- Significantly increased financial flexibility during quarter,
ending with $2.0 billion in cash
- Swift and aggressive actions taken in response to COVID-19
resulted in positive operating cash flow
- First quarter net sales decrease (43.5%)
- First quarter diluted loss per share of ($3.50); adjusted
diluted loss per share(2) of ($3.20)
Kohl’s Corporation (NYSE:KSS) today reported results for the
quarter ended May 2, 2020.
Three Months
($ in millions, except per share
data)
2020
2019
Change
Total revenue
$
2,428
$
4,087
(40.6
)%
Net sales(1)
(43.5
)%
(3.3
)%
Gross margin
17.3
%
36.8
%
(1,950) bps
Selling, general, and administrative
expenses
$
1,066
$
1,275
(16.4
)%
Reported
Net (loss) income
$
(541
)
$
62
(973
)%
Diluted (loss) earnings per share
$
(3.50
)
$
0.38
(1,021
)%
Non-GAAP(2)
Adjusted net (loss) income
$
(495
)
$
98
(605
)%
Adjusted diluted (loss) earnings per
share
$
(3.20
)
$
0.61
(625
)%
(1)
Not reporting comparable sales due to
store closures
(2)
Excludes Impairments, store closing, and
other costs
“We entered the year in a strong financial position and our
business was tracking to our expectations prior to the onset of the
crisis. We immediately responded with actions to protect the health
and safety of our associates and customers and to preserve our
financial position. I am incredibly proud of how our associates
stepped up to face this unprecedented challenge with speed and
agility. Our actions to manage cash outflow and increase liquidity
have been instrumental in enhancing our position to navigate this
crisis, and we believe our history of prudent capital management
will continue to serve us well,” said Michelle Gass, Kohl’s chief
executive officer.
“We have begun the rebuilding process, recently reopening about
50% of our stores across the country. In doing so, we have taken
special care to equip our stores with the latest health and safety
measures as we welcome back our associates and customers,” said
Gass. “As we look ahead, we know this experience will have a
lasting impact to customer behavior and the retail landscape, and
we are evolving our strategies to ensure our relevance and to
capture market share.”
Actions Taken In Response to
COVID-19
As part of the COVID-19 response, the Company has taken the
following actions to preserve financial liquidity and financial
flexibility:
- Managed inventory receipts meaningfully lower,
- Significantly reduced expenses across the business inclusive of
marketing, technology, operations and payroll,
- Decreased planned capital expenditures by approximately $500
million,
- Suspended share repurchase program,
- Suspended regular quarterly cash dividend beginning in the
second quarter of 2020,
- Replaced and upsized revolver to $1.5 billion secured facility,
and
- Issued $600 million notes due 2025.
First Quarter 2020 Earnings Conference
Call
Kohl's will host its quarterly earnings conference call at 9:00
am ET on May 19, 2020. A webcast of the conference call and the
related presentation materials will be available via the Company's
web site at
http://corporate.kohls.com/investors/events-and-presentations, both
live and after the call.
Cautionary Statement Regarding
Forward-Looking Information and Non-GAAP Measures
This current report on Form 8-K contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. The Company 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 the Company's actual
results to differ materially from those anticipated by the
forward-looking statements. These risks and uncertainties include,
but are not limited to, risks described more fully in Item 1A in
the Company's Annual Report on Form 10-K, which is expressly
incorporated herein by reference, and other factors as may
periodically be described in the Company's filings with the SEC.
Forward-looking statements relate to the date initially made, and
Kohl’s undertakes no obligation to update them.
In this press release, the Company provides information
regarding adjusted net (loss) income and adjusted diluted (loss)
earnings per share, which are not recognized terms under U.S.
generally accepted accounting principles (“GAAP”) and do not
purport to be alternatives to net income as a measure of operating
performance. A reconciliation of adjusted net (loss) income and
adjusted diluted (loss) earnings per share is provided in this
release. The Company believes that the use of these non-GAAP
financial measures provides investors with enhanced visibility into
its results with respect to the impact of certain costs. Because
not all companies use identical calculations, these presentations
may not be comparable to other similarly titled measures of other
companies.
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. Since its founding, Kohl's has given more than
$750 million to support communities nationwide, with a focus on
family health and wellness. For a list of store locations or to
shop online, visit Kohls.com. For more information about Kohl’s
impact in the community or how to join our winning team, visit
Corporate.Kohls.com or follow @KohlsNews on Twitter.
