Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Feb. 03, 2018 | Mar. 14, 2018 | Jul. 28, 2017 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Feb. 3, 2018 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | KSS | ||
Entity Registrant Name | KOHLS CORP | ||
Entity Central Index Key | 885,639 | ||
Current Fiscal Year End Date | --02-03 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 168,236,899 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 7 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Feb. 03, 2018 | Jan. 28, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 1,308 | $ 1,074 |
Merchandise inventories | 3,542 | 3,795 |
Other | 481 | 378 |
Total current assets | 5,331 | 5,247 |
Property and equipment, net | 7,773 | 8,103 |
Other assets | 236 | 224 |
Total assets | 13,340 | 13,574 |
Current liabilities: | ||
Accounts payable | 1,271 | 1,507 |
Accrued liabilities | 1,155 | 1,224 |
Income taxes payable | 99 | 112 |
Current portion of capital lease and financing obligations | 126 | 131 |
Total current liabilities | 2,651 | 2,974 |
Long-term debt | 2,797 | 2,795 |
Capital lease and financing obligations | 1,591 | 1,685 |
Deferred income taxes | 213 | 272 |
Other long-term liabilities | 662 | 671 |
Shareholders’ equity: | ||
Common stock - 373 and 371 million shares issued | 4 | 4 |
Paid-in capital | 3,078 | 3,003 |
Treasury stock, at cost, 205 and 197 million shares | (10,651) | (10,338) |
Accumulated other comprehensive loss | (11) | (14) |
Retained earnings | 13,006 | 12,522 |
Total shareholders’ equity | 5,426 | 5,177 |
Total liabilities and shareholders’ equity | $ 13,340 | $ 13,574 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares shares in Millions | Feb. 03, 2018 | Jan. 28, 2017 |
Statement Of Financial Position [Abstract] | ||
Common stock, shares issued | 373 | 371 |
Treasury stock, shares | 205 | 197 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Statement [Abstract] | |||
Net sales | $ 19,095 | $ 18,686 | $ 19,204 |
Cost of merchandise sold | 12,176 | 11,944 | 12,265 |
Gross margin | 6,919 | 6,742 | 6,939 |
Operating expenses: | |||
Selling, general and administrative | 4,512 | 4,435 | 4,452 |
Depreciation and amortization | 991 | 938 | 934 |
Impairments, store closing and other costs | 186 | ||
Operating income | 1,416 | 1,183 | 1,553 |
Interest expense, net | 299 | 308 | 327 |
Loss on extinguishment of debt | 169 | ||
Income before income taxes | 1,117 | 875 | 1,057 |
Provision for income taxes | 258 | 319 | 384 |
Net income | $ 859 | $ 556 | $ 673 |
Net income per share: | |||
Basic | $ 5.14 | $ 3.12 | $ 3.48 |
Diluted | $ 5.12 | $ 3.11 | $ 3.46 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | [1] | Retained Earnings [Member] |
Beginning Balance at Jan. 31, 2015 | $ 5,991 | $ 4 | $ 2,743 | $ (8,744) | $ (20) | $ 12,008 | |
Beginning Balance (in shares) at Jan. 31, 2015 | 367 | (166) | |||||
Comprehensive income | 676 | 3 | 673 | ||||
Stock options and awards, net of tax | 174 | 201 | $ (27) | ||||
Stock options and awards, (in shares) | 3 | (1) | |||||
Dividends paid ($1.80 in 2016, $2.00 in 2017, and $2.20 in 2018) per common share) | (349) | $ 3 | (352) | ||||
Treasury stock purchases | (1,001) | $ (1,001) | |||||
Treasury stock purchases, (in shares) | (17) | ||||||
Ending Balance at Jan. 30, 2016 | 5,491 | $ 4 | 2,944 | $ (9,769) | (17) | 12,329 | |
Ending Balance (in shares) at Jan. 30, 2016 | 370 | (184) | |||||
Comprehensive income | 559 | 3 | 556 | ||||
Stock options and awards, net of tax | 42 | 59 | $ (17) | ||||
Stock options and awards, (in shares) | 1 | ||||||
Dividends paid ($1.80 in 2016, $2.00 in 2017, and $2.20 in 2018) per common share) | (358) | 5 | (363) | ||||
Treasury stock purchases | (557) | $ (557) | |||||
Treasury stock purchases, (in shares) | (13) | ||||||
Ending Balance at Jan. 28, 2017 | 5,177 | $ 4 | 3,003 | $ (10,338) | (14) | 12,522 | |
Ending Balance (in shares) at Jan. 28, 2017 | 371 | (197) | |||||
Comprehensive income | 862 | 3 | 859 | ||||
Stock options and awards, net of tax | 61 | 75 | $ (14) | ||||
Stock options and awards, (in shares) | 2 | ||||||
Dividends paid ($1.80 in 2016, $2.00 in 2017, and $2.20 in 2018) per common share) | (368) | 7 | (375) | ||||
Treasury stock purchases | (306) | $ (306) | |||||
Treasury stock purchases, (in shares) | (8) | ||||||
Ending Balance at Feb. 03, 2018 | $ 5,426 | $ 4 | $ 3,078 | $ (10,651) | $ (11) | $ 13,006 | |
Ending Balance (in shares) at Feb. 03, 2018 | 373 | (205) | |||||
[1] | Includes loss on interest rate derivative and reclassification adjustment for interest expense included in net income |
CONSOLIDATED STATEMENT OF CHAN6
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Statement Of Stockholders Equity [Abstract] | |||
Dividends declared and paid per share | $ 2.20 | $ 2 | $ 1.80 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Operating activities | |||
Net income | $ 859 | $ 556 | $ 673 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 991 | 938 | 934 |
Share-based compensation | 55 | 41 | 48 |
Deferred income taxes | (61) | 13 | (38) |
Other non-cash expenses, net | 2 | 30 | 24 |
Impairments, store closing and other costs | 0 | 57 | 0 |
Loss on extinguishment of debt | 0 | 0 | 169 |
Changes in operating assets and liabilities: | |||
Merchandise inventories | 264 | 249 | (215) |
Other current and long-term assets | (83) | (45) | 43 |
Accounts payable | (236) | 256 | (260) |
Accrued and other long-term liabilities | (50) | 81 | 53 |
Income taxes | (50) | (23) | 53 |
Net cash provided by operating activities | 1,691 | 2,153 | 1,484 |
Investing activities | |||
Acquisition of property and equipment | (672) | (768) | (690) |
Other | 23 | 12 | 9 |
Net cash used in investing activities | (649) | (756) | (681) |
Financing activities | |||
Treasury stock purchases | (306) | (557) | (1,001) |
Shares withheld for taxes on vested restricted shares | (14) | (17) | (27) |
Dividends paid | (368) | (358) | (349) |
Debt refinancing, net | 0 | 0 | (160) |
Capital lease and financing obligation payments | (138) | (127) | (114) |
Proceeds from stock option exercises | 18 | 18 | 147 |
Proceeds from financing obligations | 0 | 11 | 1 |
Net cash used in financing activities | (808) | (1,030) | (1,503) |
Net increase (decrease) in cash and cash equivalents | 234 | 367 | (700) |
Cash and cash equivalents at beginning of period | 1,074 | 707 | 1,407 |
Cash and cash equivalents at end of period | 1,308 | 1,074 | 707 |
Supplemental information | |||
Interest paid, net of capitalized interest | 297 | 299 | 318 |
Income taxes paid | 272 | 314 | 372 |
Non-cash investing and financing activities | |||
Property and equipment acquired through additional liabilities | $ 42 | $ 54 | $ 63 |
Business and Summary of Account
Business and Summary of Accounting Policies | 12 Months Ended |
Feb. 03, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business and Summary of Accounting Policies | 1. Business and Summary of Accounting Policies Business As of February 3, 2018, we operated 1,158 department stores, a website (www.Kohls.com), 12 FILA outlets, and four Off-Aisle clearance centers. Our Kohl's stores and website sell moderately-priced proprietary and national brand apparel, footwear, accessories, beauty and home products. Our Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences. Our website includes merchandise which is available in our stores, as well as merchandise which is available only online. Our authorized capital stock consists of 800 million shares of $0.01 par value common stock and 10 million shares of $0.01 par value preferred stock. Consolidation The consolidated financial statements include the accounts of Kohl’s Corporation and its subsidiaries including Kohl’s Department Stores, Inc., its primary operating company. All intercompany accounts and transactions have been eliminated. Accounting Period Our fiscal year ends on the Saturday closest to January 31 st Fiscal year Ended Number of Weeks 2017 February 3, 2018 53 2016 January 28, 2017 52 2015 January 30, 2016 52 Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents In addition to money market investments, cash equivalents include commercial paper and certificates of deposit with original maturities of three months or less. We carry these investments at cost which approximates fair value. Also included in cash and cash equivalents are amounts due from credit card transactions with settlement terms of less than five days. Credit and debit card receivables included within cash were $83 million at February 3, 2018 and $81 million at January 28, 2017. Merchandise Inventories Merchandise inventories are valued at the lower of cost or market with cost determined on the first-in, first-out (“FIFO”) basis using the retail inventory method (“RIM”). Under RIM, the valuation of inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value inventory. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory. We would record an additional reserve if the future estimated selling price is less than cost. Property and Equipment Property and equipment consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Land $ 1,115 $ 1,118 Buildings and improvements: Owned 8,062 8,004 Leased 1,813 1,801 Fixtures and equipment 1,700 1,711 Information technology 2,337 1,939 Construction in progress 152 318 Total property and equipment, at cost 15,179 14,891 Less accumulated depreciation and amortization (7,406 ) (6,788 ) Property and equipment, net $ 7,773 $ 8,103 Construction in progress includes property and equipment which is not ready for its intended use. Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leased property and improvements to leased property are amortized on a straight-line basis over the term of the lease or useful life of the asset, whichever is less. The annual provisions for depreciation and amortization generally use the following ranges of useful lives: Buildings and improvements 5-40 years Fixtures and equipment 3-15 years Information technology 3-8 years Store Closure and Restructure Reserve The following table summarizes changes in the store closure and restructure reserve during 2017: (Dollars in Millions) Store Lease Obligations Severance Total Balance - January 28, 2017 $ 103 $ 3 $ 106 Payments (10 ) (3 ) (13 ) Reversals (6 ) — (6 ) Balance - February 3, 2018 $ 87 $ — $ 87 Long-Lived Assets All property and equipment and other long-lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than the carrying value of the assets. A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets. No material impairments were recorded in 2017 or 2015 as a result of the tests performed. An impairment relating to store closures was recorded in 2016. Accrued Liabilities Accrued liabilities consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Gift cards and merchandise return cards $ 330 $ 329 Sales, property and use taxes 151 183 Payroll and related fringe benefits 173 147 Credit card liabilities 125 67 Other 376 498 Accrued liabilities $ 1,155 $ 1,224 Self-Insurance We use a combination of insurance and self-insurance for a number of risks. We retain the initial risk of $500,000 per occurrence in workers’ compensation claims and $250,000 per occurrence in general liability claims. We record reserves for workers’ compensation and general liability claims which include the total amounts that we expect to pay for a fully developed loss and related expenses, such as fees paid to attorneys, experts and investigators. We are fully self-insured for employee-related health care benefits, a portion of which is paid by our associates. We use a third-party actuary to estimate the liabilities associated with workers’ compensation, general liability and employee-related health care risks. These liabilities include amounts for both reported claims and incurred, but not reported losses. Total liabilities for these risks were $53 million as of February 2, 2018 and $65 million as of January 28, 2017. Our self-insured retention for property losses differs based on the type of claim. For catastrophic claims such as earthquakes, floods and windstorms, the retained amount varies from 2 - 5% of the insurance claim. For other standard claims, such as fire and building damages, we are self-insured for the first $250,000 per occurrence of the property loss. Treasury Stock We account for repurchases of common stock and shares withheld in lieu of taxes when restricted stock vests using the cost method with common stock in treasury classified in the Consolidated Balance Sheets as a reduction of shareholders’ equity. Other Comprehensive Income The tax effects of interest rate derivatives included in other comprehensive income are as follows: (Dollars in Millions) 2017 2016 2015 Before-tax amounts $ 5 $ 5 $ 5 Tax expense (2 ) (2 ) (2 ) After-tax amounts $ 3 $ 3 $ 3 Revenue Recognition Revenue from the sale of merchandise is recognized when received by the customer, net of any returns. Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales taxes. Revenue from Kohl's gift card sales is recognized upon gift card redemption. Income from unredeemed cards (breakage) is recorded in proportion and over the time period gift cards are actually redeemed. Cost of Merchandise Sold and Selling, General and Administrative Expenses The following table illustrates the primary costs classified in Cost of Merchandise Sold and Selling, General and Administrative Expenses: Cost of Merchandise Sold Selling, General and Administrative Expenses • Total cost of products sold including product development costs, net of vendor payments other than reimbursement of specific, incremental and identifiable costs • Inventory shrink • Markdowns • Freight expenses associated with moving merchandise from our vendors to our distribution centers • Shipping and handling expenses of digital sales • Terms cash discount • Depreciation of product development facilities and equipment • Compensation and benefit costs including: • Stores • Corporate headquarters, including buying and merchandising • Distribution centers • Occupancy and operating costs of our retail, distribution and corporate facilities • Net revenues from the Kohl’s credit card program • Freight expenses associated with moving merchandise from our distribution centers to our retail stores and between distribution and retail facilities • Marketing expenses, offset by vendor payments for reimbursement of specific, incremental and identifiable costs • Other non-operating revenues and expenses The classification of these expenses varies across the retail industry. Vendor Allowances We receive consideration for a variety of vendor-sponsored programs, such as markdown allowances, volume rebates, and promotion and marketing support. The vendor consideration is recorded as earned either as a reduction of inventory costs or Selling, General and Administrative Expenses. Promotional and marketing allowances are intended to offset our marketing costs to promote vendors’ merchandise. Markdown allowances and volume rebates are recorded as a reduction of inventory costs. Reward Programs We maintain programs in which customers earn rewards, which can be applied to future purchases, based on their spending and other promotional activities. We accrue the cost of anticipated redemptions related to the programs when the rewards are earned on the initial purchase. The costs of the programs are recorded in Cost of Merchandise Sold. Fair Value Fair value measurements are required to be classified and disclosed in one of the following pricing categories: Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques. Current assets and liabilities are reported at cost, which approximate fair value. Leases We lease certain property and equipment used in our operations. We are often involved extensively in the construction of leased stores. In many cases, we are responsible for construction cost over runs or non-standard tenant improvements (e.g. roof or HVAC systems). As a result of this involvement, we are deemed the “owner” for accounting purposes during the construction period, so are required to capitalize the construction costs on our Balance Sheet. Upon completion of the project, we perform a sale-leaseback analysis to determine if we can remove the assets from our Balance Sheet. In many of our leases, we are reimbursed a portion of the construction costs via adjusted rental payments and/or cash payments or have terms which fix the rental payments for a significant percentage of the leased asset’s economic life. These items generally are considered “continuing involvement” which precludes us from derecognizing the assets from our Balance Sheet when construction is complete. In conjunction with these leases, we also record financing obligations equal to the cash proceeds or fair market value of the assets received from the landlord. At the end of the lease term, including exercise of any renewal options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash gain on sale of the property. We do not report rent expense for the properties which are owned for accounting purposes. Rather, rental payments under the lease are recognized as a reduction of the financing obligation and interest expense. Some of our leased property and equipment are recorded as capital leases. These assets are included in property and equipment and depreciated over the term of the lease. We do not report rent expense for capital leases. Rather, rental payments under the lease are recognized as a reduction of the capital lease obligation and interest expense. All other leases are considered operating leases. Assets subject to an operating lease and the related lease payments are not recorded on our Balance Sheet. Rent expense is recognized on a straight-line basis over the expected lease term. The lease term for all types of leases begins on the date we become legally obligated for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an economic penalty. Failure to exercise such options would result in the recognition of accelerated depreciation expense of the related assets. Marketing Marketing costs are expensed when the marketing is first seen. Marketing costs, net of related vendor allowances, are as follows: (Dollars in Millions) 2017 2016 2015 Gross marketing costs $ 1,124 $ 1,164 $ 1,171 Vendor allowances (138 ) (148 ) (160 ) Net marketing costs $ 986 $ 1,016 $ 1,011 Net marketing costs as a percent of net sales 5.2 % 5.4 % 5.3 % Income Taxes Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recorded based on differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We establish valuation allowances for deferred tax assets when we believe it is more likely than not that the asset will not be realizable for tax purposes. We recognize interest and penalty expense related to unrecognized tax benefits in our provision for income tax expense. Net Income Per Share Basic net income per share is net income divided by the average number of common shares outstanding during the period. Diluted net income per share includes incremental shares assumed for share-based awards. The information required to compute basic and diluted net income per share is as follows: (Dollars in Millions, Except per Share Data) 2017 2016 2015 Numerator—net income $ 859 $ 556 $ 673 Denominator—weighted average shares Basic 167 178 193 Impact of dilutive share-based awards (a) 1 1 2 Diluted 168 179 195 Net income per share: Basic $ 5.14 $ 3.12 $ 3.48 Diluted $ 5.12 $ 3.11 $ 3.46 (a) Excludes 2 million share-based awards for 2017, 3 million share-based awards for 2016 and 1 million share-based awards for 2015 as the impact of such awards was antidilutive. Share-Based Awards Stock-based compensation expense is generally recognized on a straight-line basis over the vesting period based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant. Recent Accounting Pronouncements The following table provides a brief description of issued, but not yet effective, accounting standards: Standard Description Effect on our Financial Statements Revenue from Contracts with Customers (ASC Topic 606) Issued May 2014 Effective Q1 2018 The standard eliminates the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replaces it with a principles-based approach for revenue recognition and disclosures. The standard will change the way we account for sales returns, our loyalty program and certain promotional programs. Based on current estimates, we do not expect these provisions of the standard will have a material impact on our financial statements. We have evaluated the principal versus agent provisions of the standard and expect to continue to record sales gross as we are the principal in the transactions. Upon implementation of the new standard, we expect to reclassify approximately $1 billion of net earnings from our credit card operations, which are currently reported in Selling, General and Administrative Expenses, into a newly-created revenue line on the face of our Income Statement. We plan to adopt the standard using the retrospective method and will restate our prior period financials to reflect the standard as if it had always been applicable. Leases (ASC Topic 842) Issued February 2016 Effective Q1 2019 Among other things, the new standard requires us to recognize a right of use asset and a lease liability on our balance sheet for leases. It also changes the presentation and timing of lease-related expenses. Approximately 5% of our store leases and all of our land leases are not currently recorded on our balance sheet. Recording right of use assets and liabilities for these and other non-store leases is expected to have a material impact on our balance sheet. We are also evaluating the impact that recording right of use assets and liabilities will have on our income statement and the financial statement impact that the standard will have on leases which are currently recorded on our balance sheet. |
