KSS - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Kohl’s Q4 2018 Earnings Release Conference Call. Certain statements made on this call, including projected financial results and the Company's future initiatives are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Kohl's intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl’s actual results to differ materially from those projected in such forward-looking statements. and include, in not most Kohl’s Item Report reference. Form uncertainties that to, recent other and from expressly on described supplemented incorporated SEC, are XA XX-K, which filings risks with but time all limited are those Annual time the Such to maybe of in are as in by Kohl’s herein

current, will no At be date today’s updated, Kohl’s obligation to conduct to session. a recorded. and is will statements Department listen-only Gass, the Kohl’s all initially that the such obligation call are participants made and update host, this of our this Kohl's reminder, a question-and-answer I Chief call note relate is will ahead. Stores. replay conference a replay. now call undertakes update to to so for no Michelle Executive go a mode. information possible undertakes conference to recorded them. available we longer listening Officer this Replays that As Please turn this Please time, Forward-looking is and discussed of the Later, like it if over being of you’re be not to would Instruction] information. [Operator in no

Michelle Gass

Kohl’s Good call. With morning Besanko, earnings quarter Financial to and Officer. me our welcome conference fourth today Chief is Bruce

announced be January. positive shifted with results pleased another of results. in we growth. quarter to consistent was very reporting % consecutive increase generally December increased the basis a We our early holiday quarter sales The are on that strong financial November, sixth Comp of

the basis, X%. we in to quarter sales our report XXXX. the On over given exceptional season holiday that X-year excited had increased We fourth comp a increasing comp are sales

execution Our strong product and performance the great stores consistent offering, compelling online. strategy, and in marketing reflects

for performance embrace we've quarter continue We investments our positive are quarter in fiscal momentum punctuate the had The in continued this in a full-year. the to transaction XXXX making. by customers sales the XXXX, encouraged resulting the are increase omni-channel growth as every we X.X%

We our of are expansion. improving while profitability both quarter consecutive margin, reporting growth, margin also delivering and fifth

strategic are to and traffic top two excellence off. paying and driving our initiatives Our operational long-term our priorities commitment of

and you to strong us will Bruce, details who the want the to our future key financially in to initiatives. I provide add business results. more turn update over remarks, and are color affords overall on I our the our the in health on to After Bruce's the drive We create. financial will now ability call will return we business

Bruce Besanko

Thanks, Michelle.

increased December As sales mentioned, week ended shifted XXrd February period the X, Michelle XXXX. X, driven the by the Consistent January. in this comp for for the comp with XX and week quarters, prior the our adjusts XXXX reporting quarter holiday for in shifted just combined year comparing for increase November, basis, February X.X% sales by announced last on X.X% a periods

of XXXX top our last year. XX, positive on our be June on double-digit outperform and comp sales of sales, a Meet Relations men's quarter Corporate business a the a shift XX% which comparison. by the a can So increase strong information fourth Pages Greet children's the driven as like-for-like is additional of sales the in reminder, was and and was presentation, company. in of perspective, in website. transactions which The digital increase on Analyst From performance appendix of line the is the Investor of available found X.X% And shifted calendar the

performance. Northeast. the slight the our We region in continue initiatives believe our country was drive except softness which by business, strongest. women's strength the core The casual modern in excludes flat Geographically, strength we saw to Our driven and was categories. strategic for Midwest juniors, active the momentum in across

results customer QX we by Competitor with was had our stores competitor store significant a closures to especially and Midwest, the think overlap were where Bon-Ton The base. also unique closures. strong positively share. market impacted will in impact We a capture opportunity remain

continue to marketing of the inventory ensure closings. dollars to a additional position from comments disproportionate will competitor share incremental capture invest will we customers these her in Michelle provide and sales We results sales store on and remarks.

line margin expectations our point prior in over quarter Gross the basis Moving margin to fourth on inventory. increased with X and the and was year. in

reflects digital basis points. electronics fiscal sales as the mix categories margin national gross a higher strength penetration period our toys, holiday continued the For margin of in during increased from shift and headwinds Fourth year, XX such and improved quarter in a brands.

decreased Our in the Coast less reductions expected The impacted our receipts. continued on port inventory focus timeliness at seasonal of delays, part slightly X%, West which inventory the inventory than managing large due store omni-channel ongoing per to level. reflects

reductions, Approximately operational levels. SG&A their expenses as million key inventory continue of to reduction to stores expense in initiatives also of a reduce the inventory sales drive store million impairment higher debt the offset year's quarter $XXX from such maturity initiatives million We last from technology on our to investments $X.X due Marketing Depreciation to wage year. leverage consecutive XXrd for IT closures. did turn. job to and portfolio. due Combined increase amazing better and decreased due excellence XX million the and benefit other of our XXth capture again, the expense on our drive due than resulted efforts decrease. $XX $XX interest savings fourth-quarter competitor of as choice interest continued the expenses Once year to increased of lower Net basis initiatives. investments growth. was The an decrease $XX year with X% efficiencies or to well in and were strategically in week was $XX was future billion as these to decrease as market our expenses last as in IT standard our to organization was to share higher the from and cloud our also in holiday quarter slightly spending pressures the our to managing expense a this shifted small, the to speed store for to million lower million earlier inventory the levels localization, $XX XXXX. the count quarter. they point contributed we