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
(Dollars in Millions, Except per Share
Data)
May 2, 2020
May 4, 2019
Net sales
$
2,160
$
3,821
Other revenue
268
266
Total revenue
2,428
4,087
Cost of merchandise sold
1,787
2,415
Gross margin rate
17.3
%
36.8
%
Operating expenses:
Selling, general, and administrative
1,066
1,275
As a percent of total revenue
43.9
%
31.2
%
Depreciation and amortization
227
230
Impairments, store closing, and other
costs
66
49
Operating (loss) income
(718
)
118
Interest expense, net
58
52
(Loss) income before income taxes
(776
)
66
Provision for income taxes
(235
)
4
Net (loss) income
$
(541
)
$
62
Average number of shares:
Basic
154
161
Diluted
155
162
(Loss) earnings per share:
Basic
$
(3.52
)
$
0.38
Diluted
$
(3.50
)
$
0.38
ADJUSTED NET (LOSS) INCOME AND
DILUTED (LOSS) EARNINGS PER SHARE, NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Three Months Ended
(Dollars in Millions, Except per Share
Data)
May 2, 2020
May 4, 2019
Net (loss) income
GAAP
$
(541
)
$
62
Impairments, store closing, and other
costs
46
36
Adjusted (non-GAAP)
$
(495
)
$
98
Diluted (loss) earnings per
share
GAAP
$
(3.50
)
$
0.38
Impairments, store closing, and other
costs
0.30
0.23
Adjusted (non-GAAP)
$
(3.20
)
$
0.61
KOHL’S CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in Millions)
May 2, 2020
May 4, 2019
Assets
Current assets:
Cash and cash equivalents
$
2,039
$
543
Merchandise inventories
3,557
3,680
Income tax receivable
174
15
Other
400
397
Total current assets
6,170
4,635
Property and equipment, net
7,169
7,211
Operating leases
2,373
2,453
Other assets
157
167
Total assets
$
15,869
$
14,466
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
1,866
$
1,295
Accrued liabilities
1,070
1,184
Income taxes payable
68
40
Current portion of:
Finance leases and financing
obligations
124
115
Operating leases
159
158
Total current liabilities
3,287
2,792
Long-term debt
3,449
1,855
Finance leases and financing
obligations
1,351
1,225
Operating leases
2,605
2,680
Deferred income taxes
165
233
Other long-term liabilities
222
239
Shareholders' equity
4,790
5,442
Total liabilities and shareholders'
equity
$
15,869
$
14,466
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three Months Ended
(Dollars in Millions)
May 2, 2020
May 4, 2019
Operating activities
Net (loss) income
$
(541
)
$
62
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
227
230
Share-based compensation
15
15
Deferred income taxes
(91
)
18
Impairments, store closing, and other
costs
51
49
Non-cash inventory costs
187
—
Non-cash lease expense
37
37
Other non-cash expenses
5
2
Changes in operating assets and
liabilities:
Merchandise inventories
(205
)
(202
)
Other current and long-term assets
(21
)
6
Accounts payable
660
108
Accrued and other long-term
liabilities
(98
)
(141
)
Income taxes
(139
)
1
Operating lease liabilities
(34
)
(49
)
Net cash provided by operating
activities
53
136
Investing activities
Acquisition of property and equipment
(162
)
(238
)
Net cash used in investing activities
(162
)
(238
)
Financing activities
Proceeds from issuance of debt
2,097
—
Deferred financing costs
(19
)
—
Treasury stock purchases
(8
)
(121
)
Shares withheld for taxes on vested
restricted shares
(20
)
(25
)
Dividends paid
(108
)
(108
)
Reduction of long-term borrowings
(497
)
(6
)
Finance lease and financing obligation
payments
(23
)
(31
)
Proceeds from stock option exercises
—
2
Proceeds from financing obligations
3
—
Net cash provided by (used in) financing
activities
1,425
(289
)
Net increase (decrease) in cash and cash
equivalents
1,316
(391
)
Cash and cash equivalents at beginning of
period
723
934
Cash and cash equivalents at end of
period
$
2,039
$
543
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200519005168/en/
Investor Relations: Mark Rupe, (262) 703-1266,
mark.rupe@kohls.com
Media: Jen Johnson, (262) 703-5241,
jen.johnson@kohls.com
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