Exhibit 99.1
National & Retail Trades and First Call, Release: August 16, 2007 at 4:00 PM (EDT)
KOHL'S CORPORATION REPORTS 20.3 PERCENT INCREASE IN SECOND
QUARTER EARNINGS PER SHARE OF $0.83
Management Raises FY 2007 Guidance
MENOMONEE FALLS, WI … August 16/BUSINESS WIRE/Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported net sales and earnings for the second quarter ended August 4, 2007.
Kohl’s Corporation second quarter earnings per diluted share increased 20.3 percent to $0.83 from $0.69 in last year’s period. Net income was $269.2 million compared with $232.4 million a year ago, an increase of 15.9 percent. Net sales increased to $3.6 billion from $3.3 billion a year ago, an increase of 8.7 percent for the quarter. Comparable store sales increased 1.3 percent for the same period.
For the six months ended August 4, 2007, net income increased 19.7 percent to $478.2 million or $1.48 per diluted share, compared to $399.6 million or $1.17 per diluted share for the six months ended July 29, 2006. Net sales increased 10.2 percent to $7.2 billion from $6.5 billion a year ago. Comparable store sales increased 2.5 percent for the same period.
Larry Montgomery, Kohl’s chairman and chief executive officer, said, “After a strong start to the quarter in May, our sales performance was affected by the performance of our seasonal businesses in June and July. Strength in our other businesses remained consistent and our early read on back-to-school is positive. We continue to achieve improvement in our operating margin in excess of both our short-term and long-range goals.”
Montgomery added, “I am very proud of our associates and the role they played in delivering these results 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.”
Earnings Guidance
The Company issued its initial guidance for the third and fourth quarter of fiscal 2007. Assuming a comparable sales increase of 2% to 4%, the Company would expect earnings per diluted share of $0.67 to $0.71 in the third quarter. For the fourth quarter, assuming comparable sales of 1% to 3%, the Company would expect earnings per diluted share of $1.63 to $1.69. This would result in earnings per diluted share of $3.77 to $3.87 for fiscal 2007 versus its previous guidance of $3.75 to $3.87 per diluted share.
Expansion Update
During the first half of the 2007 fiscal year, the Company successfully opened 17 new stores, including its entry into the Idaho market with three stores.
The Company now operates 834 stores in 46 states, compared with 749 stores in 43 states at the same time last year.
The Company will open 95 stores in the third and fourth quarters for a total of 112 new stores for fiscal 2007.
Second Quarter Earnings Conference Call
Investors will have the opportunity to listen to the conference call scheduled for 5:00 PM EDT on August 16 by dialing (913) 905-3179 (Pass Code: 3406251) ten minutes prior to the start of the call. A replay of the conference call will be accessible from 8 PM EDT August 16 through midnight September 14, 2007, by dialing (719) 457-0820 (Pass Code: 3406251).
In addition, the call will be web cast live over the Internet through the Company’s web site located athttp://www.kohls.com (see “Investor Relations” / “Calendar of Events”), or through Premiere Global’s web site athttps://cis.premconf.com/sc/scw.dll/usr?cid=vlllrcrxrdzvsnsns. 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. The web cast will be available for 30 days on both web sites.
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 SE C.
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)
Subject to Reclassification
| | | | | | | | | | | | | | | |
| | | | | Three Months | | Six Months |
| | | | | (13 Weeks) Ended | | (26 Weeks) Ended |
| | | | | | % to | | | % to | | | % to | | | % to |
| | | | | | | | | | | |
| August 4, | Net | | July 29, | Net | | August 4, | Net | | July 29, | Net |
| 2007 | Sales | | 2006 | Sales | | 2007 | Sales | | 2006 | Sales |
| | | | | | | | | | | |
Net sales | $ 3,589.2 | | | $ 3,301.5 | | | $ 7,161.3 | | | $ 6,497.8 | |
Cost of merchandise sold | 2,192.8 | 61.1% | | 2,062.2 | 62.5% | | 4,447.1 | 62.1% | | 4,103.1 | 63.1% |
| | | | | | | | | | | |
Gross margin | 1,396.4 | 38.9% | | 1,239.3 | 37.5% | | 2,714.2 | 37.9% | | 2,394.7 | 36.9% |
| | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | |
| | | | | | | | | | | |
Selling, general, and administrative | 837.8 | 23.3% | | 759.8 | 23.0% | | 1,696.3 | 23.7% | | 1,528.6 | 23.5% |
Depreciation and amortization | 106.2 | 3.0% | | 96.1 | 2.9% | | 210.8 | 3.0% | | 189.4 | 3.0% |
Preopening expenses | 8.7 | 0.2% | | 8.0 | 0.2% | | 17.3 | 0.2% | | 19.1 | 0.3% |
