- Strengthened financial position during the quarter, ending with
$2.4 billion in cash
- Disciplined management of expenses and inventory resulted in
positive operating cash flow
- Second quarter net sales decrease (22.9%)
- Second quarter diluted earnings per share of $0.30; adjusted
loss per share(2) of ($0.25)
Kohl’s Corporation (NYSE:KSS) today reported results for the
quarter ended August 1, 2020.
Three Months
Six Months
($ in millions, except per share
data)
August 1, 2020
August 3, 2019
Change
August 1, 2020
August 3, 2019
Change
Total revenue
$
3,407
$
4,430
(23.1
)%
$
5,835
$
8,517
(31.5
)%
Net sales(1)
(22.9
)%
(3.3
)%
(32.8
)%
(3.3
)%
Gross margin
33.1
%
38.8
%
(569) bps
26.8
%
37.9
%
(1,109) bps
Selling, general, and administrative
expenses
$
1,050
$
1,269
(17.3
)%
$
2,116
$
2,544
(16.8
)%
Reported
Net income (loss)
$
47
$
241
(80
)%
$
(494
)
$
303
(263
)%
Diluted earnings (loss) per share
$
0.30
$
1.51
(80
)%
$
(3.21
)
$
1.89
(270
)%
Non-GAAP(2)
Adjusted net (loss) income
$
(39
)
$
247
(116
)%
$
(534
)
$
345
(255
)%
Adjusted diluted (loss) earnings per
share
$
(0.25
)
$
1.55
(116
)%
$
(3.47
)
$
2.15
(261
)%
(1) Represents change in Net sales vs. prior year period. We are
not reporting comparable sales due to store closures. (2) Excludes
Impairments, store closing, and other costs and Gain on sale of
real estate.
"Our organization continues to navigate through a period of
extraordinary change and uncertainty presented by the COVID-19
crisis. During the second quarter we made significant progress in
rebuilding our business. We reopened all of our stores with new
safety and operating procedures, accelerated digital growth, and
showed great discipline in managing inventory and expenses
meaningfully lower. In doing so, we generated positive operating
cash flow and further enhanced our financial position,” said
Michelle Gass, Kohl’s chief executive officer.
“As we look ahead, we are planning for the crisis to continue to
impact our business in the near-term,” said Gass. “We are
well-positioned to capitalize on evolving customer behaviors and
the retail industry disruption, which we believe will drive
long-term growth and increased market share.”
Second Quarter 2020 Earnings Conference
Call Kohl's will host its quarterly earnings conference
call at 9:00 am ET on August 18, 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, and in Item 1A of Part II in the
Company's Quarterly Report on Form 10-Q for the quarter ended May
2, 2020, which are 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
Six Months Ended
(Dollars in Millions, Except per Share
Data)
August 1, 2020
August 3, 2019
August 1, 2020
August 3, 2019
Net sales
$
3,213
$
4,169
$
5,373
$
7,990
Other revenue
194
261
462
527
Total revenue
3,407
4,430
5,835
8,517
Cost of merchandise sold
2,149
2,550
3,936
4,965
Gross margin rate
33.1
%
38.8
%
26.8
%
37.9
%
Operating expenses:
Selling, general, and administrative
1,050
1,269
2,116
2,544
As a percent of total revenue
30.8
%
28.6
%
36.3
%
29.9
%
Depreciation and amortization
219
228
446
458
Impairments, store closing, and other
(2
)
7
64
56
(Gain) on sale of real estate
(127
)
—
(127
)
—
Operating income (loss)
118
376
(600
)
494
Interest expense, net
78
53
136
105
Income (loss) before income taxes
40
323
(736
)
389
(Benefit) provision for income taxes
(7
)
82
(242
)
86
Net income (loss)
$
47
$
241
$
(494
)
$
303
Average number of shares:
Basic
154
159
154
160
Diluted
155
159
154
161
Earnings (loss) per share:
Basic
$
0.31
$
1.52
$
(3.21
)
$
1.90
Diluted
$
0.30
$
1.51
$
(3.21
)
$
1.89
ADJUSTED NET (LOSS) INCOME AND
DILUTED (LOSS) EARNINGS PER SHARE, NON-GAAP FINANCIAL
MEASURES
(Unaudited)
Three Months Ended
Six Months Ended
(Dollars in Millions, Except per Share
Data)
August 1, 2020
August 3, 2019
August 1, 2020
