KSS Kohls Corporation

Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the quarter and year ended January 29, 2011.

Net income for the quarter increased 14 percent to $493 million, or $1.66 per diluted share, compared to $431 million, or $1.40 per diluted share, a year ago. Net sales were $6.0 billion, an increase of 6.3 percent for the quarter. Comparable store sales for the quarter increased 4.3 percent.

For the year, net income was $1.1 billion, or $3.65 per diluted share, compared to $991 million, or $3.23 per diluted share, for fiscal 2009. Net sales increased 7.1 percent to $18.4 billion. Comparable store sales increased 4.4 percent over the prior year.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “We clearly outperformed our direct competition for the year, achieving the highest total sales increase for the year, leading to the largest market share gain. We improved our merchandise margins significantly through strong inventory management and successful private and exclusive brand strategies. Expenses were well managed while improving the store experience for our customers. I am very proud of our 130,000 associates and the role they played in these results and want to thank them for their hard work, loyalty and dedication in delivering on our promise to ‘expect great things’ from Kohl’s."

Mansell added, “In 2011, we expect consumers to remain very interested in value and ways to make their dollars go further and we will remain focused on increasing market share. We are extremely pleased to be initiating a dividend and substantially increasing our share repurchase program this year, as a result of our financial strength. We are investing prudently for the long-term in our stores - both new and remodeled - and our high-growth e-commerce business to ensure our profitable growth while returning excess cash to our shareholders.”

Capital Structure

On February 23, the Kohl’s Board of Directors declared a quarterly dividend of $0.25 per common share. This is the first cash dividend paid to common shareholders in the Company's history. The dividend will be paid on March 30 to all shareholders of record as of March 9. This dividend reflects the Board’s confidence in the Company’s long-term cash flow and the Company anticipates using a portion of future free cash flow to continue to pay quarterly dividends.

Kohl’s Board of Directors also increased the Company's share repurchase authorization under its existing share repurchase program by $2.6 billion, to $3.5 billion. Kohl’s expects to recommence share repurchases in the coming months primarily in open market transactions, subject to market conditions, and expects to complete the program by the end of fiscal 2013.

Expansion Update

Kohl’s ended the year with 1,089 stores in 49 states, including 30 which were successfully opened in 2010. The Company also re-opened a store in Virginia which closed in January 2010 for a complete re-build. The Company completed 85 store remodels, compared to 51 stores last year. In fiscal 2011, the Company expects to open approximately 40 stores and remodel 100 stores.

Earnings Guidance

The Company issued its initial guidance for fiscal 2011. Based on assumptions of a total sales increase of 4 to 6 percent and a comparable store sales increase of 2 to 4 percent, the Company expects earnings per diluted share of $4.05 to $4.25 for the year. For the first fiscal quarter, the Company expects earnings per diluted share of $0.68 to $0.73 based on assumptions of a total sales increase of 4 to 6 percent and a comparable store sales increase of 2 to 4 percent.

Fourth Quarter 2010 Earnings Release Conference Call

Kohl’s will release its fourth quarter earnings on Thursday, February 24, 2011 at 7:00 AM EST. A conference call is scheduled at 8:30 AM EST. Investors will have an opportunity to listen to the conference call by dialing (706) 902-0486, using Conference ID 40249720. A replay of the call will also be accessible beginning at approximately 9:30 AM EST on February 24, until midnight EDT on March 24, 2011. To listen to the replay, dial (800) 642-1687 or (706) 645-9291, and use Conference ID 40249720.