in our Moving for on rate the was to year, last slightly own XX.X% than taxes, with tax but expectations. previous our consistent higher generally quarter, quarters

achieved a two a continues tax over progress We to As the tax for was result and made reform key Operational point saving a tremendous state $XXX a the This original X% effort allowed organization. the within X.X% goal X%. of excellence maintain of million compared years year's first has goal settlement. two now our priority to last and to of leverage of one-time reminder, our rate years have expense to the last years. three be us

are these took annual $XX quarter the $X in savings million. of to annual that expected efforts, we savings of actions SG&A of approximately approximately fourth several part As generate million and depreciation

our the As in April, but four filing will we in in smaller early four stores close we January, will later underperforming format new year. X-K disclose open stores in

call online customers. both consolidating locations, our our charge and We support are Kohl's which center

$XXX hourly a Additionally, incurred will the will quarter, in program associates that estimate a assets. the million $XX be fourth recorded $XX million commitments result actions we million of charges of lease and XXXX Most will we be to future in four certain the related offered charges in additional approximately at XXXX. stores a of be closing. to the that to as and to qualify charges voluntary these retirement We impair

and expected expense a we years. debt maturity debt an outstanding were $XX Additionally, in the of a of and of fourth retired as per the extended approximately quarter $XXX our debt by million loss we income million diluted on extinguishment $X.XX. quarter, On $XXX market the million. and first additional million We interest portfolio GAAP the combined reduced net to offer by quarter, basis $XXX $XX share the is decrease with million earnings result remaining reduction for repurchases. open The was two annual debt debt additional reported tender the and a over in

the $XXX diluted net was income EPS million was For GAAP year, and $X.XX.

net to charges share the per and earnings nonrecurring for income mentioned, $XXX Excluding XX% I the quarter was diluted that $X.XX. increased million just

net For million increased $XXX guidance. higher per which nonrecurring charges, is XX% excluding of income the share to $X.XX and was diluted earnings $X.XX, the than our year, the high-end

footage we store the due was to square and with square the million stores, store at which Gross ended feet portfolio, XX Kohl's one temporarily selling year temporary million feet. XX Looking footage damage. was including the X,XXX closed is hurricane

Harvey. a During XXXX, we a new format, opened was We damaged store and hurricane we North Wisconsin. by in a store in new relocated in Texas, which Carolina small store reopened format store the

and $XXX cash used we Now ended year-end, flows turning million with amount strong only of year cash a This last $XXX million debt of to decrease was balance $XXX operations, from the equivalents. sheet, largely offset reductions. from cash million for the

As earlier and a single-digit mid dollars. I basis, a decrease X%. decreased our sorry units on basis inventory per-share levels on X% expect per our a -- inventory XXXX, our and percentage In store we mentioned decreased in

Our basis mentioned Coast driven as timeliness by of receipts to port XXX accounts driven West delays seasonal payable points just to second I inventory ago. a decreased XX.X%, the by

IT e-commerce Capital million timing than to expectations Moving $XX own than million were our and on capital expenditures $XXX of XXXX, management. XXXX to due lower for lower the and payments. fulfillment

Directors the paying for year-end $XXX were during increased April million shareholders The capital common of payable quarter of close million total increased at business expenditures outstanding is share. of stock on Last our XXX and dividend XX% our record March XXXX quarter, million X.X dividend diluted to in shares XXXX. year shares XX. XXX We average the shares. to bringing our $X.XX week, were for by million. every first dividend We year since of expect million. shares Board to the X repurchased X.X our of We've approximately Weighted the on dividend the a at per

of XXXX, principally to or $XX In to the of incur, discussed first Looking is for earlier. share. share XXXX. initial our earnings to to forward guidance million $XX other half we per store $X.XX $X.XX related This diluted $X.XX the to for and in that charges approximately I year per actions the million fiscal $X.XX nonrecurring were excludes to expect closures

adopt in were QX. guidance an from includes accounting to impact in increase resulting earnings per diluted $X.XX of that required new standard the lease estimated the Our share,

will We won't standard new and prospectively restate periods. prior a adopt

but that to We basis all change will million expect Decreased points. $XX classification by standard. XX are finalizing the new accounting approximately approximately or the expense by as million. Substantially expense the amortization charges $XX and by are due as interest approximately expense well leases procedures, depreciation increase $XX standard decreased new of currently approximately under our SG&A million

on is lease charges. new includes following expectations, based standard, the which Our but of guidance the any excludes impact the nonrecurring

with year to the the first for higher of softness the in X% seen quarter end to range at flat the due of sales comp First, low February.

gross our expect up year increase flat We for SG&A year. down expected to XX the are the margin to basis X% rate X% slightly. to to increase dollars first points for to quarter with the

believe approximately tax provide on increase will million turn be million. lease XX%. the expense from are details $XXX and Excluding lease assumes to and $XXX call I additional SG&A million accounting $XXX be a Michelle, to We will initiatives. million, impact that, million, dollars rate finally Depreciation our is on $XX $XX update guidance effective our lease our of to an And expected will X.X% benefit of to And key expected results to the accounting. million interest benefit share accounting, with includes from back XX% X.X%. the to expense repurchases be $XXX to including which

