Kohl's Corporation Reports Third Quarter Financial Results
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--November 10, 2016-- Kohl’s Corporation (NYSE:KSS) today reported results for the three and nine month periods ended October 29, 2016.
| Three Months | Nine Months | ||||||||||||||||||
| ($ in millions) | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||
| Sales | $ | 4,327 | $ | 4,427 | (2.3)% | $ | 12,481 | $ | 12,817 | (2.6)% | |||||||||
| Comparable store sales | (1.7 | )% | 1.0 | % | — | (2.4 | )% | 0.8 | % | — | |||||||||
| Gross margin | 37.1 | % | 37.1 | % | 2 bp | 37.4 | % | 37.7 | % | (26) bp | |||||||||
| Selling, general, and administrative expenses | $ | 1,080 | $ | 1,099 | (2)% | $ | 3,074 | $ | 3,120 | (1)% | |||||||||
| Reported | |||||||||||||||||||
| Net income | $ | 146 | $ | 120 | 22% | $ | 303 | $ | 377 | (20)% | |||||||||
| Diluted earnings per share | $ | 0.83 | $ | 0.63 | 32% | $ | 1.68 | $ | 1.92 | (13)% | |||||||||
| Excluding Non-Recurring Items | |||||||||||||||||||
| Net income | $ | 142 | $ | 144 | (1)% | $ | 420 | $ | 484 | (13)% | |||||||||
| Diluted earnings per share | $ | 0.80 | $ | 0.75 | 7% | $ | 2.33 | $ | 2.46 | (5)% | |||||||||
Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "We are pleased to see continued improvement in our sales trends. Our back-to-school season was strong, followed by a soft September, and progressive improvement throughout October. We are encouraged by these trends as we enter the Holiday season. Our teams did an excellent job managing inventory. Expenses were also well-controlled as substantially all teams outperformed their plans."
Capital Structure
On November 9, 2016, the 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 December 21, 2016 to shareholders of record at the close of business on December 7, 2016.
Kohl's Board of Directors also increased the Company's outstanding share purchase authorization under its existing share repurchase program to $2.0 billion. Kohl's expects to repurchase shares in open market transactions, subject to market conditions, over the next three years.
Store Update
Kohl’s ended the quarter with 1,155 Kohl's stores, 12 FILA Outlet stores, and three Off/Aisle clearance centers in 49 states, compared with 1,166 Kohl's stores at the same time last year.
Earnings Guidance Update
The company reaffirmed its prior fiscal 2016 diluted earnings per share guidance of $3.12 to $3.32 per diluted share. Excluding impairments, store closing and other costs, fiscal 2016 diluted earnings per share is expected to be $3.80 to $4.00.
Third Quarter 2016 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on November 10, 2016. 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 386530. The conference call and replays are also accessible via the Company's web site at http://corporate.kohls.com/investors/events-and-presentations.
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. 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. 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 more than 1,100 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 nearly $300 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:
Jen Johnson, VP Corporate Communications, (262) 703-5241
| KOHL'S CORPORATION | |||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
| (In Millions, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | ||||||||||||
| Net sales | $ | 4,327 | $ | 4,427 | $ | 12,481 | $ | 12,817 | |||||||
| Cost of merchandise sold | 2,720 | 2,784 | 7,812 | 7,990 | |||||||||||
| Gross margin | 1,607 | 1,643 | 4,669 | 4,827 | |||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general, and administrative | 1,080 | 1,099 | 3,074 | 3,120 | |||||||||||
| Depreciation and amortization | 232 | 236 | 700 | 695 | |||||||||||
| Impairments, store closing and other costs | (6 | ) | — | 186 | — | ||||||||||
| Operating income | 301 | 308 | 709 | 1,012 | |||||||||||
| Interest expense, net | 76 | 81 | 233 | 248 | |||||||||||
| Loss on extinguishment of debt | — | 38 | — | 169 | |||||||||||
| Income before income taxes | 225 | 189 | 476 | 595 | |||||||||||
| Provision for income taxes | 79 | 69 | 173 | 218 | |||||||||||
| Net income | $ | 146 | $ | 120 | $ | 303 | $ | 377 | |||||||
| Basic net income per share | $ | 0.82 | $ | 0.63 | $ | 1.68 | $ | 1.93 | |||||||
| Average number of shares | 177 | 191 | 180 | 196 | |||||||||||
| Diluted net income per share | $ | 0.83 | $ | 0.63 | $ | 1.68 | $ | 1.92 | |||||||
| Average number of shares | 177 | 192 | 180 | 197 | |||||||||||
| As a percent of net sales: | |||||||||||||||
| Gross margin | 37.1 | % | 37.1 | % | 37.4 | % | 37.7 | % | |||||||
| Selling, general and administrative expenses | 25.0 | % | 24.8 | % | 24.6 | % | 24.3 | % | |||||||
| Operating income | 7.0 | % | 7.0 | % | 5.7 | % | 7.9 | % | |||||||
| Net income | 3.4 | % | 2.7 | % | 2.4 | % | 2.9 | % | |||||||
| Excluding non-recurring items* | |||||||||||||||
| Net income | $ | 142 | $ | 144 | $ | 420 | $ | 484 | |||||||
| Diluted net income per share | $ | 0.80 | $ | 0.75 | $ | 2.33 | $ | 2.46 | |||||||
| As a percent of net sales: | |||||||||||||||
| Operating income | 6.8 | % | 7.0 | % | 7.2 | % | 7.9 | % | |||||||
| Net income | 3.3 | % | 3.3 | % | 3.4 | % | 3.8 | % | |||||||
*Excludes impairments, store closing and other costs in 2016 and Loss on extinguishment of debt in 2015.