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=2807929 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 CONSOLIDATED STATEMENTS OF INCOME (In Millions, except per share data) (Unaudited) Subject to Reclassification     Three Months (13 Weeks) Ended   % to     % to January 29, Net January 30, Net 2011 Sales 2010 Sales   Net sales $ 6,038 $ 5,682 Cost of merchandise sold   3,815 63.2 %   3,612 63.6 %   Gross margin 2,223 36.8 % 2,070 36.4 %   Operating expenses: Selling, general, and administrative 1,242 20.5 % 1,193 21.0 % Depreciation and amortization   161 2.7 %   155 2.7 %   Operating income 820 13.6 % 722 12.7 %   Interest expense, net   32 0.6 %   31 0.5 %   Income before income taxes 788 13.0 % 691 12.2 % Provision for income taxes   295 4.8 %   260 4.6 %     Net income $ 493 8.2 % $ 431 7.6 %     Basic net income per share $ 1.67 $ 1.41 Average number of shares 295 306   Diluted net income per share $ 1.66 $ 1.40 Average number of shares 297 308     KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Millions, except per share data) (Unaudited) Subject to Reclassification   Twelve Months (52 Weeks) Ended % to % to January 29, Net January 30, Net 2011 Sales 2010 Sales   Net sales $ 18,391 $ 17,178 Cost of merchandise sold   11,359   61.8 %   10,680 62.2 %   Gross margin 7,032 38.2 % 6,498 37.8 %   Operating expenses: Selling, general, and administrative 4,462 24.2 % 4,196 24.4 % Depreciation and amortization   656   3.6 %   590 3.4 %   Operating income 1,914 10.4 % 1,712 10.0 %   Interest expense, net   132   0.7 %   124 0.8 %   Income before income taxes 1,782 9.7 % 1,588 9.2 % Provision for income taxes   668   3.6 %   597 3.4 %     Net income $ 1,114   6.1 % $ 991 5.8 %     Basic net income per share $ 3.67 $ 3.25 Average number of shares 304 305   Diluted net income per share $ 3.65 $ 3.23 Average number of shares 306 306   KOHL'S CORPORATION CONSOLIDATED BALANCE SHEETS (In Millions) (Unaudited) Subject to Reclassification     January 29,   January 30, 2011 2010

Assets

Current assets: Cash and cash equivalents $ 2,277 $ 2,267 Merchandise inventories 3,036 2,923 Deferred income taxes 77 73 Other   255   222   Total current assets 5,645 5,485   Property and equipment, net 7,256 7,018 Long-term investments 277 321 Favorable lease rights, net 193 204 Other assets   193   132 Total assets $ 13,564 $ 13,160  

Liabilities and Shareholders' Equity

  Current liabilities: Accounts payable $ 1,138 $ 1,188 Accrued liabilities 1,027 1,002 Income taxes payable 127 184 Current portion of long-term debt and capital leases   418   16   Total current liabilities 2,710 2,390   Long-term debt and capital leases 1,678 2,052 Deferred income taxes 418 377 Other long-term liabilities 656 488 Shareholders' equity   8,102   7,853 Total liabilities and shareholders' equity $ 13,564 $ 13,160   KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited) Subject to Reclassification    

Twelve Months

(52 Weeks) Ended January 29,   January 30, 2011 2010   Operating activities Net income $ 1,114 $ 991 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 656 590 Share-based compensation 66 64 Excess tax benefits from share-based compensation 3 3 Deferred income taxes 38 52 Other non-cash revenues and expenses 66 52 Changes in operating assets and liabilities: Merchandise inventories (107 ) (119 ) Other current and long-term assets (50 ) (13 ) Accounts payable (50 ) 306 Accrued and other long-term liabilities 3 234 Income taxes   (63 )   74     Net cash provided by operating activities   1,676     2,234     Investing activities Acquisition of property and equipment and favorable lease rights (761 ) (666 ) Sales of investments in auction rate securities 42 28 Other   2     (2 )   Net cash used in investing activities   (717 )   (640 )   Financing activities Treasury stock purchases (1,004 ) (1 ) Capital lease payments (17 ) (17 ) Proceeds from stock option exercises 75 51 Excess tax benefits from share-based compensation   (3 )   (3 )   Net cash (used in) provided by financing activities   (949 )   30     Net increase in cash and cash equivalents 10 1,624 Cash and cash equivalents at beginning of year   2,267     643     Cash and cash equivalents at end of year $ 2,277   $ 2,267