Michelle Gass

our Thank for discuss and sales you, provide on Bruce. QX color I'll outlook XXXX. more our performance now

we've around initiatives seen year are create new all momentum into key Greatness the The product, strategic for We experience savings, through our continue growth. holiday carried opportunities the Agenda excited and long season. that positive to in

at our operational priorities to of is pieces holiday focused key the and together all important their from most year basis. keep the more I as our opportunities and give create when competitive us are two sales These digital pressures It marketing Our priorities during season, to you and and little to more are initiatives on and X% sales growth now that the stacked on the to highest. be in X-year in traffic important increase product on channels, excellence working business beneficial X% operations at QX, comp on must this profitable QX both drivers marketing a merchandising, resulting business. in will results. a optimal a growing than Everything came and and across omni-channel driving equation, expected a more stores even color level. QX

strategy merchandise in key will had real to continues the opportunities market. the in advantage which the business growth with start be we will take I all categories our place for across active, I First, discuss company. to of drive driver and a

we in We the growth continue mid and as for single-digit growth QX, saw to gain single-digit market share active high year. in

which business, of the launched our business and classifications active. we QX, across now ahead. since footwear active more in Our penetrates XX% success XXXX in year all total we see has even nearly greatness every accelerated and had potential we apparel agenda In

active key to Nike, Adidas Our Fitbit particularly growth. all noting It's perform brands and also Armour that national tracker, really reported worth Under well. positive continue fitness

see our active, expansion the highest active performing extending be in strategy we in will success XXX continued of in-store we the approximately active XXXX. stores With to

few merchandising by category. call highlights I Next a will out

in of LEGO increase due experiences, closing in-store with digital gain a opportunity FAO pleased children's our in share led Our business. with was progress. a significant We along the knew an enhanced across toy there to season we're strength toy competitor introduction company and our The drove this with and Schwarz, categories. business to all

On Carter's the own and active saw our in apparel as such Jumping brand. side, categories, Beans proprietary national we brands strength

out very such active, had of a Tall consistently fabric worth another quarter smart management. company performer the It's Big and year consecutive of reported balance calling and its men's as positive sales by fifth driven outperforming men's strong have top brand, national opportunities that Golf business Our and also a proprietary innovations, inventory pursuing & and great been company.

in strength the We business expect continue. to the men's

coming national an for positive exceptionally driven of comps, another ran by business Koolaburra casual luggage. such in fashion active XXXX. beauty in electrics UGG pot in key Home line positive quarter company ran jewelry. also holiday strong instant Drivers in in and underperformance was such brands, the kitchen as by fashion comp and strength in quarter categories offset with accessories, QX as off the Clarks. brands electronics, footwear and Vans, for boots core of home and and Our essentially the in handbags including in this strength flat Accessories in quarter items and by including bedding with a

Our core the to be business priority key continues company. a for women's

classic holidays, women's strength apparel, while juniors During intermittent and we underperformed. modern sleep, active, the saw in

marketing Next, how let me is starts our efforts. on move it engage number Driving traffic to with customers. speak and priority we about one our our

QX. and compelling increased team allowing Black performance direct more from the put agile a some the deliver events the in the drove and marketing of of into sales and customer spend three an We key holiday our customers. our on shipping was digital, kickoff, this strategy, be About in the During including positive November our place holiday personalized spent season, earlier We half believe comprehensive season Monday. marketing season season investment for had more strong strategy acquisition. our in to of during our messages year in Friday the and cyber X, us increased sales to to comp throughout

customers all called program on loyalty generation next the centered our of offering Reward. love cash. pilot the We've program simplicity and to rewards continue the We Kohl’s learned that

However, we to the to do the Therefore, need be greatest that generous with rewards. the we learned not will customer offerings rewards also as program optimize create to modify impact. we

this We these the will stores Kohl’s -- phase these into Rewards create additional take into the will program of expanding testing, summer. learnings we next

rollout We in chain are full planning XXXX. a

expand XX% personalized all We XX% personalization our has channel our believe been to future customers machine marketing email product media efforts the more increased our by by touched customers. points. and the over advantage conversion rate. be some year. great more continue which our led the touch increasing generating great marketing for progress We'll are increased touch last having will recommendations. personalization, site points personalization for we've of and across see personalization across visits with number personalized personalized a via continue search, our way, improve also make benefit of by and learning website capabilities in We've our effort XXX% now In impressions customer of the personalization experiences. and already real in We to higher as us a we spend our in

me let and an Now strategies, our you both on including omni-channel in-store. update give digital

resonating mentioned, we XX% fourth fulfillment a the year. These increase our engagement. impressive of with Bruce digital growth half sales. in of our BOPUS especially omni-channel stores. Your double-digit increase reflect and and at A results and role in customers than digital traffic impact focus been of mobile app, options of quarter last as strategy sales, increased are given reported our driving will sales. the majority over Mobile that to personalized such we the the the are traffic and and traffic more key Smart reported investments relevancy As and is represented BOSS XX% a amplifying in again Cart which strong having and our continue be customer our has on positive digital of higher Investments search, Price,

are stores relevant asset continue customers. them more for and to differentiator to make a for Our compelling we innovate Kohl's, and key our

focus to omni reflecting We XX% able adoption much benefit orders. is from This continue saw to BOPUS and in Experience as accelerated digital capabilities peak particular, Cart. In we fulfill Marketing, with greater season. Smart fulfillment in as Site our especially critical of stores during

shipping. especially and as our by drives result it into traffic BOPUS We savings encouraged are stores on in

