KSS Kohls Corporation

Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the fiscal period ended October 29, 2011.

Third Quarter Results

Kohl’s Corporation reported third quarter diluted earnings per share increased 40 percent to $0.80. Net income for the quarter increased 20 percent to $211 million, compared to $176 million ($0.57 per diluted share) a year ago. Net sales were $4.4 billion, an increase of 3.8 percent over the comparable prior year quarter. Comparable store sales for the quarter increased 2.1 percent.

On a year-to-date basis, diluted earnings per share increased 26 percent to $2.56. Net income was $711 million, compared with $626 million ($2.03 per diluted share) for the first nine months of fiscal 2010. Net sales were $12.8 billion, an increase of 3.5 percent. Year-to-date comparable store sales increased 1.7 percent.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “I am extremely pleased with our ability to deliver strong net income and earnings per share growth in a challenging sales environment. Our gross margin rate increased over last year as a result of our increased penetration of private and exclusive brands and disciplined inventory management. We are pleased with the expense management discipline across the company that allowed us to grow our expenses less than we originally planned.”

Mansell added, “The launch of our Jennifer Lopez and Marc Anthony brands during the quarter met our aggressive sales plans. We expect our collection of powerful brands supported by significant marketing investments, especially in broadcast and digital media, to deliver a strong Holiday season.”

Quarterly Dividend Declared

On November 9, 2011, Kohl's Board of Directors declared a quarterly cash dividend of $0.25 per share of Kohl’s common stock. The dividend is payable December 28, 2011 to shareholders of record at the close of business on December 7, 2011.

Store Update

Kohl’s opened 40 stores during 2011, including 31 during the third quarter, and now has 1,127 stores in 49 states, compared with 1,089 stores at the same time last year. The Company completed the remodel of 15 stores during the third quarter, bringing the total number of stores remodeled in 2011 to 100.

Earnings Guidance

For the fourth quarter, Kohl’s expects total sales to increase between 4 and 6 percent and comparable store sales to increase between 2 and 4 percent. Gross margin as a percent of sales is expected to change between (10) and 10 basis points. Selling, general and administrative expenses are expected to increase between 5 and 6 percent. Assuming share repurchases of approximately $300 million in the fourth quarter, achieving these assumptions would result in earnings per diluted share of $1.93 to $2.04 for the fourth quarter.

As a result of its third quarter performance and its fourth quarter assumptions, Kohl’s is increasing its fiscal 2011 guidance from $4.34 to $4.49 per diluted share to $4.41 to $4.52 per diluted share.

Third Quarter 2011 Earnings

Kohl’s will host a third quarter earnings conference call at 8:30 am ET on November 10, 2011. The call can be accessed by dialing (706) 902-0486 and referencing Conference ID 22210755, or via Kohl’s web site at http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm. Replays of the call and web cast will be available for thirty 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 Kohl’s targeted 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/A, 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 1,127 stores in 49 states with a commitment to environmental leadership. In support of the communities it serves, Kohl’s has raised more than $180 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         Three Months Ended Nine Months Ended Oct. 29, Oct. 30, Oct. 29, Oct. 30, 2011 2010 2011 2010 (Restated) (Restated)   Net sales $ 4,376 $ 4,218 $ 12,786 $ 12,353 Cost of merchandise sold   2,688     2,596     7,784     7,543     Gross margin 1,688 1,622 5,002 4,810   Operating expenses: Selling, general and administrative 1,071 1,059 3,066 3,016 Depreciation and amortization   202     207     583     563     Operating income 415 356 1,353 1,231   Interest expense, net   75     79     223     233     Income before income taxes 340 277 1,130 998 Provision for income taxes   129     101     419     372       Net income $ 211   $ 176   $ 711   $ 626       Basic net income per share $ 0.80 $ 0.57 $ 2.58 $ 2.04 Average number of shares 264 307 276 307   Diluted net income per share $ 0.80 $ 0.57 $ 2.56 $ 2.03 Average number of shares 265 308 278 308   As a percent of net sales: Gross margin 38.6 % 38.5 % 39.1 % 38.9 % Selling, general and administrative expenses 24.5 % 25.1 % 24.0 % 24.4 % Operating income 9.5 % 8.4 % 10.6 % 10.0 % Net income 4.8 % 4.2 % 5.6 % 5.1 %   KOHL'S CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In Millions) (Unaudited) Subject to Reclassification         Oct. 29, Oct. 30, 2011 2010

Assets

(Restated) Current assets: Cash and cash equivalents $ 760 $ 2,441 Merchandise inventories 4,130 4,030 Income taxes receivable 105 25 Deferred income taxes 91 92 Other   257   215   Total current assets 5,343 6,803   Property and equipment, net 8,918 8,698 Long-term investments 158 275 Other assets   263   229   Total assets $ 14,682 $ 16,005  

Liabilities and Shareholders' Equity

  Current liabilities: Accounts payable $ 2,080 $ 2,125 Accrued liabilities 1,025 930 Current portion of long-term debt - 400 Current portion of capital lease and financing obligations   95   87   Total current liabilities 3,200 3,542   Long-term debt 2,141 1,494 Capital lease and financing obligations 2,003 2,005 Deferred income taxes 408 216 Other long-term liabilities 459 435 Shareholders' equity   6,471   8,313   Total liabilities and shareholders' equity $ 14,682 $ 16,005   KOHL'S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited) Subject to Reclassification     Nine Months Ended Oct. 29, Oct. 30, 2011 2010 (Restated) Operating activities Net income $ 711 $ 626 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 583 563 Share-based compensation 43 47 Excess tax benefits from share-based compensation 2 3 Deferred income taxes 146 (14 ) Other non-cash revenues and expenses 19 26 Changes in operating assets and liabilities: Merchandise inventories (1,091 ) (1,107 ) Other current and long-term assets

(1

) 1 Accounts payable 942 937 Accrued and other long-term liabilities (16 ) (76 ) Income taxes   (238 )   (212 )   Net cash provided by operating activities  

1,100

    794     Investing activities Acquisition of property and equipment (755 ) (673 ) Sales of investments in auction rate securities 143 40 Other  

(20

)

  4     Net cash used in investing activities  

(632

)   (629 )   Financing activities Treasury stock purchases (1,956 ) (4 ) Dividends paid (207 ) - Proceeds from issuance of debt 646 - Deferred financing costs (8 ) - Interest rate hedge payment (48 ) - Long-term debt payments (400 ) - Proceeds from financing obligations 12 28 Capital lease and financing obligation payments (69 ) (64 ) Proceeds from stock option exercises 47 52 Excess tax benefits from share-based compensation   (2 )   (3 )   Net cash (used in) provided by financing activities   (1,985 )   9     Net (decrease) increase in cash and cash equivalents (1,517 ) 174 Cash and cash equivalents at beginning of period   2,277     2,267     Cash and cash equivalents at end of period $ 760   $ 2,441