Exhibit 99.1
National & Retail Trades and First Call, Release: May 11, 2006 at 4:00 PM (EST)
KOHL'S CORPORATION REPORTS FIRST QUARTER NET INCOME INCREASE OF
34.1 PERCENT AND EARNINGS PER SHARE OF $0.48
MENOMONEE FALLS, WI … May 11/BUSINESS WIRE/Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the three months ended April 29, 2006.
First Quarter Results
Kohl’s Corporation reported a 34.1 percent increase in net income for the quarter ended April 29, 2006. Net income was $167.2 million, or $0.48 per diluted share, compared with $124.7 million or $0.36 per diluted share a year ago. Net sales increased to $3.2 billion from $2.7 billion a year ago, an increase of 16.1 percent for the quarter. Comparable store sales increased 6.9 percent for the same period.
Larry Montgomery, Kohl’s chairman and chief executive officer, said, “We are extremely pleased with our performance for the first quarter. We exceeded our guidance for both sales and net income. All lines of business posted strong results as did all regions of the country. At the same time, we saw continued improvement in our gross margin rate and experienced significant expense leverage on our sales increase.”
Montgomery added, “I am very proud of our associates and the role they played in delivering a great quarter 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.”
Sale of Credit Card Receivables
During the quarter, the Company completed the sale of its private label credit card accounts and the outstanding balances associated with the accounts to JPMorgan Chase for a purchase price of approximately $1.6 billion. As previously reported, Kohl’s plans to use the net proceeds to repurchase its common stock, to fund store expansion, and for general corporate purposes. The Company has entered into a multi-year program agreement with Chase whereby Kohl’s will continue to handle all customer service functions and will continue to be responsible for all advertising and marketing related to its credit card customers. In return for these services, Kohl’s will receive on-going payments related to the profitability of the program.
Share Repurchase
During the first quarter, Kohl’s board of directors authorized a $2 billion share repurchase program. The Company expects to execute this share repurchase program primarily in open market transactions, subject to market conditions, and expects to complete the program in approximately two to three years.
Earnings Guidance
As a result of its first quarter performance and the benefit of the investment of the proceeds from the sale of the receivables, the Company is raising its full-year earnings guidance from $2.74 to $2.87 per diluted share to $2.91 to $3.02 per diluted share for fiscal 2006. This would result in an increase in earnings per share of 20 percent to 24 percent over last year. The Company issued guidance for the second fiscal quarter of $0.61 to $0.64 per diluted share.
Expansion Update
During the first quarter, the Company successfully opened 17 new stores, including its entry into the Portland, OR market with four stores.
The Company now operates 749 stores in 43 states, compared with 669 stores in 40 states at the same time last year.
The Company will open the balance of its planned 85 stores for 2006 in the third and fourth quarters. The Company will make its initial entry into the state of Washington with stores in the Seattle market and will continue its expansion into Florida.
First Quarter Earnings Conference Call
Investors will have the opportunity to listen to the first quarter earnings conference call today at 5:00 PM (EDT) 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 June 10, 2006. To access this replay, simply dial (630) 652-3018, and use Pass Code: 14332432#.
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 guidance on the Company’s targeted sales and earnings. 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.
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)
(Unaudited)
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | 13 Weeks Ended |
| | |
April 29, 2006 |
% to Net Sales |
April 30, 2005 |
% to Net Sales |
| | | | | | | | | |
Net sales | | $ 3,184.7 | | | | $ 2,742.8 | | |
Cost of merchandise sold | 2,036.5 | | 63.9% | | 1,759.6 | | 64.2% |
| | | | | | | | | |
Gross margin | 1,148.2 | | 36.1% | | 983.2 | | 35.8% |
| | | | | | | | |
Operating expenses: | | | | | | | |
Selling, general and administrative | 761.7 | | 23.9% | | 672.9 | | 24.5% |
Depreciation and amortization | 93.3 | | 2.9% | | 80.0 | | 2.9% |
Preopening expenses | 11.0 | | 0.4% | | 12.6 | | 0.5% |