XXX the in peak store further enhancements to with will locations stores an digital to in -- also demand. process called in successful checkout orders. in checkout can easy to digital an new Omni enhanced efficient finally from a Centers XXX more Power capability ship introduced leverage that And to our in and We timely manner. at fulfilling piloted allow and XXXX equipped mobile XXX stores. These customers store of expansion them functionality we stores ensure store be technology lead we were pilot XX The

look to let's Now ahead XXXX.

confident have the are all of we given we to areas can the deep profitability, and that the sales across pipeline drive improve innovation We continue and focus of company.

significant First, modern exciting being the of merchandising opportunity let in size label and underway. brand larger, launch the this month XX% me talk have the With or of plus women's offers we women the plus start assortment EVRI, new business. broad I women's size with opportunity that some women's about relevant fashion. of in initiatives a will essentials XX private Later a category. wardroom will a plus we

We of will offerings shop Nine our summer, for wellness West further elevates our of family. exclusive Customers the Nike will line and brand as overall introduction this expanded positioning and also an destination ourselves an able expand assortment entire at spring, our for active fashion plus The Nine stores Kohl's. to Nine size customer's. handbags the launching in West online. will be we apparel women This millennial West in shoes, with offering and all be an of iconic

fall, we Jonathan home the the décor, at Moving introduction and collection, will to of modern including Scott furniture, basics launch décor Kohl's Scott kitchen exclusive and with offerings strategic at Scott company's with Living our Living the The more. Kohl's. home in Property strengthens in Drew an Brothers and lifestyle bath, partnership home and bedding

new scale. Earlier even to more highly be function of top we in already we progress heavily continue. ability will in in I'd and some made and share personalized the shared I and our XXXX. have is become that a customers analytics our call, work priority to in traffic. about world-class driving and of out marketing planned relevant against capabilities engagement the personalized learning and for agile. customer the future execute our investing that current ways to in and our efforts know is more to some automate existing our marketing reaching Next, We Running are like customer We're innovations building machine essential marketing we've at to

to to a While reaching of compel our company We’ve millennial, come we’re this among experience millennial always create with existing on them to customer inside connecting opportunity ways moms. we especially the we new focused launched initiative in more customers, Kohl. in know a that millennial could meaningful share and particularly direct to be have gain

bar media. example, millennial which The supported curated and we'll concept every as will Adidas, bars approximately include digital an with in updated As will and on in-store Lauren Nike mirrored POPSUGAR, days. Conrad, loved Chicago in it digital be Philadelphia. XX is LC and page fully will outfit XX and stores our testing be an of Levi's, brands landing The be experience social assortment a such

let me on our innovation move Now channels, digital and both in-store. to in

last growth a opportunity. in And the several Our we’re a been with there's ongoing strength we of our the digital momentum, even has while ours. believe bigger pleased over business years

to deliver a investing and we're new improvements enhanced with such, capability site customer As in experience personalization. engagement,

invest continuing of as network, We sixth are leveraging predictive to fulfillment build analytics inventory in optimizing deployment as in our out the also EFC. well our

opportunity have we to tremendous expand believe our also online We assortment.

currently online to of Our with pursuing categories to And our customers. to our experience innovations existing greater designed our to to even enhance and opportunities the adding relevancy. customers, mention extensions merchants the stores our businesses, goal traffic excite and for new products driving across including untapped planned more offering want assortment, are several new I last store

opportunity to grocers smaller partnerships. but such as specialty an excited rightsizing Kohl's our strategy strategy Fitness, Fitness with through initiative We we which with will an XX new important stores for also today see shops, announce locations. as initially estate I'm First, see currently not to to only such to tremendous Planet total as We with Aldi, fitness opportunity line continue our our And a up traffic partnership to our key assets, the large and runway. Planet leverage include drive real as rightsizing companies. see

the increasing our mentioned to of of I will active XXXX. and stores, active active to extend Next approximately in highest earlier, we wellness allocated expansion space amount the performing XXX significantly as

in be for a excited partnership announced family. see our we’ve new WW, new strategic one Company. concept to will the this piloting to recently where us Weight I'm collaboration and take store. been Wellness wellness Global active new we beauty the with journey a Fourth, Third, Watchers destination the on for

us. is beauty today As for you the small know, business

a However, going forward. significant opportunity we this as see

including build Over brought many GABBANA. brands brands capture Polo environment to philosophy this in an Ralph creating year, the last And prestige and to business. great more we're DOLCE we & Lauren, even

