KSS Kohls Corporation

Kohl’s Corporation (NYSE:KSS) today reported results for the quarter and year ended January 28, 2017.

      Three Months       Twelve Months ($ in millions)     2016     2015     Change       2016     2015     Change Total sales $ 6,205     $ 6,387     (2.8)%       $ 18,686     $ 19,204     (2.7)% Comparable store sales (2.2)% (2.4)% Gross margin 33.4 % 33.1 % 33 bp 36.1 % 36.1 % (6) bp Selling, general, and administrative expenses $ 1,360 $ 1,332 2% $ 4,435 $ 4,452 —% Reported Net income $ 252 $ 296 (15)% $ 556 $ 673 (17)% Diluted earnings per share $ 1.44 $ 1.58 (9)% $ 3.11 $ 3.46 (10)% Excluding non-recurring items* Net income $ 252 $ 296 (15)% $ 673 $ 781 (14)% Diluted earnings per share     $ 1.44       $ 1.58       (9)%       $ 3.76       $ 4.01       (6)%

*Excludes Impairments, store closing and other costs in 2016 and Loss on extinguishment of debt in 2015.

 

Kevin Mansell, Kohl's chairman, chief executive officer and president, said, “Sales results were weak for the quarter in total, driven by declines in brick and mortar traffic, and offset somewhat by strength in online demand. We saw improvement in merchandise margin, and our team continued to manage inventory and expenses extremely well. In 2017, we will accelerate our focus on becoming the destination for active and wellness with the launch of Under Armour in early March. We will also extend our efforts on improving our speed to market across all of our proprietary brands into all apparel areas and home.”

Dividend

On February 22, 2017, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.55 per share, a 10% increase over its prior dividend. The dividend is payable March 22, 2017 to shareholders of record at the close of business on March 8, 2017.

Store Update

Kohl's ended the fiscal year with 1,154 Kohl's stores in 49 states. During 2016, the Company:

• Opened 9 small format Kohl's stores
• Closed 19 Kohl's stores
• Opened two Off/Aisle locations
• Opened 12 FILA outlets

Initial 2017 Earnings Guidance

The Company expects earnings per diluted share of $3.50 to $3.80 for fiscal 2017. This guidance is based on the following assumptions:

• Total sales change of (1.3)% to 0.7% which includes sales of approximately $160 million in the 53rd week.
• Comparable sales change of (2)% to 0%
• Gross margin as a percentage of sales to increase 10 to 15 basis points over 2016
• SG&A dollars to increase 0.5% to 2% over 2016. Excluding the 53rd week in 2017, the Company expects SG&A dollars to increase 0% to 1.5%. SG&A dollars in the 53rd week are expected to be approximately $25 million.
• Depreciation expense of $960 million
• Interest expense of $300 million
• Effective tax rate of 37.5%
• $350 million in share repurchases
• Capital expenditures of $700 million

Fourth Quarter 2016 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 8:30 am ET on February 23, 2017. 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 is 386532. The conference call and replays are also accessible via the Company's web site at http://corporate.kohls.com/investors/events-and-presentations.

Cautionary Statement Regarding Forward-Looking Information

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including 2017 earnings guidance. 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 omnichannel retailer with more than 1,100 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, Kohl’s offers amazing national and exclusive brands, incredible savings and an easy shopping experience in our stores, online at Kohls.com and on Kohl's mobile app. Throughout its history, Kohl's has given nearly $600 million to support communities nationwide. For a list of store locations or to shop online, visit Kohls.com. For more information about Kohl’s impact in the community and how to join our winning team, visit Corporate.Kohls.com

