Kohl’s Corporation today reported results for the quarter and
nine months ended October 30, 2010.
Kohl’s Corporation reported net income for the quarter ended
October 30, 2010 of $194 million, or $0.63 per diluted share,
compared with $193 million, or $0.63 per diluted share, a year ago.
For the nine months ended October 30, 2010, net income increased 16
percent to $652 million, or $2.12 per diluted share, compared to
$560 million, or $1.83 per diluted share, for the nine months ended
October 31, 2009. These results exclude the lease accounting
corrections which are more fully described below.
Net sales for the quarter were $4.2 billion, an increase of 4.1
percent for the quarter. Comparable store sales for the quarter
increased 1.8 percent. Year to date, net sales increased 7.4
percent to $12.4 billion compared to $11.5 billion a year ago.
Comparable store sales increased 4.4 percent for the same
period.
Kevin Mansell, Kohl’s chairman, president and chief executive
officer, said “We are pleased with our financial results for the
third quarter. We continue to gain market share as reflected in our
performance in both comparable and total sales growth. This sales
performance, along with strong inventory management, allowed us to
continue to increase our gross margin rate. We are pleased with the
expense management discipline across the company that allowed us to
grow our expenses less than we originally planned.“
As previously disclosed, as a result of a detailed review of its
historical accounting for its leased properties, the Company
expects to record non-cash adjustments which are expected to
increase depreciation, interest and rent expense for the third
quarter. Though the Company has not completed its review, based
largely on the average adjustment required for leases that have
been reviewed to date, management currently expects a correction in
the range of $25 million, or $0.05 per diluted share, to $75
million, or $0.15 per diluted share. The errors occurred over a
number of years. Upon finalization of its review, the Company will
quantify the impact of the corrections on previously reported
periods. The Company expects the accounting review to be complete
before filing its third quarter 10-Q.
Earnings Guidance
For the fourth quarter, the Company expects total sales to
increase between 4.5 and 6.5 percent; comparable store sales to
increase 2 to 4 percent; and gross margin as a percent of sales to
increase 20 to 40 basis points over last year. The Company expects
selling, general and administrative expenses to increase between 3
and 4 percent. This would result in earnings per diluted share of
$1.51 to $1.59 for the fourth quarter.
Resumption of Share Repurchase
Program
Kohl’s intends to enter into an agreement within the next
several weeks to repurchase $1 billion of its common stock on an
accelerated basis. These shares would be purchased under the $2.5
billion share repurchase program announced in September 2007,
pursuant to which $1.9 billion of authorization remains. Kohl’s
entry into this repurchase agreement is contingent on, among other
things, market conditions and on Kohl’s not possessing material
non-public information on the commencement date.
Third Quarter 2010 Earnings Conference
Call
Investors will have an opportunity to listen to the third
quarter earnings conference call at 8:30 AM EST on Thursday,
November 11, 2010 by dialing (706) 902-0486, using Conference ID
19436600. A replay of the call will also be accessible beginning at
approximately 9:30 AM EST on November 11, until midnight EST on
December 11, 2010. To listen to the replay, dial (706) 645-9291,
and use Conference ID 19436600.
In addition, the call will be web cast live over the Internet
through the Company's web site located at
http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm.
To participate in the conference, register at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=60706&eventID=2807927
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. Kohl’s operates its 1,089 stores in 49 states with a
commitment to environmental leadership. In support of the
communities it serves, Kohl’s has raised more than $150 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 a
list of store locations and information, or for the added
convenience of shopping online, visit www.kohls.com.
KOHL'S CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (In Millions, except per share
data) (Unaudited) Subject to Reclassification
Before
Adjustments for Lease Accounting Corrections
Three Months (13 Weeks) Ended % to % to
Oct. 30, Net
Oct. 31, Net
2010 Sales
2009 Sales Net sales
$ 4,218 $ 4,051
Cost of merchandise sold
2,596 61.5 % 2,512
62.0 % Gross margin
1,622 38.5 % 1,539 38.0 %
Operating expenses: Selling, general, and administrative
1,113 26.4 % 1,027 25.4 % Depreciation and amortization
165 4.0 % 150 3.7 % Preopening expenses
9 0.2
% 23 0.5 % Operating income
335 7.9 % 339 8.4
% Interest expense, net
31 0.7 % 31 0.8
% Income before income taxes
304 7.2 % 308 7.6 %
Provision for income taxes
110 2.6 % 115 2.8 %
Net income
$ 194 4.6 % 193 4.8 %
Basic net income per share
$ 0.63 $
0.63 Average number of shares
307 305 Diluted net
income per share
$ 0.63 $ 0.63 Average number of
shares
308 308
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In Millions,
except per share data) (Unaudited) Subject to Reclassification
Before Adjustments for Lease Accounting Corrections
Nine Months (39 Weeks) Ended % to % to
Oct.