Next, Store. Your

continue our We roadmap term utilize center test good stores. two service friction Your lab stores. Store while address test quickly the piloting new centralized we're a front A Store at to concepts, return. and refresh example experience to the longer a This customer to pickup building to Your learning new evolve store designed including of time, points, the is findability, key the at and is purchase of

Your Store labs allows store to test and elevate scale ideas improve and like this the that experience.

give Lastly an our I update want ongoing to with on relationship you Amazon.

a encouraged as our devices through well selling We we Amazon to in also XX We've both our partnering be XXX approximately have returns continue now and as deal within learn concept. stores, in wholesale within with been great traditional store pilot in that store relationship our stores. in

Amazon better and we’ve as to founded forward relationship with partnership robust we with our to transition a Going store a wholesale to the in decision store concept more made way customers. Amazon, within from the a serve

extending assortment be will branded Amazon over we result, a stores. our of XXX As products into

I assure we can be in technology, As relevancy ahead. significant excited a in to us we to this people spoke we're enabler we will our business the you in as made initiative. innovation want to make critical and efficiencies This across the of equally look our and stores fund made Bruce and have investments on progress drive growth. focus across company, we about the operational the initiative already are to find order is excited to amount a about as for our the progress excellence the we've

into So organization made. as XXXX the we progress and wrap and me XXXX, has let reflect head up on pause the

since positive we’ve over out last two average it's growing which million inventory our completed XX%. highest by in to store gross by improved debt. per $XXX over points. share in decreased since reported paid the basis increase growth, the buyback. was years XXXX margin years million largest of addition Over free We've dividend. cash is earnings, two $XXX consecutive We've finally, XXXX. $XXX flow of XXXX. XX in our million We’ve We And been in back bought We sales

position We we to of strength. are working profitability. a year growth look sales ahead, positive guiding of improved another as we're And and from

great with to that continue speed a to closing, your while take remaining work who agility, We our to We're In happy at like thank and value. our are drive Kohl's disciplined questions one. shareholder committed to to helped and thoughtful this will efforts to I'd in make amazing time. also and associates XXXX

Operator

our is Instructions] Bob go Guggenheim question first And Drbul [Operator from ahead. with Securities. Please

Bob Drbul

Hi. Good morning.

Michelle Gass

Good morning.

Bob Drbul

guess, Amazon, Good question, on elaborate first can the more morning. you Michelle, I relationship. the the a little

curious the just there, there's or and a terms dedicated from share with returns could the -- relationship us and that and seen space that the the Just are of benefits terms going of in piece traffic but that you change any -- on there metrics in you’ve the pilot the test?

Michelle Gass

Sure.

of we Amazon. Bob, I really pleased continue relationship the in comments, with be my mentioned As to

in are is start were experiment side of the It trying an them. I was will one days and driving of things. these with things culture really in the things with working multiple we’re We device the great wholesale a shop results Amazon lots seeing is We we're Black devices. of things, relationship. what seeing through idea a had the so the with we and actually Friday great tried shop

are for taking assortment it that be pilot We us will then into broader a Amazon, by now now stores, a to Wisconsin about and in we’ve And how with of mentioned, as mid-to-late into customers and determined shop-in-shop, to stores. believe great the and to we’re returns we be Amazon the our as a And this terms environment, relates self-serve is used was more a extended shopping the in year, I so customers we’re customers. again returns, we're This the which the us. over space of at fantastic how been products our devices, it will on actually so dedicated both engage learnings bring for last but at in experience going a will it XXX year. be XXX

at It takes returning I Amazon we're our is are seeing the a free. think be of how how of be about it. package unique. lot service. thing They customers both. have big and customers hassle go really The important excited It's hand we continue to out of for the this needs items. most Amazon. question that course It the that It's don’t conversations to a we with in really to is, and forward win-win

stay So that on I'd tuned front. say

Bob Drbul

Michelle, on a And, women's just it. Got business. the question

whether what's But a to potential you a spring In I way the of as see I’m talked you season? as it's go to stores, and February. comment seem guess, on prevalent just pretty you in about wondering that be and driver if terms strap jumpsuit that this jumpsuit

Michelle Gass

Thanks, specific now strapped on this last this the year have to Jumpsuits year. for spring. going Bob. Very assortment are in think big broad and versus strapless the detail. very We hit a be a we the trending it's

In strap strapless, know. terms I of don’t versus

be Let plenty judge the both. of and we've got customer the

Bob Drbul

Good luck. you Thank very Great. much.

Michelle Gass

Thanks, Bob.