| | | | | | | | | | | |
Operating income | 443.7 | 12.4% | | 375.4 | 11.4% | | 789.8 | 11.0% | | 657.6 | 10.1% |
| | | | | | | | | | | |
Interest expense, net | 10.5 | 0.3% | | 6.0 | 0.2% | | 20.7 | 0.3% | | 20.2 | 0.3% |
| | | | | | | | | | | |
Income before income taxes | 433.2 | 12.1% | | 369.4 | 11.2% | | 769.1 | 10.7% | | 637.4 | 9.8% |
Provision for income taxes | 164.0 | 4.6% | | 137.0 | 4.2% | | 290.9 | 4.0% | | 237.8 | 3.7% |
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income | $ 269.2 | 7.5% | | $ 232.4 | 7.0% | | $ 478.2 | 6.7% | | $ 399.6 | 6.1% |
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic net income per share | $ 0.84 | | | $ 0.70 | | | $ 1.49 | | | $ 1.18 | |
Average number of shares | 320.5 | | | 333.4 | | | 321.1 | | | 339.3 | |
| | | | | | | | | | | |
Diluted net income per share | $ 0.83 | | | $ 0.69 | | | $ 1.48 | | | $ 1.17 | |
Average number of shares | 323.2 | | | 335.7 | | | 324.2 | | | 341.6 | |
Kohl’s Corporation
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
Subject to Reclassification
| | | | |
| | Six Months |
| | (26 Weeks) Ended |
| | August 4, | | July 29, |
| | 2007 | | 2006 |
| | | | |
Operating activities | | | |
Net income | $ 478,177 | | $ 399,602 |
Adjustments to reconcile net income to net cash | | | |
provided by operating activities | | | |
| Depreciation and amortization | 211,100 | | 189,645 |
| Amortization of debt discount | 108 | | 108 |
| Share-based compensation | 25,005 | | 21,086 |
| Excess tax benefits from share-based compensation | (6,857) | | (13,548) |
| Deferred income taxes | (3,589) | | 9,279 |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable, net | - | | 1,652,065 |
| Merchandise inventories | (229,781) | | (170,581) |
| Other current and long-term assets | (35,393) | | (74,830) |
| Accounts payable | 140,852 | | 182,203 |
| Accrued and other long-term liabilities | 160,930 | | 122,775 |
| Income taxes | (93,184) | | (49,131) |
| | | | |
Net cash provided by operating activities | 647,368 | | 2,268,673 |
| | | | |
Investing activities | | | |
Acquisition of property and equipment | | | |
| and favorable lease rights | (1,035,007) | | (706,489) |
Purchases of short-term investments | (2,933,527) | | (6,595,769) |
Sales of short-term investments | 3,329,201 | | 6,236,570 |
Proceeds from sale of property, plant and equipment | 28,700 | | - |
Other | (1,905) | | (2,566) |
| | | | |
Net cash used in investing activities | (612,538) | | (1,068,254) |
| | | | |
Financing activities | | | |
Net borrowings under credit facilities | 295,000 | | - |
Payments of other long-term debt | (13,961) | | (104,596) |
Treasury stock purchases | (374,362) | | (1,100,809) |
Excess tax benefits from share-based compensation | 6,857 | | 13,548 |
Proceeds from stock option exercises | 92,387 | | 27,406 |
| | | | |
Net cash provided by (used in) financing activities | 5,921 | | (1,164,451) |
| | | | |
Net increase in cash and cash equivalents | 40,751 | | 35,968 |
Cash and cash equivalents at beginning of period | 189,170 | | 126,839 |
| | | | |
Cash and cash equivalents at end of period | $ 229,921 | | $ 162,807 |
| | | | |
Kohl’s Corporation
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
Subject to Reclassification
| | | | | |
| August 4, | | July 29, |
| 2007 | | 2006 |
| | | |
Assets | | | |
Current assets: | | | |
| Cash and cash equivalents | $ 229,921 | | $162,807 |
| Short-term investments | 35,556 | | 519,276 |
| Merchandise inventories | 2,817,880 | | 2,408,149 |
| Deferred income taxes | 46,733 | | 10,591 |
| Other current assets | 159,123 | | 156,372 |
| | | | | |
| | Total current assets | 3,289,213 | | 3,257,195 |
| | | | | |
Property and equipment, net | 6,190,119 | | 5,104,521 |
Favorable lease rights, net | 213,554 | | 226,108 |
Goodwill | 9,338 | | 9,338 |
Other assets | 60,978 | | 51,504 |
| | | | | |
| | Total assets | $ 9,763,202 | | $ 8,648,666 |
| | | | | |
| | | | | |
Liabilities and Shareholders' Equity | | | |
Current liabilities: | | | |
| Accounts payable | $ 1,075,228 | | $ 1,012,174 |
| Accrued liabilities | 870,703 | | 731,008 |
| Income taxes payable | 133,223 | | 104,229 |
| Short-term debt | 295,000 | | - |
| Current portion of long-term debt and capital leases | 10,866 | | 8,243 |
| | | | | |
| | Total current liabilities | 2,385,020 | | 1,855,654 |
| | | | | |
Long-term debt and capital leases | 1,040,847 | | 1,041,314 |
Deferred income taxes | 246,484 | | 213,994 |
Other long-term liabilities | 258,388 | | 219,199 |
Shareholders' equity | 5,832,463 | | 5,318,505 |
| | | | | |
| | Total liabilities and shareholders' equity | $ 9,763,202 | | $ 8,648,666 |