Debt
Debt | 12 Months Ended |
Feb. 03, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 2. Debt Long-term debt includes the following unsecured senior debt as of February 3, 2018 and January 28, 2017: Maturity (Dollars in Millions) Effective Rate Coupon Rate Outstanding 2021 4.81 % 4.00 % $ 650 2023 3.25 % 3.25 % 350 2023 4.78 % 4.75 % 300 2025 4.25 % 4.25 % 650 2029 7.36 % 7.25 % 99 2033 6.05 % 6.00 % 166 2037 6.89 % 6.88 % 150 2045 5.57 % 5.55 % 450 4.88 % $ 2,815 Long-term debt is net of unamortized debt discounts and deferred financing costs of $18 million at February 3, 2018 and $20 million at January 28, 2017. Our long-term debt is classified as Level 1, financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our long-term debt was $2.9 billion at February 3, 2018 and $2.7 billion at January 28, 2017. On November 3, 2017, we amended and restated our existing $1.0 billion senior unsecured five-year revolving credit facility with various lenders that matures in November 2022. Among other things, the agreement includes a maximum leverage ratio financial covenant (which is consistent with the ratio under our prior credit agreement) and restrictions on liens and subsidiary indebtedness. Our various debt agreements contain covenants including limitations on additional indebtedness and certain financial tests. As of February 3, 2018, we were in compliance with all covenants of the various debt agreements. We also had outstanding trade letters of credit totaling approximately $48 million at February 3, 2018 issued under uncommitted lines with two banks. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Feb. 03, 2018 | |
Leases [Abstract] | |
Lease Commitments | 3. Lease Commitments Rent expense charged to operations was $293 million for 2017, $276 million for 2016, and $279 million for 2015. In addition to rent payments, we are often required to pay real estate taxes, insurance and maintenance costs on leased properties. These items are not included in the future minimum lease payments listed below. Many store leases include multiple renewal options, exercisable at our option, that generally range from four to eight additional five-year periods. Future minimum lease payments at February 3, 2018 were as follows: (Dollars in Millions) Capital Lease and Financing Obligations Operating Leases Fiscal year: 2018 $ 273 $ 259 2019 264 256 2020 247 252 2021 230 247 2022 207 236 Thereafter 2,183 3,873 3,404 $ 5,123 Non-cash gain on future sale of property 474 Amount representing interest (2,161 ) Present value of lease payments $ 1,717 |
Benefit Plans
Benefit Plans | 12 Months Ended |
Feb. 03, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |
Benefit Plans | 4. Benefit Plans We have a defined contribution savings plan covering all full-time and certain part-time associates. Participants in this plan may invest up to 99% of their base compensation, subject to certain statutory limits. We match 100% of the first 5% of each participant’s contribution, subject to certain statutory limits. We also offer a non-qualified deferred compensation plan to a group of executives which provides for pre-tax compensation deferrals up to 75% of salary and 100% of bonus. Deferrals and credited investment returns are 100% vested. The total costs for these benefit plans were $49 million for 2017, $47 million for 2016, and $49 million for 2015. |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 03, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes Deferred income taxes consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Deferred tax liabilities: Property and equipment $ 788 $ 1,226 Merchandise inventories 63 95 Total deferred tax liabilities 851 1,321 Deferred tax assets: Capital lease and financing obligations 445 711 Accrued and other liabilities, including stock-based compensation 106 194 Accrued step rent liability 76 111 Federal benefit on state tax reserves 30 47 Unrealized loss on interest rate swap 5 9 Merchandise inventories — — Total deferred tax assets 662 1,072 Net deferred tax liability $ 189 $ 249 Deferred tax assets included in other long-term assets totaled $24 million as of February 3, 2018 and $23 million as of January 28, 2017. The components of the provision for income taxes were as follows: (Dollars in Millions) 2017 2016 2015 Current federal $ 299 $ 272 $ 397 Current state 26 25 34 Deferred federal (86 ) 16 (35 ) Deferred state 19 6 (12 ) Provision for income taxes $ 258 $ 319 $ 384 On December 22, 2017, H.R. 1, originally the Tax Cuts & Jobs Act (“the Act”), was signed into law making significant changes to the Internal Revenue Code. Changes include a corporate rate decrease from 35% to 21%, effective January 1, 2018, as well as a variety of other changes including the acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. For matters that have not been completed, provisional amounts are recorded to the extent they can be reasonably estimated. We have calculated our best estimate of the impact of the Act in our year end income tax provision in accordance with our understanding of the Act and guidance available as of the date of this filing. For 2017, the reduction in the tax rate is prorated, resulting in a current year statutory federal tax rate of 33.7%. The provisional amount related to the current year federal tax rate reduction and the re-measurement of our deferred tax assets and liabilities is recorded as a total tax benefit of $136 million. This estimate may be impacted as we further analyze available tax accounting methods and elections, state tax conformity to the federal tax changes and guidance issued by regulatory bodies that provide interpretive guidance of the Act. The effective tax rate differs from the amount that would be provided by applying the statutory U.S. corporate tax rate due to the following items: 2017 2016 2015 Federal statutory rate 33.7 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 1.0 2.4 2.1 Re-measurement of deferred tax assets and liabilities (10.9 ) — — Other federal tax credits (0.7 ) (0.9 ) (0.8 ) Effective tax rate 23.1 % 36.5 % 36.3 % The re-measurement of deferred tax assets and liabilities above includes the following impacts: • Revaluation of deferred taxes that existed on December 22, 2017, the enactment date of the Act • Deferred taxes that were created after December 22, 2017. These items were deducted at the federal statutory rate of 33.7%, but will reverse at the newly enacted 21% rate. We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. The federal returns subject to examination are for the 2008 through 2017 tax years. State returns subject to examination vary depending upon the state. Generally, the 2014 through 2017 tax years are subject to state examination. The earliest state open period is 2006. Certain states have proposed adjustments which we are currently appealing. If we do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position. During 2017, we resolved a significant A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: (Dollars in Millions) 2017 2016 Balance at beginning of year $ 149 $ 139 Increases due to: Tax positions taken in prior years — 3 Tax positions taken in current year 18 15 Decreases due to: Tax positions taken in prior years (13 ) — Settlements with taxing authorities (16 ) (6 ) Lapse of applicable statute of limitations (3 ) (2 ) Balance at end of year $ 135 $ 149 Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $33 million at February 3, 2018 and $29 million at January 28, 2017. We had interest and penalty expense of $4 million for 2017, $6 million for 2016, and none for 2015. Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $112 million as of February 3, 2018 and $110 million as of January 28, 2017. It is reasonably possible that our unrecognized tax positions may change within the next 12 months, primarily as a result of ongoing audits. While it is possible that one or more of these examinations may be resolved in the next year, it is not anticipated that a significant impact to the unrecognized tax benefit balance will occur. We have both payables and receivables for current income taxes recorded on our balance sheet. Receivables included in other current assets totaled $62 million as of February 3, 2018 and $27 million as of January 28, 2017. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Feb. 03, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 6. Stock-Based Compensation We currently grant share-based compensation pursuant to the Kohl’s Corporation 2017 Long-Term Compensation Plan, which provides for the granting of various forms of equity-based awards, including nonvested stock, performance share units and options to purchase shares of our common stock, to officers, key employees and directors. As of February 3, 2018, there were 9.0 million shares authorized and 9.1 million shares available for grant under the 2017 Long-Term Compensation Plan. Options and nonvested stock that are surrendered or terminated without issuance of shares are available for future grants. We also have outstanding options which were granted under previous compensation plans. Annual grants are typically made in the first quarter of the fiscal year. Grants to newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the year. Stock Options The majority of stock options granted to employees vest in five equal annual installments. Outstanding options granted to employees after 2005 have a term of seven years. Outstanding options granted to employees prior to 2006 have a term of up to 15 years. Outstanding options granted to directors have a term of 10 years. All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award was estimated using a Black-Scholes option valuation model. The following table summarizes our stock option activity: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Balance at beginning of year 2,350 $ 53.29 3,076 $ 52.65 6,211 $ 52.95 Exercised (359 ) 50.94 (410 ) 46.86 (2,815 ) 52.79 Forfeited/expired (852 ) 58.00 (316 ) 55.39 (320 ) 57.36 Balance at end of year 1,139 $ 50.51 2,350 $ 53.29 3,076 $ 52.65 The intrinsic value of options