  KOHL’S CORPORATION CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

      Three Months     Twelve Months Jan 28,   Jan 30,     Jan 28,   Jan 30, (Dollars in Millions, Except per Share Data)     2017   2016     2017   2016 Net sales $ 6,205 $ 6,387 $ 18,686 $ 19,204 Cost of merchandise sold     4,133     4,275       11,944     12,265   Gross margin 2,072 2,112 6,742 6,939 As a percent of net sales 33.4 % 33.1 % 36.1 % 36.1 % Operating expenses: Selling, general, and administrative 1,360 1,332 4,435 4,452 As a percent of net sales 21.9 % 20.9 % 23.7 % 23.2 % Depreciation and amortization 239 239 938 934 Impairments, store closing and other costs     —     —       186     —   Operating income 473 541 1,183 1,553 Interest expense, net 75 79 308 327 Loss on extinguishment of debt     —     —       —     169   Income before income taxes 398 462 875 1,057 Provision for income taxes     146     166       319     384   Net income     $ 252     $ 296       $ 556     $ 673     Average number of shares: Basic 174 187 178 193 Diluted 175 187 179 195   Net income per share: Basic $ 1.45 $ 1.58 $ 3.12 $ 3.48 Diluted $ 1.44 $ 1.58 $ 3.11 $ 3.46   Excluding non-recurring items*: Net income $ 252 $ 296 $ 673 $ 781 Diluted net income per share     $ 1.44     $ 1.58       $ 3.76     $ 4.01  

*Excludes Impairments, store closing and other costs in 2016 and Loss on extinguishment of debt in 2015.

  KOHL’S CORPORATION CONSOLIDATED BALANCE SHEETS

(Unaudited)

     

January 28,

   

January 30,

(Dollars in Millions)    

2017

   

2016

Assets Current assets: Cash and cash equivalents $ 1,074 $ 707 Merchandise inventories 3,795 4,038 Other     378       331 Total current assets 5,247 5,076 Property and equipment, net 8,103 8,308 Other assets     224       222 Total assets     $ 13,574       $ 13,606   Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 1,507 $ 1,251 Accrued liabilities 1,224 1,206 Income taxes payable 112 130 Current portion of capital lease and financing obligations     131       127 Total current liabilities 2,974 2,714 Long-term debt 2,795 2,792 Capital lease and financing obligations 1,685 1,789 Deferred income taxes 272 257 Other long-term liabilities 671 563 Shareholders' equity     5,177       5,491 Total liabilities and shareholders' equity     $ 13,574       $ 13,606   KOHL’S CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

(Dollars in Millions)

    2016     2015 Operating activities         Net income $ 556 $ 673 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 938 934 Excess tax benefits from share-based compensation (5 ) (10 ) Share-based compensation 41 48 Deferred income taxes 13 (38 ) Loss on extinguishment of debt — 169 Impairments, store closing and other costs 57 — Other non-cash revenues and expenses 30 24 Changes in operating assets and liabilities: Merchandise inventories 249 (215 ) Other current and long-term assets (45 ) 43 Accounts payable 256 (260 ) Accrued and other long-term liabilities 81 53 Income taxes     (23 )     53   Net cash provided by operating activities     2,148       1,474   Investing activities Acquisition of property and equipment (768 ) (690 ) Other     12       9   Net cash used in investing activities     (756 )     (681 ) Financing activities Treasury stock purchases (557 ) (1,001 ) Shares withheld for restricted shares (17 ) (27 ) Dividends paid (358 ) (349 ) Proceeds from issuance of debt — 1,088 Reduction of long-term borrowings — (1,085 ) Premium paid on redemption of debt — (163 ) Proceeds from financing obligations 11 1 Capital lease and financing obligation payments (127 ) (114 ) Proceeds from stock option exercises 18 147 Excess tax benefits from share-based compensation     5       10   Net cash used in financing activities     (1,025 )     (1,493 ) Net increase (decrease) in cash and cash equivalents 367 (700 ) Cash and cash equivalents at beginning of period     707       1,407   Cash and cash equivalents at end of period     $ 1,074       $ 707    

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Kohl’s CorporationInvestor Relations:Wes McDonald, Chief Financial Officer, (262) 703-1893orMedia:Jen Johnson, VP, Corporate Communications, (262) 703-5241