Kohl's Corporation Reports Second Quarter Financial Results
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--August 13, 2015-- Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the quarter and year-to-date period ended August 1, 2015.
| Quarter | Year to Date | ||||||||||||||||||
| ($ in millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||
| Sales | $ | 4,267 | $ | 4,242 | 0.6% | $ | 8,390 | $ | 8,312 | 0.9% | |||||||||
| Comparable store sales | 0.1 | % | (1.3 | )% | - | 0.8 | % | (2.3 | )% | - | |||||||||
| Gross margin | 38.9 | % | 39.0 | % | (6) bp | 38.0 | % | 37.9 | % | 5 bp | |||||||||
| Net income | |||||||||||||||||||
| Reported | $ | 130 | $ | 232 | (44)% | $ | 257 | $ | 357 | (28)% | |||||||||
| Excluding loss on | |||||||||||||||||||
| extinguishment of debt | $ | 211 | $ | 232 | (9)% | $ | 340 | $ | 357 | (5)% | |||||||||
| Diluted earnings per share | �� | ||||||||||||||||||
| Reported | $ | 0.66 | $ | 1.13 | (42)% | $ | 1.29 | $ | 1.73 | (25)% | |||||||||
| Excluding loss on | |||||||||||||||||||
| extinguishment of debt | $ | 1.07 | $ | 1.13 | (5)% | $ | 1.70 | $ | 1.73 | (2)% | |||||||||
Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "Our sales results were below our plan as the shift of sales in tax-free states from July into August was larger than anticipated. Our expenses were well managed for the season. Our inventory receipts are well-positioned for the back-to-school and fall seasons."
Dividend
On August 11, 2015, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.45 per share. The dividend is payable September 23, 2015 to shareholders of record at the close of business on September 9, 2015.
Store Update
Kohl’s ended the quarter with 1,164 stores in 49 states, compared with 1,160 stores at the same time last year.
Loss on Extinguishment of Debt and Guidance Update
As previously reported, the Company completed a cash tender offer for $767 million of debt. In addition, the Company exercised its right to redeem $318 million of notes due in 2017 which were not initially tendered. The Company also issued $1.1 billion in new notes. In conjunction with the refinancing, the Company incurred a loss of approximately $170 million. $131 million was recognized in the second quarter of fiscal 2015 and the Company expects an additional $39 million to be recognized in the third quarter of fiscal 2015 when the remaining 2017 notes are settled.
Absent the effect of the loss on the extinguishment of debt, the Company now expects its fiscal 2015 earnings per diluted share to be at the low range of its previous guidance of $4.40 to $4.60.
Absent the effect of the loss on the extinguishment of debt, the Company now expects its fiscal 2015 earnings per diluted share to be at the low range of its previous guidance of $4.40 to $4.60.
Second Quarter 2015 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on August 13, 2015. The phone number for the conference call is (800) 230-1074. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID for both the live call and the replay is 346895. The conference call and replays are 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 2015 earnings guidance. Kohl's intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Item 1A in Kohl's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC.
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including 2015 earnings guidance. Kohl's intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Item 1A in Kohl's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC.
About Kohl's
Kohl’s (NYSE: KSS) is a leading specialty department store with 1,164 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store, online at Kohls.com and via mobile devices. Committed to its communities, Kohl’s has raised more than $274 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 additional information about Kohl’s philanthropic and environmental initiatives, visit www.Kohls.com/Cares. For a list of store locations and information, or for the added convenience of shopping online, visit www.Kohls.com.
Connect with Kohl’s:
Facebook (http://www.facebook.com/Kohls)
Twitter (http://twitter.com/Kohls)
Google+ (http://plus.google.com/+Kohls)
Pinterest (http://pinterest.com/Kohls)
Instagram (http://instagram.com/Kohls)
YouTube (http://www.youtube.com/Kohls)
Contacts
Investor Relations:
Wes McDonald, Chief Financial Officer, (262) 703-1893
Media:
Bevin Bailis, SVP, PR and Communications, (262) 703-1464
| KOHL'S CORPORATION | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| (In Millions, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| August 1, 2015 | August 2, 2014 | August 1, 2015 | August 2, 2014 | ||||||||||||
| Net sales | $ | 4,267 | $ | 4,242 | $ | 8,390 | $ | 8,312 | |||||||
| Cost of merchandise sold | 2,605 | 2,588 | 5,206 | 5,162 | |||||||||||
| Gross margin | 1,662 | 1,654 | 3,184 | 3,150 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general, and administrative | 1,005 | 981 | 2,021 | 1,981 | |||||||||||
