Kohl's Corporation Reports Third Quarter Financial Results

MENOMONEE FALLS, Wis.--()--Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the quarter and year-to-date periods ended October 31, 2015.

               
      Quarter     Year to Date
($ in millions)       2015   2014   Change     2015   2014   Change
Sales $ 4,427   $ 4,374   1.2 % $ 12,817   $ 12,686   1.0 %
Comparable store sales 1.0 % (1.8 )% - 0.8 % (2.2 )% -
Gross margin 37.1 % 37.2 % (10) bp 37.7 % 37.7 % -
Net income
Reported $ 120 $ 142 (15 )% $ 377 $ 498 (24 )%
Excluding loss on
extinguishment of debt $ 144 $ 142 1 % $ 484 $ 498 (3 )%
Diluted earnings per share
Reported $ 0.63 $ 0.70 (10 )% $ 1.92 $ 2.43 (21 )%
Excluding loss on
extinguishment of debt       $ 0.75       $ 0.70       7 %     $ 2.46       $ 2.43       1 %

Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "Our 1% increase in sales was driven by strong back-to-school and late October selling periods offset by a weak September. Most of our key initiatives enjoyed strong success while weakness was concentrated in seasonal businesses."

Dividend

On November 11, 2015, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.45 per share. The dividend is payable December 23, 2015 to shareholders of record at the close of business on December 9, 2015.

Store Update

Kohl’s ended the quarter with 1,166 stores in 49 states, compared with 1,163 stores at the same time last year.

Loss on Extinguishment of Debt

During the quarter, the Company completed its $1.1 billion debt refinancing when it settled $318 million of debt that had been called in the second quarter. In conjunction with the refinancing, the Company incurred a debt extinguishment loss of $169 million, including $38 million which was recognized in the third quarter.

Third Quarter 2015 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 8:30 am ET on November 12, 2015. The phone number for the conference call is (800) 230-1074. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID for both the live call and the replay is 346897. The conference call and replays are also accessible via the Company's web site at http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm.

Cautionary Statement Regarding Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Kohl's intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to, those described in Item 1A in Kohl's Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC.

About Kohl's

Kohl’s (NYSE: KSS) is a leading specialty department store with 1,166 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store, online at Kohls.com and via mobile devices. Committed to its communities, Kohl’s has raised more than $274 million for children’s initiatives nationwide through its Kohl’s Cares® cause merchandise program, which operates under Kohl's Cares, LLC, a wholly-owned subsidiary of Kohl's Department Stores, Inc. For additional information about Kohl’s philanthropic and environmental initiatives, visit www.Kohls.com/Cares. For a list of store locations and information, or for the added convenience of shopping online, visit www.Kohls.com.

Connect with Kohl’s:

Facebook (http://www.facebook.com/Kohls)
Twitter (http://twitter.com/Kohls)
Google+ (http://plus.google.com/+Kohls)
Pinterest (http://pinterest.com/Kohls)
Instagram (http://instagram.com/Kohls)
YouTube (http://www.youtube.com/Kohls)

 
 
KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
                 
Three Months Ended Nine Months Ended
October 31, November 1, October 31, November 1,
2015 2014 2015 2014
Net sales $ 4,427 $ 4,374 $ 12,817 $ 12,686
Cost of merchandise sold 2,784   2,746   7,990   7,908  
 
Gross margin 1,643 1,628 4,827 4,778
 
Operating expenses:
Selling, general, and administrative 1,099 1,097 3,120 3,078
Depreciation and amortization 236   227   695   665  
 
Operating income 308 304 1,012 1,035
 
Interest expense, net 81 85 248 255
 
Loss on extinguishment of debt 38     169    
 
Income before income taxes 189 219 595 780
Provision for income taxes 69   77   218   282  
 
Net income $ 120   $ 142   $ 377   $ 498  
 
Basic net income per share $ 0.63 $ 0.70 $ 1.93 $ 2.44
Average number of shares 191 202 196 204
 