| KOHL'S CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In Millions) | ||||||||
| (Unaudited) | ||||||||
| October 29, 2016 | October 31, 2015 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 597 | $ | 501 | ||||
| Merchandise inventories | 4,721 | 5,254 | ||||||
| Other | 336 | 312 | ||||||
| Total current assets | 5,654 | 6,067 | ||||||
| Property and equipment, net | 8,203 | 8,499 | ||||||
| Other assets | 219 | 228 | ||||||
| Total assets | $ | 14,076 | $ | 14,794 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,097 | $ | 2,141 | ||||
| Accrued liabilities | 1,235 | 1,244 | ||||||
| Income taxes payable | 66 | 28 | ||||||
| Short-term debt | — | 400 | ||||||
| Current portion of capital lease | ||||||||
| and financing obligations | 128 | 126 | ||||||
| Total current liabilities | 3,526 | 3,939 | ||||||
| Long-term debt | 2,794 | 2,792 | ||||||
| Capital lease and financing obligations | 1,702 | 1,817 | ||||||
| Deferred income taxes | 298 | 216 | ||||||
| Other long-term liabilities | 649 | 556 | ||||||
| Shareholders' equity | 5,107 | 5,474 | ||||||
| Total liabilities and shareholders' equity | $ | 14,076 | $ | 14,794 | ||||
| KOHL'S CORPORATION | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In Millions) | |||||||
| (Unaudited) | |||||||
| Nine Months Ended | |||||||
| October 29, 2016 | October 31, 2015 | ||||||
| Operating activities | |||||||
| Net income | $ | 303 | $ | 377 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by operating activities: | |||||||
| Depreciation and amortization | 700 | 695 | |||||
| Share-based compensation | 31 | 36 | |||||
| Excess tax benefits from share-based compensation | (4 | ) | (10 | ) | |||
| Deferred income taxes | 40 | (84 | ) | ||||
| Loss on extinguishment of debt | — | 169 | |||||
| Impairments, store closing and other costs | 57 | — | |||||
| Other non-cash revenues and expenses | 20 | 23 | |||||
| Changes in operating assets and liabilities: | |||||||
| Merchandise inventories | (679 | ) | (1,433 | ) | |||
| Other current and long-term assets | 20 | 74 | |||||
| Accounts payable | 846 | 630 | |||||
| Accrued and other long-term liabilities | 23 | (6 | ) | ||||
| Income taxes | (77 | ) | (64 | ) | |||
| Net cash provided by operating activities | 1,280 | 407 | |||||
| Investing activities | |||||||
| Acquisition of property and equipment | (591 | ) | (551 | ) | |||
| Other | 7 | 3 | |||||
| Net cash used in investing activities | (584 | ) | (548 | ) | |||
| Financing activities | |||||||
| Treasury stock purchases | (441 | ) | (789 | ) | |||
| Shares withheld for taxes on vested restricted shares | (15 | ) | (26 | ) | |||
| Dividends paid | (270 | ) | (264 | ) | |||
| Proceeds from issuance of debt, net | — | 1,088 | |||||
| Net borrowings under credit facilities | — | 400 | |||||
| Reduction of long-term borrowings | — | (1,085 | ) | ||||
| Premium paid on redemption of debt | — | (163 | ) | ||||
| Capital lease and financing obligation payments | (95 | ) | (83 | ) | |||
| Proceeds from stock option exercises | 6 | 146 | |||||
| Excess tax benefits from share-based compensation | 4 | 10 | |||||
| Proceeds from financing obligations | 5 | 1 | |||||
| Net cash used in financing activities | (806 | ) | (765 | ) | |||
| Net decrease in cash and cash equivalents | (110 | ) | (906 | ) | |||
| Cash and cash equivalents at beginning of period | 707 | 1,407 | |||||
| Cash and cash equivalents at end of period | $ | 597 | $ | 501 | |||