Operator

with to ahead. Oliver go we Next Chen go and Cowen Company. Please

Oliver Chen

the on innovative. Fitness. deal sounds really Planet with It Congrats Congrats.

on on I On the the mix that guidance? your classic how to are You and in and of also would millennial then inform what did year that reinvigorate terms topic and for happening just a main business love thoughts And is percentage modeling momentum thoughts had what's thoughts is February, of with what February ahead? you. good such are point question, traffic? -- February juniors, your as your in the what QX. just help of what strategy women's Thank the to integrate And moms? there

Michelle Gass

business, women's then -- will talk I'll more and have about a with February. I the Oliver. Bruce start little Thanks,

was In the about is of pleased. very had QX, XX% the businesses for you of in really The as I’d saw on business and year, then for areas. business whole It's couple year total we a important women's certain strong the women's, really know, and say our basically business positive. we terms opportunity as women's In for we're of us. a

So, are in those was well. modern strong terms Lauren like [ph], we got brands a of right Vera they're really and all platform, investment, the L business the of on They’re of Vera We Conrad, and really speed basics resonating. lot our contemporary fashion. Simply of focus balance Wang, Brand what where LC put the and doing

that. pleased very feel we So about

brands classic totality had business for a I in business and also continues the year, great well. of business total It's if a is said, an then soft with And and spots, which say some and brands & customer quarter they to news course I the opportunities for of our on more juniors, we the our and two that we Croft for worth say women's fastest it's year. as QX and of to had our classic, active areas, year sleep were Our the really on noting in that to We outside is that our the opportunity Croft & have. had hits is isolated good juniors. bring correcting. great newness had juniors intermittent businesses and The did business. you we misses private and would one are all private top And Women's us. our is about it, Barrow I'd opportunities. to of women's Barrow team positive our like will,

improvement anticipate course on it, correcting year. this coming is again, we the and So team

everything, and millennial You also opportunity. across will like we're doing millennial, around really be mentioned a question a localized opportunity the

have with brands in a in of the Levi's -- for mix one active are XX some great give mentioned our idea where kind customer whole And kind wardrobing we to them up millennials, brand, importantly around carving challenges. and space place. millennial is today great so solve proprietary the their it's out coupled help resonate of with this then we national to brands that I brands, store like our brands. The We starting that and test them destination all

So giving outfitting of solution. sort

a to see expect and significant a to it's commitment make we but Xwe'll lot on test. of progress works, millennials this that front. So our how is

Bruce Besanko

the of our guidance. comment that February on Oliver, and informing is me month on how let

flat we primarily this in So, we a point, full-year below combination very is -- portions weather plan. a pardon up And customers principally at significant are of year. vantage both cold slow guide from -- off home. large our is for are of believe to the snow. rain, both but confident believe first keeping across of the the on those of temperatures starting and of it comp, country in all, our February comp things X.X% it's top but is me, of of form start. whether precipitation the The impact from We to a X% February driven,

but we that start, slow impact the to we that which to and off relates our selling in is gross see. affects weather on confident the first did the the impact we it think but margin a way of margin all, again, more are or And full-year is margin, So the are full-year, also -- the promoted, we so is which quarter, this we we fall Kohl's clearance of in is the guided in are that more why we're we margin inventory that's as levels, guide. being way it the we effect first for affecting think guide and gross confident

Michelle Gass

just would … I And add

Oliver Chen

Okay. Thanks.

Michelle Gass

when one add just as unique as first This would us not is in Ones quarter. we’ve not to people be that seen year pent-up And as home weather Bruce's in is it's to it well last volatility as the had we snowstorm. see certainly bit relates really we’ve thing the cold these weather, terms -- the seen may returns, of erratic was experience a and it the stuck demand. weather third at that particularly you We comment well. with that situation before selling well. do this quarter I with are where and or what to typically

good aged really down. really We're feel I our well we So extremely are spring inventory about inventory, positioned. is the clean,

excited. I'm So

lean efforts even team and to allow our that I mentioned, We’ve agile the demand to waiting -- marketing I plans for all to us is ready. we the will amplify we’re once I in being weather the business as But think anxiously think turn. I said, place, into turn, the for drive that think more. weather also marketing and

has start, up again as of X%, we to So confident guidance while slow growing with margin guidance said, I flat year. a reiterate our that it's annual confident in so -- Bruce our in this very of feel

So ahead. I fantastic got a think year we’ve

Oliver Chen

Okay.

on helpful. very Planet. lastly So That’s

the concept really What’s a further? for broad faster? active win-win, non-correlated It and comp on this it's background great dive like traffic on such appeal and your indicates you especially this a survey Can Our thoughts and some with the as you unit pace into seems move rationale. opportunities. story growth

Michelle Gass

in to that. Planet co-location and figure Fitness the fact take partnership these as the to see got a win-win, to you advantage these customers. teams how of in stores co-market We the Yes, XX we first are working real can --

excited very about So it.

everything, to a I think build few. like we have

is We for our will great a will for indications is and there, our and be going customers. fit from us it all learn but we to this take

Oliver Chen

That’s great.

Michelle Gass

Okay.

Operator

Matthew JPMorgan. ahead. from Boss go is question with Please Next

Matthew Boss

on Great and congrats a nice quarter.

Michelle Gass

Thank Matt. you,

Bruce Besanko

Thanks.