30, Net
Oct. 31, Net
2010 Sales
2009 Sales
Net sales
$ 12,353 $ 11,496 Cost of
merchandise sold
7,543 61.1 % 7,068 61.5 %
Gross margin
4,810 38.9 % 4,428 38.5 %
Operating expenses: Selling, general, and administrative
3,190 25.8 % 2,954 25.7 % Depreciation and amortization
470 3.8 % 435 3.8 % Preopening expenses
15 0.1
% 49 0.4 % Operating income
1,135 9.2 % 990
8.6 % Interest expense, net
93 0.7 % 93
0.8 % Income before income taxes
1,042 8.5 % 897 7.8
% Provision for income taxes
390 3.2 % 337 2.9
% Net income
$ 652 5.3 % $ 560 4.9 %
Basic net income per share
$ 2.13 $
1.84 Average number of shares
307 305 Diluted net
income per share
$ 2.12 $ 1.83 Average number of
shares
308 306
KOHL'S CORPORATION CONDENSED
CONSOLIDATED BALANCE SHEETS (In Millions)
(Unaudited) Subject to Reclassification
Before
Adjustments for Lease Accounting Corrections
Oct. 30, Oct. 31,
2010 2009
Assets
Current assets: Cash and cash equivalents
$ 2,441
$ 1,503 Merchandise inventories
4,030
3,807 Income taxes receivable
32 - Deferred
income taxes
92 69 Other
215
208 Total current assets
6,810 5,587
Property and equipment, net
7,236 7,082
Long-term investments
275 326 Favorable lease rights,
net
196 198 Other assets
138
130 Total assets
$ 14,655 $
13,323
Liabilities and
Shareholders' Equity
Current liabilities: Accounts payable
$ 2,125
$ 2,071 Accrued liabilities
925 918
Income taxes payable
- 14 Current portion of
long-term debt and capital leases
417
17 Total current liabilities
3,467
3,020 Long-term debt and capital leases
1,668
2,054 Deferred income taxes
398 390 Other
long-term liabilities
518 464 Shareholders' equity
8,604 7,395 Total liabilities and
shareholders' equity
$ 14,655 $ 13,323
KOHL'S CORPORATION CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In Millions) (Unaudited)
Subject to Reclassification
Before Adjustments for Lease
Accounting Corrections
Nine Months
(39 Weeks) Ended Oct. 30, Oct. 31,
2010
2009
Operating activities Net income
$
652 $ 560 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
470 435 Share-based compensation
47 45 Excess tax
benefits from share-based compensation
3 3 Deferred income
taxes
5 69 Other non-cash revenues and expenses
27 40
Changes in operating assets and liabilities: Merchandise
inventories
(1,107 ) (1,005 ) Other current and
long-term assets
1 4 Accounts payable
937 1,190
Accrued and other long-term liabilities
(80 ) 118
Income taxes
(213 ) (96 ) Net
cash provided by operating activities
742
1,363
Investing activities Acquisition
of property and equipment and favorable lease rights
(645
) (550 ) Sales of investments in auction rate securities
40 20 Other
4 (1 ) Net
cash used in investing activities
(601 )
(531 )
Financing activities Treasury stock
purchases
(4 ) (1 ) Capital lease payments
(12
) (12 ) Proceeds from stock option exercises
52 44
Excess tax benefits from share-based compensation
(3
) (3 ) Net cash provided by financing
activities
33 28 Net
increase in cash and cash equivalents
174 860 Cash and cash
equivalents at beginning of period
2,267
643 Cash and cash equivalents at end of period
$ 2,441 $ 1,503
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