exercised represents the excess of our stock price at the time the option was exercised over the exercise price and was $3 million in 2017, $2 million in 2016, $52 million in 2015. Additional information related to stock options outstanding and exercisable at February 3, 2018, segregated by exercise price range, is summarized below: (Shares in Thousands) Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 41.24 – $ 50.00 561 1.5 $ 47.73 524 1.5 $ 47.81 $ 50.01 – $ 64.49 578 1.0 53.21 520 0.8 53.16 Balance at end of year 1,139 1.3 $ 50.51 1,044 1.1 $ 50.47 Intrinsic value (in thousands) $ 14,771 $ 13,575 The intrinsic value of outstanding and exercisable stock options represents the excess of our closing stock price on February 3, 2018 ($63.47) over the exercise price multiplied by the applicable number of stock options Nonvested Stock Awards We have also awarded shares of nonvested common stock to eligible key employees and to our Board of Directors. Substantially all awards have restriction periods tied primarily to employment and/or service. Employee awards generally vest over five years. Director awards vest over the term to which the director was elected, generally one year. In lieu of cash dividends, holders of nonvested stock awards are granted restricted stock equivalents which vest consistently with the underlying nonvested stock awards. The fair value of nonvested stock awards is the closing price of our common stock on the date of grant. We may acquire shares from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employee’s unvested stock award. Such shares are then designated as treasury shares. The following table summarizes nonvested stock activity, including restricted stock equivalents issued in lieu of cash dividends: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance at beginning of year 2,163 $ 52.75 2,211 $ 57.37 2,431 $ 52.29 Granted 1,624 39.69 1,128 46.61 955 65.02 Vested (772 ) 52.14 (935 ) 55.54 (957 ) 52.61 Forfeited (204 ) 59.58 (241 ) 55.54 (218 ) 55.16 Balance at end of year 2,811 $ 45.60 2,163 $ 52.75 2,211 $ 57.37 The aggregate fair value of awards at the time of vesting was $40 million in 2017, $52 million in 2016, and $50 million in 2015. Performance Share Units We grant performance-based restricted stock units ("performance share units") to certain executives. The performance measurement period for these performance share units is three fiscal years. The fair market value of the grants are determined using a Monte-Carlo valuation on the date of grant. The actual number of shares which will be earned at the end of the three-year vesting periods will vary based on our cumulative financial performance over the vesting periods. The number of performance share units earned will be modified up or down based on Kohl’s Relative Total Shareholder Return against a defined peer group during the vesting periods. The payouts, if earned, will be settled in Kohl's common stock after the end of each multi-year performance periods. The following table summarizes performance share unit activity by year of grant: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance at beginning of year 512 $ 57.82 357 $ 63.58 221 $ 56.76 Granted 365 40.83 309 47.89 177 70.50 Vested (106 ) 57.58 — — — — Forfeited (111 ) 78.35 (154 ) 59.74 (41 ) 56.71 Balance at end of year 660 $ 44.97 512 $ 57.82 357 $ 63.58 Other Required Disclosures Stock-based compensation expense, other than that included in Impairments, store closing and other costs, is included in Selling, General and Administrative Expenses in our Consolidated Statements of Income. Stock-based compensation expense totaled $55 million for 2017, $44 million for 2016 and $48 million for 2015. At February 3, 2018, we had approximately $98 million of unrecognized share-based compensation expense, which is expected to be recognized over a weighted-average period of 1.5 years. |
Contingencies
Contingencies | 12 Months Ended |
Feb. 03, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Contingencies | 7. Contingencies At any time, we may be subject to investigations, legal proceedings, or claims related to the on-going operation of our business, including claims both by and against us. Such proceedings typically involve claims related to various forms of liability, contract disputes, allegations of violations of laws or regulations or other actions brought by us or others including our employees, consumers, competitors, suppliers or governmental agencies. We routinely assess the likelihood of any adverse outcomes related to these matters on a case by case basis, as well as the potential ranges of losses and fees. We establish accruals for our potential exposure, as appropriate, for significant claims against us when losses become probable and reasonably estimable. Where we are able to reasonably estimate a range of potential losses relating to significant matters, we record the amount within that range that constitutes our best estimate. We also disclose the nature of and range of loss for claims against us when losses are reasonably possible and material. These accruals and disclosures are determined based on the facts and circumstances related to the individual cases and require estimates and judgments regarding the interpretation of facts and laws, as well as the effectiveness of strategies or other factors beyond our control. |
Quarterly Financial Information
Quarterly Financial Information (Unaudited) | 12 Months Ended |
Feb. 03, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information (Unaudited) | 8. Quarterly Financial Information (Unaudited) 2017 (Dollars and Shares in Millions, Except per Share Data) First Second Third Fourth Net sales $ 3,843 $ 4,144 $ 4,332 $ 6,776 Gross margin $ 1,398 $ 1,633 $ 1,595 $ 2,293 Selling, general and administrative expenses $ 975 $ 983 $ 1,095 $ 1,459 Net income $ 66 $ 208 $ 117 $ 468 Basic shares 170 168 166 165 Basic net income per share $ 0.39 $ 1.24 $ 0.70 $ 2.83 Diluted shares 171 168 166 167 Diluted net income per share $ 0.39 $ 1.24 $ 0.70 $ 2.81 2016 (Dollars and Shares in Millions, Except per Share Data) First Second Third Fourth Net sales $ 3,972 $ 4,182 $ 4,327 $ 6,205 Gross margin $ 1,412 $ 1,650 $ 1,607 $ 2,072 Selling, general and administrative expenses $ 1,008 $ 986 $ 1,080 $ 1,360 Impairments, store closing and other costs $ 64 $ 128 $ (6 ) $ — Net income $ 17 $ 140 $ 146 $ 252 Basic shares 183 180 177 174 Basic net income per share $ 0.09 $ 0.77 $ 0.83 $ 1.45 Diluted shares 184 181 177 175 Diluted net income per share $ 0.09 $ 0.77 $ 0.83 $ 1.44 Due to changes in stock prices during the year and timing of share repurchases and issuances, the sum of quarterly net income per share may not equal the annual net income per share. |
Business and Summary of Accou16
Business and Summary of Accounting Policies (Policies) | 12 Months Ended |
Feb. 03, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Business | Business As of February 3, 2018, we operated 1,158 department stores, a website (www.Kohls.com), 12 FILA outlets, and four Off-Aisle clearance centers. Our Kohl's stores and website sell moderately-priced proprietary and national brand apparel, footwear, accessories, beauty and home products. Our Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences. Our website includes merchandise which is available in our stores, as well as merchandise which is available only online. Our authorized capital stock consists of 800 million shares of $0.01 par value common stock and 10 million shares of $0.01 par value preferred stock. |
Consolidation | Consolidation The consolidated financial statements include the accounts of Kohl’s Corporation and its subsidiaries including Kohl’s Department Stores, Inc., its primary operating company. All intercompany accounts and transactions have been eliminated. |
Accounting period | Accounting Period Our fiscal year ends on the Saturday closest to January 31 st Fiscal year Ended Number of Weeks 2017 February 3, 2018 53 2016 January 28, 2017 52 2015 January 30, 2016 52 |
Use of estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and cash equivalents | Cash and Cash Equivalents In addition to money market investments, cash equivalents include commercial paper and certificates of deposit with original maturities of three months or less. We carry these investments at cost which approximates fair value. Also included in cash and cash equivalents are amounts due from credit card transactions with settlement terms of less than five days. Credit and debit card receivables included within cash were $83 million at February 3, 2018 and $81 million at January 28, 2017. |
Merchandise inventories | Merchandise Inventories Merchandise inventories are valued at the lower of cost or market with cost determined on the first-in, first-out (“FIFO”) basis using the retail inventory method (“RIM”). Under RIM, the valuation of inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value inventory. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory. We would record an additional reserve if the future estimated selling price is less than cost. |
Property and equipment | Property and Equipment Property and equipment consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Land $ 1,115 $ 1,118 Buildings and improvements: Owned 8,062 8,004 Leased 1,813 1,801 Fixtures and equipment 1,700 1,711 Information technology 2,337 1,939 Construction in progress 152 318 Total property and equipment, at cost 15,179 14,891 Less accumulated depreciation and amortization (7,406 ) (6,788 ) Property and equipment, net $ 7,773 $ 8,103 Construction in progress includes property and equipment which is not ready for its intended use. Property and equipment is recorded at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Leased property and improvements to leased property are amortized on a straight-line basis over the term of the lease or useful life of the asset, whichever is less. The annual provisions for depreciation and amortization generally use the following ranges of useful lives: Buildings and improvements 5-40 years Fixtures and equipment 3-15 years Information technology 3-8 years |
Store Closure and Restructure Reserve | Store Closure and Restructure Reserve The following table summarizes changes in the store closure and restructure reserve during 2017: (Dollars in Millions) Store Lease Obligations Severance Total Balance - January 28, 2017 $ 103 $ 3 $ 106 Payments (10 ) (3 ) (13 ) Reversals (6 ) — (6 ) Balance - February 3, 2018 $ 87 $ — $ 87 |