| Depreciation and amortization | 233 | 222 | 459 | 438 | |||||||||||
| Operating income | 424 | 451 | 704 | 731 | |||||||||||
| Interest expense, net | 84 | 85 | 168 | 170 | |||||||||||
| Loss on extinguishment of debt | 131 | — | 131 | — | |||||||||||
| Income before income taxes | 209 | 366 | 405 | 561 | |||||||||||
| Provision for income taxes | 79 | 134 | 148 | 204 | |||||||||||
| Net income | $ | 130 | $ | 232 | $ | 257 | $ | 357 | |||||||
| Basic net income per share | $ | 0.66 | $ | 1.14 | $ | 1.30 | $ | 1.74 | |||||||
| Average number of shares | 196 | 204 | 198 | 205 | |||||||||||
| Diluted net income per share | $ | 0.66 | $ | 1.13 | $ | 1.29 | $ | 1.73 | |||||||
| Average number of shares | 197 | 205 | 199 | 206 | |||||||||||
| As a percent of net sales: | |||||||||||||||
| Gross margin | 38.9 | % | 39.0 | % | 38.0 | % | 37.9 | % | |||||||
| Selling, general and | |||||||||||||||
| administrative expenses | 23.6 | % | 23.1 | % | 24.1 | % | 23.8 | % | |||||||
| Operating income | 9.9 | % | 10.6 | % | 8.4 | % | 8.8 | % | |||||||
| Net income | 3.0 | % | 5.5 | % | 3.1 | % | 4.3 | % | |||||||
| Excluding loss on extinguishment of debt: | |||||||||||||||
| Net income | $ | 211 | $ | 232 | $ | 340 | $ | 357 | |||||||
| Diluted net income per share | $ | 1.07 | $ | 1.13 | $ | 1.70 | $ | 1.73 | |||||||
| Net income as a percent of net sales | 5.0 | % | 5.5 | % | 4.1 | % | 4.3 | % | |||||||
| KOHL'S CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In Millions) | ||||||||
| (Unaudited) | ||||||||
| August 1, 2015 | August 2, 2014 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 934 | $ | 746 | ||||
| Merchandise inventories | 4,252 | 3,899 | ||||||
| Deferred income taxes | 130 | 132 | ||||||
| Other | 310 | 323 | ||||||
| Total current assets | 5,626 | 5,100 | ||||||
| Property and equipment, net | 8,528 | 8,686 | ||||||
| Other assets | 201 | 281 | ||||||
| Total assets | $ | 14,355 | $ | 14,067 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,566 | $ | 1,479 | ||||
| Accrued liabilities | 1,125 | 1,057 | ||||||
| Income taxes payable | 53 | 66 | ||||||
| Current portion of long-term debt | 317 | — | ||||||
| Current portion of capital lease | ||||||||
| and financing obligations | 117 | 105 | ||||||
| Total current liabilities | 3,178 | 2,707 | ||||||
| Long-term debt | 2,791 | 2,778 | ||||||
| Capital lease and financing obligations | 1,821 | 1,896 | ||||||
| Deferred income taxes | 318 | 315 | ||||||
| Other long-term liabilities | 570 | 562 | ||||||
| Shareholders' equity | 5,677 | 5,809 | ||||||
| Total liabilities and shareholders' equity | $ | 14,355 | $ | 14,067 | ||||
| KOHL'S CORPORATION | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In Millions) | |||||||
| (Unaudited) | |||||||
| Six Months Ended | |||||||
| August 1, 2015 | August 2, 2014 | ||||||
| Operating activities | |||||||
| Net income | $ | 257 | $ | 357 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities: | |||||||
| Depreciation and amortization | 459 | 438 | |||||
| Share-based compensation | 24 | 24 | |||||
| Excess tax benefits from share-based compensation | (10 | ) | (2 | ) | |||
| Deferred income taxes | (65 | ) | (17 | ) | |||
| Other non-cash revenues and expenses | 17 | 11 | |||||
| Loss on extinguishment of debt | 131 | — | |||||
| Changes in operating assets and liabilities: | |||||||
| Merchandise inventories | (433 | ) | (20 | ) | |||
| Other current and long-term assets | 60 | 2 | |||||
| Accounts payable | 55 | 114 | |||||
| Accrued and other long-term liabilities | (121 | ) | (103 | ) | |||
| Income taxes | (21 | ) | (74 | ) | |||
| Net cash provided by operating activities | 353 | 730 | |||||
| Investing activities | |||||||
| Acquisition of property and equipment | (377 | ) | (374 | ) | |||
| Other | 3 | 6 | |||||
| Net cash used in investing activities | (374 | ) | (368 | ) | |||
| Financing activities | |||||||
| Treasury stock purchases | (543 | ) | (392 | ) | |||
| Shares withheld for taxes on vested restricted shares | (23 | ) | (16 | ) | |||
| Dividends paid | (178 | ) | (160 | ) | |||
| Proceeds from issuance of debt | 1,098 | — | |||||
| Deferred financing costs | (9 | ) | — | ||||
| Reduction of long-term borrowings | (767 | ) | — | ||||
| Premium paid on redemption of debt | (126 | ) | — | ||||
| Capital lease and financing obligation payments | (54 | ) | (61 | ) | |||
| Proceeds from stock option exercises | 140 | 37 | |||||
| Excess tax benefits from share-based compensation | 10 | 2 | |||||
| Proceeds from financing obligations | — | 3 | |||||
| Net cash used in financing activities | (452 | ) | (587 | ) | |||
| Net decrease in cash and cash equivalents | (473 | ) | (225 | ) | |||
| Cash and cash equivalents at beginning of period | 1,407 | 971 | |||||
| Cash and cash equivalents at end of period | $ | 934 | $ | 746 | |||