August 3, 2019
Net income (loss)
GAAP
$
47
$
241
$
(494
)
$
303
Impairments, store closing, and other
(2
)
7
64
56
(Gain) on sale of real estate
(127
)
—
(127
)
—
Income tax impact of items noted above
43
(1)
23
(14)
Adjusted (non-GAAP)
$
(39
)
$
247
$
(534
)
$
345
Diluted (loss) earnings per
share
GAAP(1)
$
0.30
$
1.51
$
(3.21
)
$
1.89
Impairments, store closing, and other
(0.01
)
0.05
0.41
0.35
(Gain) on sale of real estate
(0.82
)
—
(0.82
)
—
Income tax impact of items noted above
0.28
(0.01)
0.15
(0.09)
Adjusted (non-GAAP)(2)
$
(0.25
)
$
1.55
$
(3.47
)
$
2.15
(1) Weighted average diluted shares outstanding for purpose of
calculating diluted earnings per share for the three months ended
August 1, 2020 was 155 million, which includes the dilutive effect
of share-based awards as determined under the treasury stock
method. (2) Weighted average diluted shares outstanding for
purposes of calculating diluted adjusted (loss) earnings per share
for the three months ended August 1, 2020 was 154 million as the
effect of including dilutive shares would be antidilutive.
KOHL’S CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in Millions)
August 1, 2020
August 3, 2019
Assets
Current assets:
Cash and cash equivalents
$
2,428
$
625
Merchandise inventories
2,698
3,656
Income tax receivable
205
16
Other
357
381
Total current assets
5,688
4,678
Property and equipment, net
6,970
7,276
Operating leases
2,418
2,428
Other assets
159
160
Total assets
$
15,235
$
14,542
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
1,064
$
1,330
Accrued liabilities
1,130
1,199
Income taxes payable
86
34
Current portion of:
Finance leases and financing
obligations
126
119
Operating leases
160
158
Total current liabilities
2,566
2,840
Long-term debt
3,450
1,855
Finance leases and financing
obligations
1,356
1,270
Operating leases
2,637
2,647
Deferred income taxes
122
254
Other long-term liabilities
267
221
Shareholders' equity
4,837
5,455
Total liabilities and shareholders'
equity
$
15,235
$
14,542
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Six Months Ended
(Dollars in Millions)
August 1, 2020
August 3, 2019
Operating activities
Net (loss) income
$
(494
)
$
303
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
446
458
Share-based compensation
14
27
Deferred income taxes
(132
)
41
Impairments, store closing, and other
costs
48
45
(Gain) on sale of real estate
(127
)
—
Non-cash inventory costs
187
—
Non-cash lease expense
74
75
Other non-cash expenses
10
3
Changes in operating assets and
liabilities:
Merchandise inventories
656
(175
)
Other current and long-term assets
20
29
Accounts payable
(142
)
143
Accrued and other long-term
liabilities
(23
)
(177
)
Income taxes
(151
)
(8
)
Operating lease liabilities
(82
)
(88
)
Net cash provided by operating
activities
304
676
Investing activities
Acquisition of property and equipment
(196
)
(439
)
Proceeds from sale of real estate
193
—
Net cash used in investing activities
(3
)
(439
)
Financing activities
Proceeds from issuance of debt
2,097
—
Deferred financing costs
(19
)
—
Treasury stock purchases
(8
)
(254
)
Shares withheld for taxes on vested
restricted shares
(20
)
(27
)
Dividends paid
(108
)
(214
)
Reduction of long-term borrowings
(497
)
(6
)
Finance lease and financing obligation
payments
(44
)
(60
)
Proceeds from stock option exercises
—
2
Proceeds from financing obligations
3
13
Net cash provided by (used in) financing
activities
1,404
(546
)
Net increase (decrease) in cash and cash
equivalents
1,705
(309
)
Cash and cash equivalents at beginning of
period
723
934
Cash and cash equivalents at end of
period
$
2,428
$
625
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200818005148/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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