Long-lived assets | Long-Lived Assets All property and equipment and other long-lived assets are reviewed for potential impairment when events or changes in circumstances indicate that the asset’s carrying value may not be recoverable. If such indicators are present, it is determined whether the sum of the estimated undiscounted future cash flows attributable to such assets is less than the carrying value of the assets. A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets. No material impairments were recorded in 2017 or 2015 as a result of the tests performed. An impairment relating to store closures was recorded in 2016. |
Accrued liabilities | Accrued Liabilities Accrued liabilities consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Gift cards and merchandise return cards $ 330 $ 329 Sales, property and use taxes 151 183 Payroll and related fringe benefits 173 147 Credit card liabilities 125 67 Other 376 498 Accrued liabilities $ 1,155 $ 1,224 |
Self-insurance | Self-Insurance We use a combination of insurance and self-insurance for a number of risks. We retain the initial risk of $500,000 per occurrence in workers’ compensation claims and $250,000 per occurrence in general liability claims. We record reserves for workers’ compensation and general liability claims which include the total amounts that we expect to pay for a fully developed loss and related expenses, such as fees paid to attorneys, experts and investigators. We are fully self-insured for employee-related health care benefits, a portion of which is paid by our associates. We use a third-party actuary to estimate the liabilities associated with workers’ compensation, general liability and employee-related health care risks. These liabilities include amounts for both reported claims and incurred, but not reported losses. Total liabilities for these risks were $53 million as of February 2, 2018 and $65 million as of January 28, 2017. Our self-insured retention for property losses differs based on the type of claim. For catastrophic claims such as earthquakes, floods and windstorms, the retained amount varies from 2 - 5% of the insurance claim. For other standard claims, such as fire and building damages, we are self-insured for the first $250,000 per occurrence of the property loss. |
Treasury stock | Treasury Stock We account for repurchases of common stock and shares withheld in lieu of taxes when restricted stock vests using the cost method with common stock in treasury classified in the Consolidated Balance Sheets as a reduction of shareholders’ equity. |
Accumulated other comprehensive loss and other comprehensive income (loss) | Other Comprehensive Income The tax effects of interest rate derivatives included in other comprehensive income are as follows: |
Revenue recognition | Revenue Recognition Revenue from the sale of merchandise is recognized when received by the customer, net of any returns. Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales taxes. Revenue from Kohl's gift card sales is recognized upon gift card redemption. Income from unredeemed cards (breakage) is recorded in proportion and over the time period gift cards are actually redeemed. |
Cost of merchandise sold and selling, general and administrative expenses | Cost of Merchandise Sold and Selling, General and Administrative Expenses The following table illustrates the primary costs classified in Cost of Merchandise Sold and Selling, General and Administrative Expenses: Cost of Merchandise Sold Selling, General and Administrative Expenses • Total cost of products sold including product development costs, net of vendor payments other than reimbursement of specific, incremental and identifiable costs • Inventory shrink • Markdowns • Freight expenses associated with moving merchandise from our vendors to our distribution centers • Shipping and handling expenses of digital sales • Terms cash discount • Depreciation of product development facilities and equipment • Compensation and benefit costs including: • Stores • Corporate headquarters, including buying and merchandising • Distribution centers • Occupancy and operating costs of our retail, distribution and corporate facilities • Net revenues from the Kohl’s credit card program • Freight expenses associated with moving merchandise from our distribution centers to our retail stores and between distribution and retail facilities • Marketing expenses, offset by vendor payments for reimbursement of specific, incremental and identifiable costs • Other non-operating revenues and expenses The classification of these expenses varies across the retail industry. |
Vendor allowances | Vendor Allowances We receive consideration for a variety of vendor-sponsored programs, such as markdown allowances, volume rebates, and promotion and marketing support. The vendor consideration is recorded as earned either as a reduction of inventory costs or Selling, General and Administrative Expenses. Promotional and marketing allowances are intended to offset our marketing costs to promote vendors’ merchandise. Markdown allowances and volume rebates are recorded as a reduction of inventory costs. |
Leases | Leases We lease certain property and equipment used in our operations. We are often involved extensively in the construction of leased stores. In many cases, we are responsible for construction cost over runs or non-standard tenant improvements (e.g. roof or HVAC systems). As a result of this involvement, we are deemed the “owner” for accounting purposes during the construction period, so are required to capitalize the construction costs on our Balance Sheet. Upon completion of the project, we perform a sale-leaseback analysis to determine if we can remove the assets from our Balance Sheet. In many of our leases, we are reimbursed a portion of the construction costs via adjusted rental payments and/or cash payments or have terms which fix the rental payments for a significant percentage of the leased asset’s economic life. These items generally are considered “continuing involvement” which precludes us from derecognizing the assets from our Balance Sheet when construction is complete. In conjunction with these leases, we also record financing obligations equal to the cash proceeds or fair market value of the assets received from the landlord. At the end of the lease term, including exercise of any renewal options, the net remaining financing obligation over the net carrying value of the fixed asset will be recognized as a non-cash gain on sale of the property. We do not report rent expense for the properties which are owned for accounting purposes. Rather, rental payments under the lease are recognized as a reduction of the financing obligation and interest expense. Some of our leased property and equipment are recorded as capital leases. These assets are included in property and equipment and depreciated over the term of the lease. We do not report rent expense for capital leases. Rather, rental payments under the lease are recognized as a reduction of the capital lease obligation and interest expense. All other leases are considered operating leases. Assets subject to an operating lease and the related lease payments are not recorded on our Balance Sheet. Rent expense is recognized on a straight-line basis over the expected lease term. The lease term for all types of leases begins on the date we become legally obligated for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an economic penalty. Failure to exercise such options would result in the recognition of accelerated depreciation expense of the related assets. |
Advertising | Marketing Marketing costs are expensed when the marketing is first seen. Marketing costs, net of related vendor allowances, are as follows: (Dollars in Millions) 2017 2016 2015 Gross marketing costs $ 1,124 $ 1,164 $ 1,171 Vendor allowances (138 ) (148 ) (160 ) Net marketing costs $ 986 $ 1,016 $ 1,011 Net marketing costs as a percent of net sales 5.2 % 5.4 % 5.3 % |
Income taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recorded based on differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. We establish valuation allowances for deferred tax assets when we believe it is more likely than not that the asset will not be realizable for tax purposes. We recognize interest and penalty expense related to unrecognized tax benefits in our provision for income tax expense. |
Net income per share | Net Income Per Share Basic net income per share is net income divided by the average number of common shares outstanding during the period. Diluted net income per share includes incremental shares assumed for share-based awards. The information required to compute basic and diluted net income per share is as follows: (Dollars in Millions, Except per Share Data) 2017 2016 2015 Numerator—net income $ 859 $ 556 $ 673 Denominator—weighted average shares Basic 167 178 193 Impact of dilutive share-based awards (a) 1 1 2 Diluted 168 179 195 Net income per share: Basic $ 5.14 $ 3.12 $ 3.48 Diluted $ 5.12 $ 3.11 $ 3.46 (a) Excludes 2 million share-based awards for 2017, 3 million share-based awards for 2016 and 1 million share-based awards for 2015 as the impact of such awards was antidilutive. |
Share-Based Awards | Share-Based Awards Stock-based compensation expense is generally recognized on a straight-line basis over the vesting period based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The following table provides a brief description of issued, but not yet effective, accounting standards: Standard Description Effect on our Financial Statements Revenue from Contracts with Customers (ASC Topic 606) Issued May 2014 Effective Q1 2018 The standard eliminates the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replaces it with a principles-based approach for revenue recognition and disclosures. The standard will change the way we account for sales returns, our loyalty program and certain promotional programs. Based on current estimates, we do not expect these provisions of the standard will have a material impact on our financial statements. We have evaluated the principal versus agent provisions of the standard and expect to continue to record sales gross as we are the principal in the transactions. Upon implementation of the new standard, we expect to reclassify approximately $1 billion of net earnings from our credit card operations, which are currently reported in Selling, General and Administrative Expenses, into a newly-created revenue line on the face of our Income Statement. We plan to adopt the standard using the retrospective method and will restate our prior period financials to reflect the standard as if it had always been applicable. Leases (ASC Topic 842) Issued February 2016 Effective Q1 2019 Among other things, the new standard requires us to recognize a right of use asset and a lease liability on our balance sheet for leases. It also changes the presentation and timing of lease-related expenses. Approximately 5% of our store leases and all of our land leases are not currently recorded on our balance sheet. Recording right of use assets and liabilities for these and other non-store leases is expected to have a material impact on our balance sheet. We are also evaluating the impact that recording right of use assets and liabilities will have on our income statement and the financial statement impact that the standard will have on leases which are currently recorded on our balance sheet. |
