Exhibit 99.1
National & Retail Trades and First Call, Release: February 23, 2006 at 4:00 PM (EST)
KOHL'S CORPORATION REPORTS RECORD EARNINGS
FOR FOURTH QUARTER AND FISCAL 2005
·
Fourth Quarter Net Income Increase of 17.6% and EPS of $1.08 per Diluted Share
·
Fiscal 2005 Net Income Increase of 19.7% and EPS of $2.43 per Diluted Share
MENOMONEE FALLS, WI … February 23/BUSINESS WIRE/Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported record results for the three and twelve months ended January 28, 2006.
Fourth Quarter Results
Kohl’s Corporation reported a 17.6 percent increase in net income for the quarter ended January 28, 2006. Net income was $374.9 million, or $1.08 per diluted share, compared with $318.8 million or $0.92 per diluted share a year ago. Net sales increased to $4.7 billion from $4.1 billion a year ago, an increase of 14.1 percent for the quarter. Comparable store sales increased 2.7 percent for the same period.
2005 Fiscal Year Results
For the twelve months ended January 28, 2006, net income increased 19.7 percent to $842.0 million or $2.43 per diluted share, compared with $703.4 million or $2.04 per diluted share a year ago. Net sales increased 14.5 percent to $13.4 billion from $11.7 billion a year ago. Comparable store sales increased 3.4 percent for the same period.
The results for fiscal 2005 reflect the Company’s decision to adopt expensing of stock options. In accordance with the modified retrospective method, fiscal 2004’s results have been restated.
Larry Montgomery, Kohl’s chairman and chief executive officer, said, “We made tremendous progress on our 2005 initiatives and are very pleased with the bottom-line results for the quarter and the year. We concentrated on inventory management, resulting in lower clearance levels and the best gross margin performance in our history. We have made great strides in broadening our assortment and are receiving positive feedback from our shoppers. We are attracting new customers and believe we are building momentum as a brand. In 2006, we will continue to focus on these initiatives: merchandise content, marketing, inventory management and the in-store shopping experience. These are the building blocks of a great retail strategy.”
Montgomery added, “I am very proud of our over 107,000 associates and the role they played in delivering another record year and want to thank them for their hard work, loyalty and dedication to serving our customers. They are the reason you can continue to ‘Expect Great Things’ from Kohl’s in 2006.”
Expansion Update
During the year, Kohl’s successfully opened 95 stores including entries into the Orlando and Jacksonville, FL markets and the Buffalo, NY market.
The Company ended the year with 732 stores in 41 states, compared with 637 stores in 40 states at the end of 2004.
Kohl’s continues to target opening 500 additional stores over the next five years. The Company plans to open approximately 80-85 stores in fiscal 2006 with approximately 17 stores opening during the first quarter, including its initial entry into the Pacific Northwest in the Portland, OR market.
Fourth Quarter Earnings Conference Call
Investors will have the opportunity to listen to the fourth quarter earnings conference call today at 5:00 PM (EST) by dialing (847) 619-6368 ten minutes prior to the start of the call. In addition, the call will be web cast live over the Internet through the Company’s web site located athttp://www.kohls.com (see “Company News”), or through Broadcast Networks’ Vcall web site located athttp://www.vcall.com. To listen to the call, please go to either web site at least 15 minutes early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a telephone replay will be available beginning shortly after the call and continuing through March 23, 2006. To access this replay, simply dial (630) 652-3018, and use Pass Code: 13584558.
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 on Exhibit 99.1 to 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.
Investor Relations Contact: Wes McDonald, Chief Financial Officer, (262) 703-1893
Media Contact:
Vicki Shamion, Vice President – Public Relations, (262) 703-1464
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
13 Weeks Ended | ||||||||||||||
January 28, 2006 | % to Net | January 29, 2005 (Restated) | % to Net | |||||||||||
Net sales | $ 4,651.9 | $ 4,078.7 | ||||||||||||
Cost of merchandise sold | 3,073.3 | 66.1% | 2,708.1 | 66.4% | ||||||||||
Gross margin | 1,578.6 | 33.9% | 1,370.6 | 33.6% | ||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative | 864.3 | 18.6% | 760.0 | 18.6% | ||||||||||
Depreciation and amortization | 91.2 | 1.9% | 78.0 | 1.9% | ||||||||||
Preopening expenses | 1.5 | 0.0% | 2.6 | 0.1% | ||||||||||
Operating income | 621.6 | 13.4% | 530.0 | 13.0% | ||||||||||
Interest expense, net | 18.8 | 0.4% | 17.4 | 0.4% | ||||||||||