Diluted net income per share $ 0.63 $ 0.70 $ 1.92 $ 2.43
Average number of shares 192 203 197 205
 
As a percent of net sales:
Gross margin 37.1 % 37.2 % 37.7 % 37.7 %
Selling, general and
administrative expenses 24.8 % 25.1 % 24.3 % 24.3 %
Operating income 7.0 % 6.9 % 7.9 % 8.2 %
Net income 2.7 % 3.2 % 2.9 % 3.9 %
 
Excluding loss on
extinguishment of debt:
Net income $ 144 $ 142 $ 484 $ 498
Diluted net income per share $ 0.75 $ 0.70 $ 2.46 $ 2.43
Net income as a percent of net sales 3.3 % 3.2 % 3.8 % 3.9 %
 
 
KOHL'S CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
         
October 31, November 1,
2015 2014

Assets

Current assets:
Cash and cash equivalents $ 501 $ 631
Merchandise inventories 5,254 4,973
Income tax receivable 36 76
Deferred income taxes 136 125
Other 276   295
 
Total current assets 6,203 6,100
 
Property and equipment, net 8,499 8,671
Other assets 196   243
 
Total assets $ 14,898   $ 15,014
 

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable $ 2,141 $ 2,384
Accrued liabilities 1,244 1,162
Income taxes payable 28 24
Short-term debt 400
Current portion of capital lease
and financing obligations 126   109
 
Total current liabilities 3,939 3,679
 
Long-term debt 2,792 2,779
Capital lease and financing obligations 1,817 1,886
Deferred income taxes 305 293
Other long-term liabilities 571 572
Shareholders' equity 5,474   5,805
 
Total liabilities and shareholders' equity $ 14,898   $ 15,014
 
 
KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
      Nine Months Ended
October 31,     November 1,
2015 2014
Operating activities
Net income $ 377 $ 498
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 695 665
Share-based compensation 36 38
Excess tax benefits from share-based compensation (10 ) (2 )
Deferred income taxes (84 ) (37 )
Other non-cash revenues and expenses 23 19
Loss on extinguishment of debt 169
Changes in operating assets and liabilities:
Merchandise inventories (1,433 ) (1,093 )
Other current and long-term assets 74 (1 )
Accounts payable 630 1,019
Accrued and other long-term liabilities (6 ) (1 )
Income taxes (64 ) (175 )
Net cash provided by operating activities 407   930  
 
Investing activities
Acquisition of property and equipment (551 ) (561 )
Sales of investments in auction rate securities 59
Other 3   6  
Net cash used in investing activities (548 ) (496 )
 
Financing activities
Treasury stock purchases (789 ) (549 )
Shares withheld for taxes on vested restricted shares (26 ) (17 )
Dividends paid (264 ) (239 )
Proceeds from issuance of debt 1,098
Net borrowings under credit facilities 400
Deferred financing costs (10 )
Reduction of long-term borrowings (1,085 )
Premium paid on redemption of debt (163 )
Capital lease and financing obligation payments (83 ) (87 )
Proceeds from stock option exercises 146 111
Excess tax benefits from share-based compensation 10 2
Proceeds from financing obligations 1   5  
Net cash used in financing activities (765 ) (774 )
 
Net decrease in cash and cash equivalents (906 ) (340 )
Cash and cash equivalents at beginning of period 1,407   971  
Cash and cash equivalents at end of period $ 501   $ 631  

Contacts

Kohl’s Corporation
Investor Relations:
Wes McDonald, Chief Financial Officer, (262) 703-1893
or
Media:
Bevin Bailis, SVP, PR and Communications, (262) 703-1464

Contacts

Kohl’s Corporation
Investor Relations:
Wes McDonald, Chief Financial Officer, (262) 703-1893
or
Media:
Bevin Bailis, SVP, PR and Communications, (262) 703-1464