Business and Summary of Accou17
Business and Summary of Accounting Policies Loyalty Program (Policies) | 12 Months Ended |
Feb. 03, 2018 | |
Accounting Policies [Abstract] | |
Reward Programs | Reward Programs We maintain programs in which customers earn rewards, which can be applied to future purchases, based on their spending and other promotional activities. We accrue the cost of anticipated redemptions related to the programs when the rewards are earned on the initial purchase. The costs of the programs are recorded in Cost of Merchandise Sold. |
Business and Summary of Accou18
Business and Summary of Accounting Policies Fair Value Measurements (Policies) | 12 Months Ended |
Feb. 03, 2018 | |
Accounting Policies [Abstract] | |
Fair Value | Fair Value Fair value measurements are required to be classified and disclosed in one of the following pricing categories: Level 1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3: Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques. Current assets and liabilities are reported at cost, which approximate fair value. |
Business and Summary of Accou19
Business and Summary of Accounting Policies (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of fiscal period | The following fiscal periods are presented in this report. Fiscal year Ended Number of Weeks 2017 February 3, 2018 53 2016 January 28, 2017 52 2015 January 30, 2016 52 |
Property and equipment | Property and equipment consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Land $ 1,115 $ 1,118 Buildings and improvements: Owned 8,062 8,004 Leased 1,813 1,801 Fixtures and equipment 1,700 1,711 Information technology 2,337 1,939 Construction in progress 152 318 Total property and equipment, at cost 15,179 14,891 Less accumulated depreciation and amortization (7,406 ) (6,788 ) Property and equipment, net $ 7,773 $ 8,103 |
Range of useful lives | The annual provisions for depreciation and amortization generally use the following ranges of useful lives: Buildings and improvements 5-40 years Fixtures and equipment 3-15 years Information technology 3-8 years |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes changes in the store closure and restructure reserve during 2017: (Dollars in Millions) Store Lease Obligations Severance Total Balance - January 28, 2017 $ 103 $ 3 $ 106 Payments (10 ) (3 ) (13 ) Reversals (6 ) — (6 ) Balance - February 3, 2018 $ 87 $ — $ 87 |
Accrued Liabilities | Accrued liabilities consist of the following: (Dollars in Millions) Feb 3, 2018 Jan 28, 2017 Gift cards and merchandise return cards $ 330 $ 329 Sales, property and use taxes 151 183 Payroll and related fringe benefits 173 147 Credit card liabilities 125 67 Other 376 498 Accrued liabilities $ 1,155 $ 1,224 |
Tax Effects of Interest Rate Derivatives in Other Comprehensive (Loss) Income | The tax effects of interest rate derivatives included in other comprehensive income are as follows: |
Advertising | Marketing costs, net of related vendor allowances, are as follows: (Dollars in Millions) 2017 2016 2015 Gross marketing costs $ 1,124 $ 1,164 $ 1,171 Vendor allowances (138 ) (148 ) (160 ) Net marketing costs $ 986 $ 1,016 $ 1,011 Net marketing costs as a percent of net sales 5.2 % 5.4 % 5.3 % |
Net income per share | The information required to compute basic and diluted net income per share is as follows: (Dollars in Millions, Except per Share Data) 2017 2016 2015 Numerator—net income $ 859 $ 556 $ 673 Denominator—weighted average shares Basic 167 178 193 Impact of dilutive share-based awards (a) 1 1 2 Diluted 168 179 195 Net income per share: Basic $ 5.14 $ 3.12 $ 3.48 Diluted $ 5.12 $ 3.11 $ 3.46 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Debt Disclosure [Abstract] | |
Components of long-term debt | Long-term debt includes the following unsecured senior debt as of February 3, 2018 and January 28, 2017: Maturity (Dollars in Millions) Effective Rate Coupon Rate Outstanding 2021 4.81 % 4.00 % $ 650 2023 3.25 % 3.25 % 350 2023 4.78 % 4.75 % 300 2025 4.25 % 4.25 % 650 2029 7.36 % 7.25 % 99 2033 6.05 % 6.00 % 166 2037 6.89 % 6.88 % 150 2045 5.57 % 5.55 % 450 4.88 % $ 2,815 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Leases [Abstract] | |
Schedule Of Future Minimum Lease Payments | Future minimum lease payments at February 3, 2018 were as follows: (Dollars in Millions) Capital Lease and Financing Obligations Operating Leases Fiscal year: 2018 $ 273 $ 259 2019 264 256 2020 247 252 2021 230 247 2022 207 236 Thereafter 2,183 3,873 3,404 $ 5,123 Non-cash gain on future sale of property 474 Amount representing interest (2,161 ) Present value of lease payments $ 1,717 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Income Tax Disclosure [Abstract] | |
Deferred income taxes | Deferred income taxes consist of the following: |
Components of the provision for income tax | The components of the provision for income taxes were as follows: (Dollars in Millions) 2017 2016 2015 Current federal $ 299 $ 272 $ 397 Current state 26 25 34 Deferred federal (86 ) 16 (35 ) Deferred state 19 6 (12 ) Provision for income taxes $ 258 $ 319 $ 384 |
Items affecting statutory corporate tax rate | On December 22, 2017, H.R. 1, originally the Tax Cuts & Jobs Act (“the Act”), was signed into law making significant changes to the Internal Revenue Code. Changes include a corporate rate decrease from 35% to 21%, effective January 1, 2018, as well as a variety of other changes including the acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. For matters that have not been completed, provisional amounts are recorded to the extent they can be reasonably estimated. We have calculated our best estimate of the impact of the Act in our year end income tax provision in accordance with our understanding of the Act and guidance available as of the date of this filing. For 2017, the reduction in the tax rate is prorated, resulting in a current year statutory federal tax rate of 33.7%. The provisional amount related to the current year federal tax rate reduction and the re-measurement of our deferred tax assets and liabilities is recorded as a total tax benefit of $136 million. This estimate may be impacted as we further analyze available tax accounting methods and elections, state tax conformity to the federal tax changes and guidance issued by regulatory bodies that provide interpretive guidance of the Act. The effective tax rate differs from the amount that would be provided by applying the statutory U.S. corporate tax rate due to the following items: 2017 2016 2015 Federal statutory rate 33.7 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 1.0 2.4 2.1 Re-measurement of deferred tax assets and liabilities (10.9 ) — — Other federal tax credits (0.7 ) (0.9 ) (0.8 ) Effective tax rate 23.1 % 36.5 % 36.3 % |
Reconciliation of gross amount of unrecognized tax benefits | A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: (Dollars in Millions) 2017 2016 Balance at beginning of year $ 149 $ 139 Increases due to: Tax positions taken in prior years — 3 Tax positions taken in current year 18 15 Decreases due to: Tax positions taken in prior years (13 ) — Settlements with taxing authorities (16 ) (6 ) Lapse of applicable statute of limitations (3 ) (2 ) Balance at end of year $ 135 $ 149 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of stock option activity | The following table summarizes our stock option activity: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Balance at beginning of year 2,350 $ 53.29 3,076 $ 52.65 6,211 $ 52.95 Exercised (359 ) 50.94 (410 ) 46.86 (2,815 ) 52.79 Forfeited/expired (852 ) 58.00 (316 ) 55.39 (320 ) 57.36 Balance at end of year 1,139 $ 50.51 2,350 $ 53.29 3,076 $ 52.65 |
Stock options outstanding and exercisable by exercise price range | Additional information related to stock options outstanding and exercisable at February 3, 2018, segregated by exercise price range, is summarized below: (Shares in Thousands) Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price $ 41.24 – $ 50.00 561 1.5 $ 47.73 524 1.5 $ 47.81 $ 50.01 – $ 64.49 578 1.0 53.21 520 0.8 53.16 Balance at end of year 1,139 1.3 $ 50.51 1,044 1.1 $ 50.47 Intrinsic value (in thousands) $ 14,771 $ 13,575 |
Summary of nonvested stock activity | The following table summarizes nonvested stock activity, including restricted stock equivalents issued in lieu of cash dividends: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance at beginning of year 2,163 $ 52.75 2,211 $ 57.37 2,431 $ 52.29 Granted 1,624 39.69 1,128 46.61 955 65.02 Vested (772 ) 52.14 (935 ) 55.54 (957 ) 52.61 Forfeited (204 ) 59.58 (241 ) 55.54 (218 ) 55.16 Balance at end of year 2,811 $ 45.60 2,163 $ 52.75 2,211 $ 57.37 |
Performance Share Activity | The following table summarizes performance share unit activity by year of grant: 2017 2016 2015 (Shares in Thousands) Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Balance at beginning of year 512 $ 57.82 357 $ 63.58 221 $ 56.76 Granted 365 40.83 309 47.89 177 70.50 Vested (106 ) 57.58 — — — — Forfeited (111 ) 78.35 (154 ) 59.74 (41 ) 56.71 Balance at end of year 660 $ 44.97 512 $ 57.82 357 $ 63.58 |
Quarterly Financial Informati24
Quarterly Financial Information (Unaudited) (Tables) | 12 Months Ended |
Feb. 03, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Data | 2017 (Dollars and Shares in Millions, Except per Share Data) First Second Third Fourth Net sales $ 3,843 $ 4,144 $ 4,332 $ 6,776 Gross margin $ 1,398 $ 1,633 $ 1,595 $ 2,293 Selling, general and administrative expenses $ 975 $ 983 $ 1,095 $ 1,459 Net income $ 66 $ 208 $ 117 $ 468 Basic shares 170 168 166 165 Basic net income per share $ 0.39 $ 1.24 $ 0.70 $ 2.83 Diluted shares 171 168 166 167 Diluted net income per share $ 0.39 $ 1.24 $ 0.70 $ 2.81 2016 (Dollars and Shares in Millions, Except per Share Data) First Second Third Fourth Net sales $ 3,972 $ 4,182 $ 4,327 $ 6,205 Gross margin $ 1,412 $ 1,650 $ 1,607 $ 2,072 Selling, general and administrative expenses $ 1,008 $ 986 $ 1,080 $ 1,360 Impairments, store closing and other costs $ 64 $ 128 $ (6 ) $ — Net income $ 17 $ 140 $ 146 $ 252 Basic shares 183 180 177 174 Basic net income per share $ 0.09 $ 0.77 $ 0.83 $ 1.45 Diluted shares 184 181 177 175 Diluted net income per share $ 0.09 $ 0.77 $ 0.83 $ 1.44 |