Income before income taxes | 602.8 | 13.0% | 512.6 | 12.6% | ||||||||||
Provision for income taxes | 227.9 | 4.9% | 193.8 | 4.8% | ||||||||||
Net income | $ 374.9 | 8.1% | $ 318.8 | 7.8% | ||||||||||
Basic net income per share | $ 1.09 | $ 0.93 | ||||||||||||
Avg. number of shares | 344.7 | 343.2 | ||||||||||||
Diluted net income per share | $ 1.08 | $ 0.92 | ||||||||||||
Avg. number of shares |
| 346.6 | 345.7 | |||||||||||
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
52 Weeks Ended | ||||||||||||||
January 28, 2006 | % to Net Sales | January 29, 2005 (Restated) | % to Net Sales | |||||||||||
Net sales | $ 13,402.2 | $11,700.6 | ||||||||||||
Cost of merchandise sold | 8,639.3 | 64.5% | 7,587.0 | 64.8% | ||||||||||
Gross margin | 4,762.9 | 35.5% | 4,113.6 | 35.2% | ||||||||||
Operating expenses: | ||||||||||||||
Selling, general and administrative | 2,963.5 | 22.1% | 2,583.0 | 22.1% | ||||||||||
Depreciation and amortization | 338.9 | 2.5% | 288.2 | 2.5% | ||||||||||
Preopening expenses | 44.3 | 0.3% | 49.1 | 0.4% | ||||||||||
Operating income | 1,416.2 | 10.6% | 1,193.3 | 10.2% | ||||||||||
Interest expense, net | 70.4 | 0.6% | 62.4 | 0.5% | ||||||||||
Income before income taxes | 1,345.8 | 10.0% | 1,130.9 | 9.7% | ||||||||||
Provision for income taxes | 503.8 | 3.7% | 427.5 | 3.7% | ||||||||||
Net income | $ 842.0 | 6.3% | $ 703.4 | 6.0% | ||||||||||
Basic net income per share | $ 2.45 | $ 2.06 | ||||||||||||
Avg. number of shares | 344.2 | 341.7 | ||||||||||||
Diluted net income per share | $ 2.43 | $ 2.04 | ||||||||||||
Avg. number of shares |
| 346.8 | 344.8 | |||||||||||
Kohl's Corporation
Condensed Consolidated Statements of Cash Flows
(In Thousands)
Subject to Reclassification
52 Weeks Ended | ||||||||
January 28, 2006 | January 29, 2005 (Restated) | |||||||
Operating activities | ||||||||
Net income | $ 841,960 | $ 703,401 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 339,608 | 288,892 | ||||||
Amortization of debt discount | 218 | 216 | ||||||
Deferred income taxes | 18,793 | 78,274 | ||||||
Share-based compensation | 43,941 | 43,375 | ||||||
Excess tax benefits from share-based compensation | (14,458) | (10,563) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (262,433) | (239,475) | ||||||
Merchandise inventories | (290,591) | (339,987) | ||||||
Other current and long-term assets | (19,594) | 19,188 | ||||||
Accounts payable | 125,316 | 172,056 | ||||||
Accrued and other long-term liabilities | 94,747 | 151,558 | ||||||
Income taxes | 4,184 | 70,160 | ||||||
Net cash provided by operating activities | 881,691 | 937,095 | ||||||
Investing activities | ||||||||
Acquisition of property and equipment and favorable lease rights | (799,417) | (889,598) | ||||||
Net purchases of short-term investments | (71,310) | (54,482) | ||||||
Acquisition of software and other | (33,056) | (33,411) | ||||||
Net cash used in investing activities | (903,783) | (977,491) | ||||||
Financing activities | ||||||||
Excess tax benefits from share-based compensation | 14,458 | 10,563 | ||||||
Repayments of long-term debt, net | (5,102) | (13,292) | ||||||
Net proceeds from issuances of common shares | 22,858 | 47,094 | ||||||
Net cash provided by financing activities | 32,214 | 44,365 | ||||||
Net increase in cash and cash equivalents | 10,122 | 3,969 | ||||||
Cash and cash equivalents at beginning of period | 116,717 | 112,748 | ||||||
Cash and cash equivalents at end of period | $ 126,839 | $116,717 |
Kohl's Corporation | |||||
Condensed Consolidated Balance Sheets | |||||
(In Thousands) | |||||
Subject to Reclassification | |||||
January 28, 2006 | January 29, 2005 (Restated) | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ 126,839 | $ 116,717 | |||
Short-term investments | 160,077 | 88,767 | |||
Accounts receivable trade, net | 1,652,065 | 1,389,632 | |||
Merchandise inventories | 2,237,568 | 1,946,977 | |||
Deferred income taxes | 23,677 | 54,050 | |||
Other current assets | 65,826 | 47,294 | |||
Total current assets | 4,266,052 | 3,643,437 | |||
Property and equipment, net | 4,543,832 | 3,987,945 | |||
Favorable lease rights, net | 212,380 | 224,903 | |||
Goodwill | 9,338 | 9,338 | |||
Other assets | 121,436 | 113,676 | |||
Total assets | $ 9,153,038 | $ 7,979,299 | |||
Liabilities and Shareholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ 829,971 | $ 704,655 | |||
Accrued liabilities | 641,635 | 570,757 | |||
Income taxes payable | 166,908 | 177,182 | |||
Current portion of long-term debt and capital leases | 107,941 | 3,464 | |||
Total current liabilities | 1,746,455 | 1,456,058 | |||
Long-term debt and capital leases | 1,046,104 | 1,103,441 | |||
Deferred income taxes | 217,801 | 229,381 | |||
Other long-term liabilities | 185,340 | 156,521 | |||
Shareholders’ equity | 5,957,338 | 5,033,898 | |||
Total liabilities and shareholders’ equity | $ 9,153,038 | $ 7,979,299 |