,108,377
$ 51.22
1,107,938
$ 515
August 26 – September 29, 2012 2,035,966
52.41
2,012,200
410
September 30 – October 27, 2012 2,028,737
51.65
2,022,000
306
Total 5,173,080
$ 51.85
5,142,138
$ 306

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In November 2012, our Board of Directors increased the remaining share repurchase authorization under our existing share repurchase program by $3.2 billion, to $3.5 billion. Pursuant to this program, we may repurchase shares from time to time in open market transactions, accelerated stock repurchase programs, tender offers, privately negotiated transactions or by other means. We expect to repurchase shares in open market transactions, subject to market conditions, over the next three years.



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
					(In Millions)
February 3 – March 2, 2013	24,966	$	46.31	—	$	3,121
March 3 – April 6, 2013	1,928,686	46.94		1,778,039	3,037
April 7 – May 4, 2013	421,542	47.41		420,132	3,017
Total	2,375,194	$	47.01	2,198,171	$	3,017

1916

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~~Item 6. Exhibits~~



~~4.1~~			~~Sixth Supplemental Indenture~~
Exhibit Number		Description
10.1		Offer letter dated ~~September 25, 2012~~as of May 17, 2013 by and between ~~the Company~~Michelle Gass and The Bank of New York Mellon Trust Company, N.A., formerly known as The Bank of New York Trust Company, N.A., as successor to The Bank of New York, as Trustee, incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K dated September 18, 2012.Kohl's Department Stores, Inc.

~~4.2~~	10.2		~~Form~~Agreement dated as of ~~$350,000,000 3.250% Notes due 2023, incorporated~~May 20, 2013 by ~~reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K dated September 18, 2012.~~ and between John Worthington and Kohl's Department Stores, Inc.

31.1			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of ~~Periodic Report by~~the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2			Certification of ~~Periodic Report by~~the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

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~~SIGNATURES~~

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		Kohl’s Corporation (Registrant)

Date:	~~November 30, 2012~~June 7, 2013	/s/ Wesley S. McDonald
		Wesley S. McDonald On behalf of the Registrant and as Senior Executive Vice President and Chief Financial Officer (Principal Financial and Chief Accounting Officer)

2117




PART I	FINANCIAL INFORMATION
Item 1.
~~Item 1~~	Financial Statements:
		3
	~~Condensed~~ Consolidated Balance Sheets	3

	~~Condensed~~ Consolidated Statements of Income	4

	~~Condensed~~ Consolidated Statements of Comprehensive Income	4

	~~Condensed~~ Consolidated ~~Statement~~Statements of Changes in ~~Shareholders’~~Shareholders' Equity	5

	~~Condensed~~ Consolidated Statements of Cash Flows	6

	Notes to ~~Condensed~~ Consolidated Financial Statements	7

Item 22.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	1110

Item 33.	Quantitative and Qualitative Disclosures About Market Risk	1715

Item 44.	Controls and Procedures	1715

PART II	~~OTHER INFORMATION~~
	OTHER INFORMATION
Item 1A1A.	Risk Factors	1816

Item 22.	Unregistered Sales of Equity Securities and Use of Proceeds	1816

Item 66.	Exhibits	2017

	Signatures	2117



	Common Stock			Paid-In			Treasury Stock					Accumulated Other Comprehensive			Retained
	Shares	Amount		Capital			Shares		Amount			Income			Earnings			Total
Balance at January 28, 2012	358	$	4	$	2,339		(111	)	$	(5,977	)	$	(53	)	$	10,195		$	6,508
Comprehensive income												5			609			614
Stock options and awards	2	—		90					—			—			—			90
Net income tax impact from exercise of stock options	—	—		(6		)			—			—			—			(6		)
Dividends paid ($0.96 per share)	—	—		—					2			—			(229		)	(227		)
Treasury stock purchases	—	—		—			(18	)	(873		)	—			—			(873		)
Balance at October 27, 2012	360	$	4	$	2,423		(129	)	$	(6,848	)	$	(48	)	$	10,575		$	6,106



	2012	2011
Dividend yield	2.6%	1.8%
Volatility	33.7%	33.0%
Risk-free interest rate	1.0%	2.1%
Expected life in years	5.5	5.5
Weighted average fair value at grant date	$11.84	$14.60



	Quarter		Year to Date
Average unit retail	0.6	%	3.9	%
Units per transaction	1.0		(2.2	)
Average transaction value	1.6		1.7
Number of transactions	(0.5	)	(2.2	)
Comparable store sales	1.1	%	(0.5	)%



							Increase/(Decrease)
(Dollars in Millions)	2012			2011			$			%
Quarter	$	1,712		$	1,688		$	24		1	%
Year to date	4,878			5,002			(124		)	(2	)%
Gross margin as a percent of sales
Quarter	38.1		%	38.6		%
Year to date	37.7		%	39.1		%



	Quarter		Year to Date
2011 Gross Margin	38.57	%	39.13	%
Increase (decrease) due to:
Merchandise Margin:
Stores	(0.32	)%	(1.29	)%
E-Commerce	0.05	%	0.04	%
E-Commerce shipping	(0.17	)%	(0.17	)%
Total Decrease	(0.44	)%	(1.42	)%
2012 Gross Margin	38.13	%	37.71	%



							Increase / (Decrease)
(Dollars in Millions)	2012			2011			$			%
Quarter	$	1,077		$	1,071		$	6		0.6	%
Year to date	3,055			3,066			(11		)	(0.4	)%
SG&A as a percent of net sales
Quarter	24.0		%	24.5		%
Year to date	23.6		%	24.0		%



	Dollars in Millions)
Total Debt	$	4,586
Permited Exclusions	(8		)
Subtotal	4,578
Rent x 8	2,150
Included Indebtedness (A)	$	6,728

Net Worth	6,106
Investments (accounted for under equity method)	—
Subtotal	6,106
Included Indebtedness	6,728
Capitalization (B)	$	12,834

Leverage Ratio (A/B)	0.52
Maximum permitted Leverage Ratio	0.70



Period	Total Number of Shares Purchased During Period	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
					(In millions)
July 29 – August 25, 2012	1,108,377	$	51.22	1,107,938	$	515
August 26 – September 29, 2012	2,035,966	52.41		2,012,200	410
September 30 – October 27, 2012	2,028,737	51.65		2,022,000	306
Total	5,173,080	$	51.85	5,142,138	$	306

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