Business and Summary of Accou25
Business and Summary of Accounting Policies (Narrative) (Details) | 3 Months Ended | 12 Months Ended | ||
Feb. 03, 2018USD ($)Store$ / sharesshares | Feb. 03, 2018USD ($)Store$ / sharesshares | Jan. 28, 2017USD ($) | Jan. 30, 2016 | |
Business And Summary Of Accounting Policies [Line Items] | ||||
Number of Stores | Store | 1,158 | 1,158 | ||
Authorized common stock | shares | 800,000,000 | 800,000,000 | ||
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Preferred stock, shares authorized | shares | 10,000,000 | 10,000,000 | ||
Preferred stock, par value | $ / shares | $ 0.01 | $ 0.01 | ||
Weeks in reporting period | P53W | P52W | P52W | |
Credit and debit card receivables | $ 83,000,000 | $ 83,000,000 | $ 81,000,000 | |
Estimated Total Self Insurance Related Liabilities | $ 53,000,000 | 53,000,000 | $ 65,000,000 | |
Deductible as a Percent of Losses, Minimum | 2.00% | |||
Deductible as a percent of losses | 5.00% | |||
Percentage of store leases | 5.00% | |||
ASU No. 2014-09 [Member] | ||||
Business And Summary Of Accounting Policies [Line Items] | ||||
Reclassification of net earnings from credit card operations | 1,000,000,000 | |||
6321 Accident and Health Insurance [Member] | ||||
Business And Summary Of Accounting Policies [Line Items] | ||||
Value of initial insurance risk retained | $ 500,000 | 500,000 | ||
General Liability [Member] | ||||
Business And Summary Of Accounting Policies [Line Items] | ||||
Value of initial insurance risk retained | 250,000 | 250,000 | ||
524126 Direct Property and Casualty Insurance Carriers [Member] | ||||
Business And Summary Of Accounting Policies [Line Items] | ||||
Value of initial insurance risk retained | $ 250,000 | $ 250,000 |
Business and Summary of Accou26
Business and Summary of Accounting Policies Property and Equipment (Details) - USD ($) $ in Millions | Feb. 03, 2018 | Jan. 28, 2017 |
Property, Plant and Equipment [Line Items] | ||
Land | $ 1,115 | $ 1,118 |
Fixtures and equipment | 1,700 | 1,711 |
Information technology | 2,337 | 1,939 |
Construction in progress | 152 | 318 |
Total property and equipment, at cost | 15,179 | 14,891 |
Less accumulated depreciation and amortization | (7,406) | (6,788) |
Property and equipment, net | 7,773 | 8,103 |
Owned | ||
Property, Plant and Equipment [Line Items] | ||
Buildings and Improvements, Gross | 8,062 | 8,004 |
Leased | ||
Property, Plant and Equipment [Line Items] | ||
Investment Building and Improvements, Gross | $ 1,813 | $ 1,801 |
Business and Summary of Accou27
Business and Summary of Accounting Policies Ranges of Useful Lives (Details) | 12 Months Ended |
Feb. 03, 2018 | |
Minimum | Building Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Minimum | Fixtures and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Minimum | Information Technology [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Maximum | Building Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Maximum | Fixtures and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 15 years |
Maximum | Information Technology [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 8 years |
Business and Summary of Accou28
Business and Summary of Accounting Policies Store Closure and Restructure Reserve (Details) $ in Millions | 12 Months Ended |
Feb. 03, 2018USD ($) | |
Restructuring Cost And Reserve [Line Items] | |
Restructuring Reserve | $ 106 |
Payments for Restructuring | (13) |
Restructuring Reserve, Accrual Adjustment | (6) |
Restructuring Reserve | 87 |
Contract Termination [Member] | |
Restructuring Cost And Reserve [Line Items] | |
Restructuring Reserve | 103 |
Payments for Restructuring | (10) |
Restructuring Reserve, Accrual Adjustment | (6) |
Restructuring Reserve | 87 |
Employee Severance [Member] | |
Restructuring Cost And Reserve [Line Items] | |
Restructuring Reserve | 3 |
Payments for Restructuring | $ (3) |
Business and Summary of Accou29
Business and Summary of Accounting Policies Accrued Liabilities (Details) - USD ($) $ in Millions | Feb. 03, 2018 | Jan. 28, 2017 |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Gift cards and merchandise return cards | $ 330 | $ 329 |
Accrued capital | 151 | 183 |
Payroll and related fringe benefits | 173 | 147 |
Credit card liabilities | 125 | 67 |
Other | 376 | 498 |
Accrued liabilities | $ 1,155 | $ 1,224 |
Business and Summary of Accou30
Business and Summary of Accounting Policies Tax Effects of Interest Rate Derivatives in Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Before tax amounts, interest rate derivatives | $ 5 | $ 5 | $ 5 |
Tax (expense) benefit, interest rate derivatives | (2) | (2) | (2) |
After-tax amounts, interest rate derivatives | $ 3 | $ 3 | $ 3 |
Business and Summary of Accou31
Business and Summary of Accounting Policies Adverstising (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||
Advertising Costs Exclusive Of Vendor Allowances | $ 1,124 | $ 1,164 | $ 1,171 |
Allowances Received From Vendors For Advertising Expenses Incurred | (138) | (148) | (160) |
Advertising Expense | $ 986 | $ 1,016 | $ 1,011 |
Net Advertising To Net Sales | 5.20% | 5.40% | 5.30% |
Business and Summary of Accou32
Business and Summary of Accounting Policies Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |||||||||||
Numerator—net income | $ 468 | $ 117 | $ 208 | $ 66 | $ 252 | $ 146 | $ 140 | $ 17 | $ 859 | $ 556 | $ 673 |
Denominator - weighted average shares, Basic | 165 | 166 | 168 | 170 | 174 | 177 | 180 | 183 | 167 | 178 | 193 |
Impact of dilutive share-based awards | 1 | 1 | 2 | ||||||||
Weighted average shares, Diluted | 167 | 166 | 168 | 171 | 175 | 177 | 181 | 184 | 168 | 179 | 195 |
Basic | $ 2.83 | $ 0.70 | $ 1.24 | $ 0.39 | $ 1.45 | $ 0.83 | $ 0.77 | $ 0.09 | $ 5.14 | $ 3.12 | $ 3.48 |
Diluted | $ 2.81 | $ 0.70 | $ 1.24 | $ 0.39 | $ 1.44 | $ 0.83 | $ 0.77 | $ 0.09 | $ 5.12 | $ 3.11 | $ 3.46 |
Excluded options as the impact of such options was antidilutive | 2 | 3 | 1 |
Debt - Components of Long Term
Debt - Components of Long Term Debt (Details) | Nov. 03, 2017USD ($) | Feb. 03, 2018USD ($)Bank | Jan. 28, 2017USD ($) |
Debt Instrument [Line Items] | |||
Unamortized debt discount | $ 18,000,000 | $ 20,000,000 | |
Long-term Debt, Fair Value | 2,900,000,000 | 2,700,000,000 | |
Long-term debt | $ 2,797,000,000 | $ 2,795,000,000 | |
Number of periods funds may withdrawn | 5 years | ||
Borrowings under credit facility | $ 1,000,000,000 | ||
Line of Credit Facility, Description | 1 | ||
Maturity of notes | Nov. 30, 2022 | ||
Trade Letters of Credit and Stand by Letters of Credit | |||
Debt Instrument [Line Items] | |||
Line of credit facility outstanding amount | $ 48,000,000 | ||
Number of Banks With Uncommitted Lines | Bank | 2 | ||
Senior Notes | |||
Debt Instrument [Line Items] | |||
Effective Rate | 4.88% | 4.88% | |
Total senior debt | $ 2,815,000,000 | $ 2,815,000,000 | |
Senior Notes | Senior Notes Due Two Thousand And Twenty One [Member] | |||
Debt Instrument [Line Items] | |||
Effective Rate | 4.81% | 4.81% | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | 4.00% | |
Total senior debt | $ 650,000,000 | $ 650,000,000 | |
Senior Notes | Senior Notes Due Twenty Twenty Three [Member] | |||
Debt Instrument [Line Items] | |||
Effective Rate | 3.25% | 3.25% | |
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | 3.25% | |
Total senior debt | $ 350,000,000 | $ 350,000,000 | |
Senior Notes | Four Point Seven Eight Percent Senior Note Due Twenty Twenty Three [Member] | |||
Debt Instrument [Line Items] | |||
Effective Rate | 4.78% | 4.78% | |
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | 4.75% | |
Total senior debt | $ 300,000,000 | $ 300,000,000 | |
Senior Notes | Senior Notes Due Twenty Twenty Five [Member] | |||
Debt Instrument [Line Items] | |||
Effective Rate | 4.25% | 4.25% | |
Debt Instrument, Interest Rate, Stated Percentage | 4.25% | 4.25% | |
Total senior debt | $ 650,000,000 | $ 650,000,000 | |
Senior Notes | Senior Notes Due 2029 | |||
Debt Instrument [Line Items] | |||
Effective Rate | 7.36% | 7.36% | |
Debt Instrument, Interest Rate, Stated Percentage | 7.25% | 7.25% | |
Total senior debt | $ 99,000,000 | $ 99,000,000 | |
Senior Notes | Senior Notes Due 2033 | |||
Debt Instrument [Line Items] | |||
Effective Rate | 6.05% | 6.05% | |
Debt Instrument, Interest Rate, Stated Percentage | 6.00% | 6.00% | |
Total senior debt | $ 166,000,000 | $ 166,000,000 | |
Senior Notes | Senior Notes Due 2037 | |||
Debt Instrument [Line Items] | |||
Effective Rate | 6.89% | 6.89% | |
Debt Instrument, Interest Rate, Stated Percentage | 6.88% | 6.88% | |
Total senior debt | $ 150,000,000 | $ 150,000,000 | |
Senior Notes | Senior Notes Due 2045 | |||
Debt Instrument [Line Items] | |||
Effective Rate | 5.57% | 5.57% | |
Debt Instrument, Interest Rate, Stated Percentage | 5.55% | 5.55% | |
Total senior debt | $ 450,000,000 | $ 450,000,000 |
Lease Commitments Lease Commitm
Lease Commitments Lease Commitments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Operating Leased Assets [Line Items] | |||
Rent expense charged | $ 293 | $ 276 | $ 279 |
Lease renewal period term | 5 years | ||
Minimum | |||
Operating Leased Assets [Line Items] | |||
Lease renewal period term | 4 years | ||
Maximum | |||
Operating Leased Assets [Line Items] | |||
Lease renewal period term | 8 years |
Lease Commitments Schedule of F
Lease Commitments Schedule of Future Minimum Lease Payments (Details) $ in Millions | Feb. 03, 2018USD ($) |
Leases [Abstract] | |
2018, Operating Leases | $ 259 |
2019, Operating Leases | 256 |
2020, Operating Leases | 252 |
2021, Operating Leases | 247 |
2022, Operating Leases | 236 |
Thereafter, Operating Leases | 3,873 |
Total future payments due, Operating Leases | 5,123 |
2018, Capital Leases and Financing Obligations | 273 |
2019, Capital Leases and Financing Obligations | 264 |
2020, Capital Leases and Financing Obligations | 247 |
2021, Capital Leases and Financing Obligations | 230 |
2022, Capital Leases and Financing Obligations | 207 |
Thereafter, Capital Leases and Financing Obligations | 2,183 |
Total future minimum payments due, Capital Leases and Financing Obligations | 3,404 |
Non-cash gain on future sale of property | 474 |
Amount representing interest | (2,161) |
Present value of lease payments | $ 1,717 |
Benefit Plans Benefit Plans (De
Benefit Plans Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Compensation And Retirement Disclosure [Abstract] | |||