Matthew Boss

maybe year? by I and Michelle XXXX, comps performance the this opportunities first flat in between and would -- past comps how guess, Michelle, rank the what's swing on positive incremental year, the largest two factor category for maybe versus you

Michelle Gass

So thanks for Matt. the question,

As excited as we in enter the I remarks, I'm really said year.

of happening business. I XXXX We’ve of think innovation. for innovation us the is across all theme our parts

approach So I summer if But in been fashion. and area. I very today, I this think going customer innovation single on particular the category. making, how a great. product, also ahead out been basics terms start we’ve EVRI, the start of in some every Nine as the It's launch product fall with which has huge a in got West. in be to with team launching brand plus thoughtful process hard us in is It's time and to there's will of were of women's to

shape. West So great I think in we're between EVRI and Nine

will expand that we that’s kids, broader of going excited product us, They’ve whether I'm where agenda cut frankly is as focused priority. in Brothers. across Scott and footwear, drive that television men's, partners deep be business If EVRI than to really I stores XXX will We’ve the fantastic. broad women's, their they’re be product elevation in-home, categories, the with that's in presence involved now is active lift as know brands Our reaches all for The relates market that to anticipating continue more we Living our Property the continuing be as important. our and and speed women's, proprietary so two thirds have product. On to especially it's you to was continue to the with great and got partnerships coming assortment. a we business that about that as

opportunity, just and to over terms will experimenting partnership. think mentioned I really a active then expanded or going of So But our if I traffic, it's rolling marketing cuts as are are in on the the great channel, the lot in-store, as across. we others about Weight Watchers in-store, innovation I that have a experience that that. the mentioned, rightsizing incubating the driving with all move creating and something enable then digital I around focus And

the spirit So there to of we that sustain innovation company really great, great a at sure demand. the happening is can make

Matthew Boss

maybe Great. I e-commerce you the we are you over in that on seeing And management? gross from offset today what then, maybe margin guess, with efficiency Bruce, are have pressure inning front. to And inventory what initiatives time?

Bruce Besanko

question. Good

there's what Matt, from had once experienced inventory improve. we and still still not these of early inventory even between our we levels innings, So inventory, we past, an I We're consecutive the on say I room turn XX turn the the reductions. of but have quarters what at in perspective to in look would when a certainly nice gap after

the and a in turns e-com has So I you as particularly higher holiday. an think there's room. penetration -- know, it From faster e-com

So I think there's opportunity there too.

Michelle Gass

we one millions to had mean, impact I it It major comment, thing initiative of margin, been a when key see is of sales it's we things units. The The add management part Bruce's also in would to have benefits is business. of other the inventory units. We speed into working, I enabler. context but often a driver. literally in the of chase our about that. has speed we’ve biggest talk And into a we can chased

analytics while said, management then inventory technology we point our really we turn. make And see really as I how I to think are things thoughtfully I'd inventory. the are getting team we raises to resonating, that and place deeper matter. the know where can nice job producing then doing the of to last chase how things is is choices a they into we’re sophistication, that on to the The into increase investing predictive Like bar those going them.

reduction further ultimately a this our runway I on inventory turns like on management, us, greater that said, gives So inventory. and inventory

Matthew Boss

Great. Congrats again.

Michelle Gass

Thank you, Matt.

Operator

go ahead. Next we Advisory Dana Telsey with to Telsey Please will go Group.

Dana Telsey

morning, on Hi. progress. nice everyone, Good the and congratulations

Michelle Gass

Dana. Thanks,

Dana Telsey

you what you each? changed for on fulfillment outlook think your proprietary online of are executing of what this mentioned Thank SG&A? brands, are And brands national costs, most and as active, just you how Michelle, And managing there? then lastly you what’s you. about season and performance excited and

Michelle Gass

Right.

cost on brand also the question, are I will and touch a don’t there. let Why the and Bruce proprietary on take questions touch there piece. few active, So I then

constantly decides portfolio. first that So are of believer them resonating with are brands all, ultimately what customer our we I'm the editing a and that

what’s sit XX%. necessarily driving we we penetrating per in here, at today looking we not mix to a se, particular national as XX% brands proprietary about relevant. our are And are are So brands about and

that’s look I newness -- excitement two-thirds about -- we as pipeline we’ve both. a and and innovation as proprietary. got Women's you we of touched really women's, think earlier, and ahead, I great said you across Dana, mentioned

I getting on I’m as fashion, excited but even balance ahead been think what's in precision Conrad just really got that focused we’ve in has Apartment initiative been we Lauren key women's. inventory really in LC phenomenal X us basics, So right really got as fashion, has we’ve that be gives plans it more relates we positive relevant on for and our to right, right, about it we’ve more a trajectory. speed the sure But really We’ve making the I private we’ve really our got brand core got brands, out think there. growth brands. have look that to

got what know in course teams has they’re classics actively or are Sonoma the be issues juniors, correcting. we’ve really some the been positive. and areas where softness, And those it

the active, can XX really went, about we excited important category. how proving this extend in very pilot that I our out further think store I’m for test

us real XXXX I active. in player and journey. I being think for importantly do, has as are credit giving customer a a we there been like, really since we when mean, surveys this shift customers began the

big the levels business is examples as on of business men's across getting into really lines golf out side, all huge an call and a Nike, a good has jacket big has our -- also innovation. providing on we brands will of be a would which with active there expanding of are a So win. going example, been across which hit. And the I lot lots been of The to plus I with side, of their be business and hasn't layering mentioned women's, incrementality. into part been