| | | | | | | | | |
Operating income | 282.2 | | 8.9% | | 217.7 | | 7.9% |
| | | | | | | | | |
Interest expense, net | 14.2 | | 0.5% | | 17.2 | | 0.6% |
| | | | | | | | | |
Income before income taxes | 268.0 | | 8.4% | | 200.5 | | 7.3% |
Provision for income taxes | 100.8 | | 3.1% | | 75.8 | | 2.8% |
| | | | | | | | | |
Net income | | $ 167.2 | | 5.3% | | $ 124.7 | | 4.5% |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
Basic net income per share | $ 0.48 | | | | $ 0.36 | | |
Avg. number of shares | | 345.3 | | | | 343.5 | | |
| | | | | | | | | |
Diluted net income per share | | $ 0.48 | | | | $ 0.36 | | |
Avg. number of shares | | 347.3 | | | | 345.9 | | |
| | | | | | | | | |
| | | | | | | | |
Kohl's Corporation |
Condensed Consolidated Statements of Cash Flows |
(In Thousands) (Unaudited) |
Subject to Reclassification |
| | | | | | | | | |
| | | | | | | 13 Weeks Ended |
| | | | | | |
April 29, 2006 | |
April 30, 2005 |
Operating activities | | | | | | |
Net income | | | | | $ 167,245 | | $ 124,734 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | |
| | Depreciation and amortization | | | 93,407 | | 80,189 |
| | Amortization of debt discount | | | 36 | | 53 |
| | Deferred income taxes | | | 19,709 | | 47,775 |
| | Share-based compensation | | 9,918 | | 9,608 |
| | Excess tax benefits from share-based compensation | | (6,952) | | (3,564) |
| | Changes in operating assets and liabilities: | | | | |
| | Accounts receivable, net | | | 1,652,065 | | 80,329 |
| | Merchandise inventories | | | (110,323) | | (165,776) |
| | Other current and long-term assets | | | (95,895) | | (58,766) |
| | Accounts payable | | | 38,720 | | (17,912) |
| | Accrued and other long-term liabilities | | 47,453 | | (88,068) |
| | Income taxes payable | | | | (65,798) | | (117,657) |
| | | | | | | | | |
Net cash provided by (used in) operating activities | | | 1,749,585 | | (109,055) |
Investing activities | | | | | | | |
Acquisition of property and equipment and favorable lease rights | | | (280,635) | |
(176,332) |
Net (purchases) sales of short-term investments | | | (1,241,059) | | 88,767 |
Other | | | (2,576) | | (233) |
Net cash used in investing activities | |
(1,524,270) | |
(87,798) |
Financing activities | | | | | | |
Proceeds from short-term debt | | | 0 | | 175,000 |
Net borrowing under credit facilities | | | 0 | | 15,000 |
Repayments of other long-term debt, net | | | (101,689) | | (1,020) |
Excess tax benefits from share-based compensation | | | 6,952 | | 3,564 |
Treasury stock purchases | | | (77,247) | | 0 |
Proceeds from issuances of common shares | | | 15,032 | | 7,321 |
| | | | | | | | | |
Net cash (used in) provided by financing activities | | (156,952) | | 199,865 |
Net increase in cash and cash equivalents | | 68,363 | | 3,012 |
Cash and cash equivalents at beginning of period | | 126,839 | | 116,717 |
| | | | | | | | | |
Cash and cash equivalents at end of period | | | $ 195,202 | | $ 119,729 |
| | | | | |
Kohl's Corporation |
Condensed Consolidated Balance Sheets |
(In Thousands) (Unaudited) |
Subject to Reclassification |
| | | | | | |
| | | |
April 29, 2006 | |
April 30, 2005 |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ 195,202 | | $ 119,729 |
Short-term investments | | 1,401,136 | | 0 |
Accounts receivable trade, net | | 0 | | 1,309,303 |
Merchandise inventories | | | 2,347,891 | | 2,112,753 |
Deferred income taxes | | | 0 | | 3,322 |
Other current assets | | | 176,129 | | 106,060 |
Total current assets | | | 4,120,358 | | 3,651,167 |
| | | | | | |
Property and equipment, net | | 4,791,447 | | 4,179,569 |
Favorable lease rights, net | | 209,225 | | 221,775 |
Goodwill | | | 9,338 | | 9,338 |
Other assets | | | 52,500 | | 38,729 |
Total assets | | | $ 9,182,868 | | $ 8,100,578 |
| | | | | | |
Liabilities and Shareholders' Equity | | | | |
| | | | | | |
Current liabilities: | | | | | |
Accounts payable | | | $ 868,691 | | $ 686,743 |
Accrued liabilities | | | 662,954 | | 477,720 |
Income taxes payable | | | 94,158 | | 55,961 |
Deferred income taxes | | | 3,210 | | 0 |
Short-term debt | | | 0 | | 190,000 |
Current portion of long-term debt and capital leases | | 8,440 | | 105,038 |
Total current liabilities | | | 1,637,453 | | 1,515,462 |
| | | | | | |
Long-term debt and capital leases | | | 1,043,952 | | 1,018,033 |
Deferred income taxes | | | 210,623 | | 226,428 |
Other long-term liabilities | | 211,457 | | 161,490 |
Shareholders’ equity | | | 6,079,383 | | 5,179,165 |
Total liabilities and shareholders’ equity | $ 9,182,868 | | $ 8,100,578 |