Percentage of maximum investment by participant | 99.00% | ||
Increase in percentage of participants 100% contribution fully matched per participants | 5.00% | ||
Non-qualified deferred compensation plan pre-tax compensation deferrals | 75.00% | ||
Deferrals and credited investment returns vesting percentage | 100.00% | ||
Employee Stock Ownership Plan, Defined Contribution Plan, Non-Qualified Deferred Compensation Plan | $ 49 | $ 47 | $ 49 |
Deferred Income Taxes (Details)
Deferred Income Taxes (Details) - USD ($) $ in Millions | Feb. 03, 2018 | Jan. 28, 2017 |
Income Tax Disclosure [Abstract] | ||
Property and equipment | $ 788 | $ 1,226 |
Merchandise inventories | 63 | 95 |
Total deferred tax liabilities | 851 | 1,321 |
Capital lease and financing obligations | 445 | 711 |
Accrued and other liabilities, including stock-based compensation | 106 | 194 |
Accrued step rent liability | 76 | 111 |
Federal benefit on state tax reserves | 30 | 47 |
Unrealized loss on interest rate swap | 5 | 9 |
Merchandise inventories | 0 | |
Total deferred tax assets | 662 | 1,072 |
Net deferred tax liability | 189 | 249 |
Deferred Tax Asset Re-class | $ 24 | $ 23 |
Income Taxes Components of the
Income Taxes Components of the Provision for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current federal | $ 299 | $ 272 | $ 397 |
Current state | 26 | 25 | 34 |
Deferred federal | (86) | 16 | (35) |
Deferred state | 19 | 6 | (12) |
Provision for income taxes | $ 258 | $ 319 | $ 384 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Feb. 04, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Examination [Line Items] | ||||
Federal statutory rate | 33.70% | 35.00% | 35.00% | |
Income Tax Expense Benefit | $ 136 | |||
Income Tax Examination, Penalties and Interest Accrued | 33 | $ 29 | ||
Income Tax Examination, Penalties and Interest Expense | 4 | 6 | $ 0 | |
Unrecognized tax benefits that would impact effective tax rate | 112 | 110 | ||
Income Taxes Receivable, Current | $ 62 | $ 27 | ||
Earliest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2,006 | |||
Federal | Earliest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2,008 | |||
Federal | Latest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2,017 | |||
State and Local | ||||
Income Tax Examination [Line Items] | ||||
Tax settlement pre tax benefit | $ 30 | |||
State and Local | Earliest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2,014 | |||
State and Local | Latest Tax Year | ||||
Income Tax Examination [Line Items] | ||||
Open Tax Year | 2,017 | |||
Scenario, Plan | ||||
Income Tax Examination [Line Items] | ||||
Federal statutory rate | 21.00% | |||
Maximum | ||||
Income Tax Examination [Line Items] | ||||
Federal statutory rate | 35.00% |
Income Taxes Items Affecting St
Income Taxes Items Affecting Statutory Corporate Tax Rate (Details) | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory rate | 33.70% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 1.00% | 2.40% | 2.10% |
Re-measurement of deferred tax assets and liabilities | (10.90%) | ||
Other federal tax credits | (0.70%) | (0.90%) | (0.80%) |
Effective tax rate | 23.10% | 36.50% | 36.30% |
Income Taxes Reconciliation of
Income Taxes Reconciliation of Gross Amount of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jan. 28, 2017 | Jan. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||
Balance at beginning of year | $ 149 | $ 139 |
Tax positions taken in prior years | 3 | |
Tax positions taken in current year | 18 | 15 |
Tax positions taken in prior years | (13) | 0 |
Settlements with taxing authorities | (16) | (6) |
Lapse of applicable statute of limitations | (3) | (2) |
Balance at end of year | $ 135 | $ 149 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Feb. 03, 2018USD ($)Installment$ / sharesshares | Jan. 28, 2017USD ($) | Jan. 30, 2016USD ($) | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Authorized | shares | 9 | ||
Available for grant | shares | 9.1 | ||
Number of vesting installments | Installment | 5 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 3 | $ 2 | $ 52 |
Closing stock price | $ / shares | $ 63.47 | ||
Aggregate fair value of awards at the time of vesting | $ 40 | 52 | 50 |
Total share-based compensation expense | 55 | $ 44 | $ 48 |
Total unrecognized share-based compensation expense for al share-based payment plans | $ 98 | ||
Weighted average period, years | 1 year 6 months | ||
Non Vested Stock Awards | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
General term of a elected director, years | 5 years | ||
Vesting term, years | 1 year | ||
After 2005 | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Term of options granted, years | 7 years | ||
Prior 2006 | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Term of options granted, years | 15 years | ||
Director | Employee Stock Option | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Term of options granted, years | 10 years |
Summary of Stock Option Activit
Summary of Stock Option Activity (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Balance at beginning of year, shares | 2,350 | 3,076 | 6,211 |
Exercised, shares | (359) | (410) | (2,815) |
Forfeited/expired, shares | (852) | (316) | (320) |
Balance at end of quarter, shares | 1,139 | 2,350 | 3,076 |
Balance at beginning of year, Weighted Average Exercise Price (in dollars per share) | $ 53.29 | $ 52.65 | $ 52.95 |
Exercised, Weighted Average Exercise Price (in dollars per share) | 50.94 | 46.86 | 52.79 |
Forfeited/expired, Weighted Average Exercise Price (in dollars per share) | 58 | 55.39 | 57.36 |
Balance at end of quarter, Weighted Average Exercise Price (in dollars per share) | $ 50.51 | $ 53.29 | $ 52.65 |
Stock-Based Compensation Stock
Stock-Based Compensation Stock Options Outstanding and Exercisable by Exercise Price Range (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Feb. 03, 2018USD ($)$ / sharesshares | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Stock Options Outstanding, Shares | shares | 1,139 |
Stock Options Outstanding, Weighted Average Remaining Contractual Life (in years) | 1 year 3 months 19 days |
Stock Options Outstanding, Weighted Average Exercise Price | $ / shares | $ 50.51 |
Stock Options Exercisable, Shares | shares | 1,044 |
Stock Options Exercisable, Weighted Average Remaining Contractual Life (in years) | 1 year 1 month 6 days |
Stock Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 50.47 |
Stock Options Outstanding, intrinsic value | $ | $ 14,771 |
Stock Options Exercisable, intrinsic value | $ | $ 13,575 |
Exercise Prices Range Thirty Six Point One Three To Forty Six Point Zero Zero [Domain] | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Stock Options Outstanding, Shares | shares | 561 |
Stock Options Outstanding, Weighted Average Remaining Contractual Life (in years) | 1 year 6 months |
Stock Options Outstanding, Weighted Average Exercise Price | $ / shares | $ 47.73 |
Stock Options Exercisable, Shares | shares | 524 |
Stock Options Exercisable, Weighted Average Remaining Contractual Life (in years) | 1 year 6 months |
Stock Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 47.81 |
Exercise Prices Range Fifty One Point Zero One to Fifty Five Point Zero Zero [Member] | |
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items] | |
Stock Options Outstanding, Shares | shares | 578 |
Stock Options Outstanding, Weighted Average Remaining Contractual Life (in years) | 1 year |
Stock Options Outstanding, Weighted Average Exercise Price | $ / shares | $ 53.21 |
Stock Options Exercisable, Shares | shares | 520 |
Stock Options Exercisable, Weighted Average Remaining Contractual Life (in years) | 9 months 18 days |
Stock Options Exercisable, Weighted Average Exercise Price | $ / shares | $ 53.16 |
Summary of Nonvested Stock Acti
Summary of Nonvested Stock Activity (Details) - Restricted Stock [Member] - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value [Roll Forward] | |||
Balance at beginning of year, shares | 2,163 | 2,211 | 2,431 |
Granted, shares | 1,624 | 1,128 | 955 |
Vested, shares | (772) | (935) | (957) |
Forfeited, shares | (204) | (241) | (218) |
Balance at end of quarter, shares | 2,811 | 2,163 | 2,211 |
Balance at beginning of year, Weighted Average Grant Date Fair Value | $ 52.75 | $ 57.37 | $ 52.29 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 39.69 | 46.61 | 65.02 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | 52.14 | 55.54 | 52.61 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 59.58 | 55.54 | 55.16 |
Balance at end of quarter, Weighted Average Grant Date Fair Value | $ 45.60 | $ 52.75 | $ 57.37 |
Stock-Based Compensation Perfor
Stock-Based Compensation Performance Share Units (Details) - Performance Share Unit Activity [Domain] - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Balance at beginning of year, shares | 512 | 357 | 221 |
Granted, shares | 365 | 309 | 177 |
Vested, shares | (106) | 0 | 0 |
Forfeited, shares | (111) | (154) | (41) |
Balance at end of quarter, shares | 660 | 512 | 357 |
Balance at beginning of year, Weighted Average Grant Date Fair Value | $ 57.82 | $ 63.58 | $ 56.76 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value | 40.83 | 47.89 | 70.50 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | 57.58 | 0 | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | 78.35 | 59.74 | 56.71 |
Balance at end of quarter, Weighted Average Grant Date Fair Value | $ 44.97 | $ 57.82 | $ 63.58 |
Quarterly Financial Informati47
Quarterly Financial Information (Unaudited) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2018 | Oct. 28, 2017 | Jul. 29, 2017 | Apr. 29, 2017 | Jan. 28, 2017 | Oct. 29, 2016 | Jul. 30, 2016 | Apr. 30, 2016 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 6,776 | $ 4,332 | $ 4,144 | $ 3,843 | $ 6,205 | $ 4,327 | $ 4,182 | $ 3,972 | $ 19,095 | $ 18,686 | $ 19,204 |
Gross margin | 2,293 | 1,595 | 1,633 | 1,398 | 2,072 | 1,607 | 1,650 | 1,412 | 6,919 | 6,742 | 6,939 |
Selling, general and administrative | 1,459 | 1,095 | 983 | 975 | 1,360 | 1,080 | 986 | 1,008 | 4,512 | 4,435 | 4,452 |
Impairments, store closing and other costs | 0 | (6) | 128 | 64 | (169) | ||||||
Net income | $ 468 | $ 117 | $ 208 | $ 66 | $ 252 | $ 146 | $ 140 | $ 17 | $ 859 | $ 556 | $ 673 |
Basic shares | 165 | 166 | 168 | 170 | 174 | 177 | 180 | 183 | 167 | 178 | 193 |
Basic net income per share | $ 2.83 | $ 0.70 | $ 1.24 | $ 0.39 | $ 1.45 | $ 0.83 | $ 0.77 | $ 0.09 | $ 5.14 | $ 3.12 | $ 3.48 |
Diluted shares | 167 | 166 | 168 | 171 | 175 | 177 | 181 | 184 | 168 | 179 | 195 |
Diluted net income per share | $ 2.81 | $ 0.70 | $ 1.24 | $ 0.39 | $ 1.44 | $ 0.83 | $ 0.77 | $ 0.09 | $ 5.12 | $ 3.11 | $ 3.46 |