KSS Kohls Corporation

Kohl�s Corporation (NYSE:KSS). Kohl�s Corporation today reported results for the quarter and year ended February 2, 2008. Fourth Quarter Results Kohl�s Corporation reported net income for the quarter ended February 2, 2008 of $411.7 million, or $1.31 per diluted share, compared with $484.6 million, or $1.48 per diluted share, a year ago. Net sales were $5.5 billion, an increase of 0.7 percent for the quarter. Comparable store sales for the quarter decreased 4.0 percent. Fiscal 2006 consisted of 53 weeks, resulting in a 14-week fiscal fourth quarter. To provide a better measure of the Company�s business trends, the reported comparable store sales results for the quarter and the year compare the periods ended February 2, 2008 to January 27, 2007. The impact of the 53rd week on total sales was approximately $200 million. 2007 Fiscal Year Results For the fiscal year ended February 2, 2008, net income was $1.1 billion, or $3.39 per diluted share, compared with $1.1 billion or $3.31 per diluted share, a year ago. Net sales were $16.5 billion for the year, an increase of 5.6 percent over $15.6 billion a year ago. On a comparable 52-week basis, comparable store sales decreased 0.8 percent. Larry Montgomery, Kohl�s chairman and chief executive officer, said, �2007 proved to be a difficult year for most retailers, and Kohl�s was no exception. Despite a challenging year which saw deep discounts across the industry, our gross margin increased over the prior year as a result of improved inventory management and increased penetration from our private and exclusive brands. Additionally, we achieved record sales for our sixteenth consecutive year as a public company and increased our diluted earnings per share over last year.� Montgomery added, �We expect 2008 to be a challenging year from a macro-economic perspective. We are planning conservatively in our sales expectations, inventory levels and expenses. We will continue to invest the necessary resources to ensure our profitable growth over the long-run through investments in people and technology.� Expansion Update During the year, Kohl�s successfully opened 112 stores. The Company ended the year with 929 stores in 47 states, compared with 817 stores in 45 states at the end of 2006. The Company expects to open approximately 70-75 stores in fiscal 2008, with 28 stores opening this spring. 2008 Earnings Guidance The Company issued its initial guidance for fiscal 2008. Based on assumptions of a total sales increase of 5% to 8% and a comparable sales change of 0% to negative 3%, the Company expects earnings per diluted share of $3.15 to $3.50 for the year. For the first fiscal quarter, the Company expects earnings per diluted share of $0.50 to $0.54. Fourth Quarter Earnings Conference Call Investors will have the opportunity to listen to the conference call scheduled for 5:00 PM EST on February 28 by dialing (706) 902-0486 (CONFERENCE ID 34081229). The replay of the conference call will also be accessible from 8 PM EST February 28 until midnight March 28, 2008, by dialing (706)645-9291 (CONFERENCE ID 34081229). In addition, the call will be web cast live over the Internet through the Company's web site located at http://www.kohls.com (see "Investor Relations" / "Calendar of Events"). To participate in the conference, register at http://audioevent.mshow.com/341853/, using CONFERENCE ID 34081229, at least ten minutes prior to the call to download and install any necessary audio software. The web cast will be available for 30 days. Cautionary Statement Regarding Forward-Looking Information This press release contains �forward-looking statements� within the meaning of the Private Securities Litigation Reform Act of 1995 including guidance on the Company�s targeted sales and earnings. Kohl's intends forward-looking terminology such as �believes�, �expects�, �may�, �will�, �should�, �anticipates�, �plans�, or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to those described in Item 1A in Kohl�s Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC. About Kohl�s Based in Menomonee Falls, Wis., Kohl�s (NYSE: KSS) is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. A company committed to the communities it serves, Kohl�s operates 929 stores in 47 states and has raised more than $85 million for children�s initiatives nationwide through its Kohl�s Cares for Kids� philanthropic program. For a list of store locations and information, or for the added convenience of shopping online, visit www.kohls.com. Kohl's Corporation Consolidated Statements of Income (In Millions, except per share