Bruce. forward great hand to to year. to So our there's I'll lots we there. looking it over this We’ve and are a going then pipeline all -- got to And bring customers

Bruce Besanko

X.X% with so expenses respect leveraging Dana, to committed first, remain the Yes, at to X%. to SG&A of a and cost so ship, we

and are prepared I remarks, company the think in savings. effectiveness was effort, $XXX margin operational and to that I the and mark our both with particularly fiscal already mentioned gross excellence done SG&A has as million And of report in fact, at a initiatives. my are great in delighted we year deal our we 'XX second

to So this which third go get. we have more here, even fiscal 'XX, year is

And to of rising here So of respect shipping. is shipping efforts with of pickup shipping the the good. mitigate to We cost increasing around that’s operational element an penetration. cost all need of store Cost by important excellence. then

driving do to X recent we down. need -- a EFC help cost investment shortly. customer our package, to our EFC split minimize that We overall BOPUS would more far is and EFC productive the that productive that the be we first with here the operational in doing excellence sixth work -- costs is We are the need of more or of to and speed ways part manage sixth the that distribution BOSS under shipments opening are launch. We We is one the per generation begin is announced which with undertaking. There's centers. than that. we of X and

we’ve of can time. been of shipping that all element expect we we deliver so benefits that we reasons, cost investments for And making to think over that’s those technology get the that the an and down

Dana Telsey

Thank you.

Operator

go ahead. Mark Our next question with Baird. from Please is Altschwager

Mark Altschwager

XXXX. strong Hey, good congrats on morning and a

about e-commerce, positive it margin offset algorithm out, merchandise thinking to we XX should Is of margin? headwind Bruce, following How up some Just gross overall? a those be start still from comments. basis on that margin by point gross

Bruce Besanko

remains of cost from basis our headwind to view, points. XX in the Yes, shipping XX

with we XX to mitigate question, basis we we XX to that look investments, at excellence more the can ways technology the exists may Now Dana's go cost but that up. said as move ship through I that to into intend point digital and headwind of that extent channel through operational and to the some sales

Mark Altschwager

customer color customer updates Just spoke customers? then a in on you net maybe if And compare be would How some great. to to acquisition metrics. last front. have that Are up do the I’m Got separately, markets it. in Was Bon-Ton any year-over-year you management bringing count there any XXXX? control wondering younger year group?

Michelle Gass

great. Thanks, Mark. Yes,

QX, our encouraged very acquisition customer are new digits. in We was double by continued around customer low up rate efforts again acquisition. in the our And

So do not we in. new but that, helping see that to We are continuing the customers competitive just get are closures it's those store that.

We retain spoke we are and grow real And can earlier getting marketing, across new board. customers asset really that’s them I about the into as for a now as loyal personalized us customers.

Mark Altschwager

Thank luck. you of and best

Michelle Gass

Thanks, Mark.

Operator

be go the with Lynch. will from America Please Our question Merrill ahead. Lorraine of line Bank Hutchinson final of

Lorraine Hutchinson

payment wanted in for on trends your also, change Thanks. you I in XXXX? Good then any minute. credit for credit outlook And seeing your portfolio? to Are what’s focus a morning. for

Bruce Besanko

stab a that. take me let Lorraine, at Hey,

take step back. So let a me just

is important program. Our our element loyalty credit an of operation

coming credit our millennials, from about effort are from quarter that third About are new about well. millennial. of a new applications on In millennials fact, an we in as we talk accounts millennials, are the as focusing a of are

focus a a fantastic the and in We that. of of we example that has consolidated we call ex we team is done as fiscal 'XX, terms an in In millennials. grew the week, XXrd think job Dallas revenue opportunity The center, So on -- great grew costs. that’s the managing we profitability.

has Our going significantly. expense down fraud been

team credit that operation, solid. a the the in both bottom tremendous remain so line the line the ensuring And on top has terms done of job just and

customers continue that mentioned cardholders. In that, Michelle credit customer had some of that acquisition the the we terms new fourth of new guidance XXXX, we them any or that we the just we we in can credit the where convert particularly hopeful loyalty can profitability on quarter, haven't are but into convert through provided to card ladder our revenue,

Lorraine Hutchinson

Thank you.

Operator

closing any Ms. Gass, comments?

Michelle Gass

are want a No, you say on Thank we today everyone the great XXXX. forward thank to and listening you I looking just so to to much. call

Operator

gentlemen, Ladies after at XXXX Time. through AM available midnight replay conference April X, this XX:XX will Time and be today, Eastern for Eastern

the That XXXXXX. AT&T system by any participants, the code does conclude please Executive for teleconference XXXXXX. code today. dialing entering participation Investor Thank and XXXX-XXX-XXXX using access access for and at AT&T and corporate Replays also You International may for replay dial the Section access you time Kohl's numbers Those available XXXX-XXX-XXXX our are are XXX-XXX-XXXX, your XXX-XXX-XXXX. website. conference Teleconference. of again at

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Kohl's (KSS) 5 Mar 192018 Q4 Earnings call transcript