data) � � � � � � � February 2, % to February 3, % to 2008 Net 2007 Net (13 Weeks) Sales (14 Weeks) Sales � Net sales $ 5,487.3 $ 5,448.6 Cost of merchandise sold 3,605.4 65.7% 3,519.4 64.6% � Gross margin 1,881.9 34.3% 1,929.2 35.4% � Operating expenses: Selling, general, and administrative 1,066.9 19.4% 1,035.3 19.0% Depreciation and amortization 126.1 2.3% 104.0 1.9% Preopening expenses 5.1 0.1% 2.1 0.0% � Operating income 683.8 12.5% 787.8 14.5% � Interest expense, net 23.0 0.5% 10.0 0.2% � Income before income taxes 660.8 12.0% 777.8 14.3% Provision for income taxes 249.1 4.5% 293.2 5.4% � � Net income $ 411.7 7.5% $ 484.6 8.9% � � Basic net income per share $ 1.32 $ 1.49 Average number of shares 312.9 324.5 � Diluted net income per share $ 1.31 $ 1.48 Average number of shares 313.8 327.8 Kohl's Corporation Consolidated Statements of Income (In Millions, except per share data) � � � � � � � February 2, % to February 3, % to 2008 Net 2007 Net (52 Weeks) Sales (53 Weeks) Sales � Net sales $ 16,473.7 $ 15,596.9 Cost of merchandise sold 10,459.5 63.5% 9,922.1 63.6% � Gross margin 6,014.2 36.5% 5,674.8 36.4% � Operating expenses: Selling, general, and administrative 3,696.8 22.4% 3,422.6 21.9% Depreciation and amortization 452.1 2.7% 387.7 2.5% Preopening expenses 60.8 0.4% 49.7 0.4% � Operating income 1,804.5 11.0% 1,814.8 11.6% � Interest expense, net 62.4 0.4% 40.4 0.2% � Income before income taxes 1,742.1 10.6% 1,774.4 11.4% Provision for income taxes 658.2 4.0% 665.7 4.3% � � Net income $ 1,083.9 6.6% $ 1,108.7 7.1% � � Basic net income per share $ 3.41 $ 3.34 Average number of shares 318.1 332.3 � Diluted net income per share $ 3.39 $ 3.31 Average number of shares 320.1 334.8 KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) Subject to Reclassification � � � � February 2, February 3, 2008 2007 (52 Weeks) (53 Weeks) � Operating activities Net income $ 1,083,851 $ 1,108,681 Adjustments to reconcile net income to net cash provided by operating activities: � Depreciation and amortization, including debt discount 453,171 388,515 Share-based compensation 53,607 44,699 Excess tax benefits from share-based compensation (6,151 ) (25,707 ) Deferred income taxes (11,958 ) 9,216 Other non-cash revenues and expenses 33,700 31,477 Changes in operating assets and liabilities: Accounts receivable, net - 1,652,065 Merchandise inventories (275,025 ) (349,663 ) Other current and long-term assets (44,329 ) (65,348 ) Accounts payable (98,391 ) 104,405 Accrued and other long-term liabilities 148,746 129,821 Income taxes (102,858 ) 92,062 � � Net cash provided by operating activities 1,234,363 � 3,120,223 � � Investing activities Acquisition of property and equipment and favorable lease rights (1,541,683 ) (1,163,092 ) Purchases of short-term investments (9,198,942 ) (13,509,169 ) Sales of short-term investments 9,147,044 13,238,936 Proceeds from sale of property, plant and equipment 30,197 - Other (4,387 ) (6,856 ) � Net cash used in investing activities (1,567,771 ) (1,440,181 ) � Financing activities Proceeds from issuance of debt 996,031 - Payments of long-term debt (19,611 ) (109,596 ) Deferred financing fees (7,287 ) - Treasury stock purchases (747,915 ) (1,628,416 ) Excess tax benefits from share-based compensation 6,151 25,707 Proceeds from stock option exercises 97,412 � 94,594 � � Net cash provided by (used in) financing activities 324,781 � (1,617,711 ) � Net increase (decrease) in cash (8,627 ) 62,331 Cash at beginning of period 189,170 � 126,839 � � Cash at end of period $ 180,543 � $ 189,170 � Kohl's Corporation Consolidated Balance Sheets (In Thousands) Subject to Reclassification � � � � February 2, February 3, 2008 2007 � Assets Current assets: Cash $ 180,543 $ 189,170 Short-term investments 483,128 431,230 Merchandise inventories 2,855,733 2,578,378 Deferred income taxes 71,069 40,190 Other current assets 133,416 154,919 � Total current assets 3,723,889 3,393,887 � Property and equipment, net 6,509,819 5,352,974 Favorable lease rights, net 209,958 219,286 Goodwill 9,338 9,338 Other assets 107,078 58,539 � Total assets $10,560,082 $ 9,034,024 � � Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 835,985 $ 934,376 Accrued liabilities 798,508 725,025 Income taxes payable 124,254 233,263 Current portion of long-term debt and capital leases 12,701 18,841 � Total current liabilities 1,771,448 1,911,505 � Long-term debt and capital leases 2,051,875 1,040,057 Deferred income taxes 262,451 243,530 Other long-term liabilities 372,705 235,537 Shareholders' equity 6,101,603 5,603,395 � Total liabilities and shareholders' equity $10,560,082 $ 9,034,024