- Third quarter comparable sales decrease 6.9% and net sales
decrease 7.2%
- Third quarter diluted earnings per share of $0.82
- Kohl’s Board has formed search committee to oversee the search
for a new CEO while Tom Kingsbury has agreed to serve as Interim
CEO during the transition period
Kohl’s Corporation (NYSE:KSS) today reported results for the
quarter ended October 29, 2022.
Three Months
Nine Months
($ in millions, except per share
data)
October 29,
2022
October 30,
2021
Change
October 29,
2022
October 30,
2021
Change
Total revenue
$
4,277
$
4,600
(7.0
%)
$
12,079
$
12,934
(6.6
%)
Net sales(1)
(7.2
%)
15.5
%
(7.1
%)
33.9
%
Gross margin
37.3
%
39.9
%
(263) bps
38.4
%
40.6
%
(215) bps
Selling, general, and administrative
expenses
$
1,334
$
1,380
(3.3
%)
$
3,910
$
3,791
3.1
%
Reported
Net income
$
97
$
243
(60
%)
$
254
$
639
(60
%)
Diluted earnings per share
$
0.82
$
1.65
(50
%)
$
2.02
$
4.19
(52
%)
Non-GAAP(2)
Adjusted net income
$
97
$
243
(60
%)
$
254
$
790
(68
%)
Adjusted diluted earnings per share
$
0.82
$
1.65
(50
%)
$
2.02
$
5.18
(61
%)
(1)
Represents change in Net sales vs. prior
year period.
(2)
Amounts shown for the three and nine
months ended October 29, 2022 and the three months ended October
30, 2021 are GAAP as there are no adjustments to Non-GAAP. These
amounts are shown for comparability purposes.
“The Kohl’s Board is focused on supporting the management team
during this CEO transition period, as well as the Board’s search
committee in its pursuit of finding the next CEO to lead Kohl’s. We
look forward to partnering with Interim CEO Tom Kingsbury and the
entire leadership team to execute at the highest level this holiday
season, while also capitalizing on opportunities to strengthen the
business. Kohl’s is a great company with extremely bright prospects
and I am confident we will find the right candidate to successfully
position Kohl’s to drive sales, grow earnings and create
shareholder value. On behalf of the Board, I want to thank all of
our associates for their dedication and hard work,” said Peter
Boneparth, Kohl’s Independent Board Chair.
2022 Outlook Commentary
Given the recent volatility in business trends, the significant
macroeconomic headwinds, along with the unexpected CEO transition,
the Company will not be providing guidance for the fourth quarter,
and therefore is withdrawing its prior full year 2022 guidance.
Accelerated Share Repurchase
Agreement On November 2, 2022, the Company’s $500
million accelerated share repurchase agreement (ASR) was completed,
with final settlement occurring on November 7, 2022. In total, the
Company received 17.9 million shares, including 11.8 million shares
in the third quarter and the remaining 6.1 million shares in the
fourth quarter.
Dividend As previously
announced, on November 9, 2022, Kohl’s Board of Directors declared
a quarterly cash dividend on the Company’s common stock of $0.50
per share. The dividend is payable December 21, 2022 to
shareholders of record at the close of business on December 7,
2022.
Third Quarter 2022 Earnings Conference
Call Kohl’s will host its quarterly earnings conference
call at 9:00 am ET on November 17, 2022. A webcast of the
conference call and the related presentation materials will be
available via the Company's web site at investors.kohls.com, both
live and after the call.
Cautionary Statement Regarding
Forward-Looking Information and Non-GAAP Measures This
press release 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 Item 1A of Part II of the Company’s Quarterly Report on Form
10-Q for the first quarter of fiscal 2022, 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 income and adjusted diluted 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 income and adjusted diluted 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 and the online convenience of Kohls.com and the Kohl's
App, Kohl's offers amazing national and exclusive brands at
incredible savings for families nationwide. Kohl’s is uniquely
positioned to deliver against its strategy and its vision to be the
most trusted retailer of choice for the active and casual
lifestyle. Kohl’s is committed to progress in its diversity and
inclusion pledges, and the company's environmental, social, and
corporate governance (ESG) stewardship. 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
Nine Months Ended
(Dollars in Millions, Except per Share
Data)
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Net sales
$
4,052
$
4,366
$
11,386
$
12,251
Other revenue
225
234
693
683
Total revenue
4,277
4,600
12,079
12,934
Cost of merchandise sold
2,541
2,623
7,013
7,282
Gross margin rate
37.3
%
39.9
%
38.4
%
40.6
%
Operating expenses:
Selling, general, and administrative
1,334
1,380
3,910
3,791
As a percent of total revenue
31.2
%
30.0
%
32.4
%
29.3
%
Depreciation and amortization
202
210
608
631
Operating income
200
387
548
1,230
Interest expense, net
81
66
226
195
Loss on extinguishment of debt
—
—
—
201
Income before income taxes
119
321
322
834
Provision for income taxes
22
78
68
195
Net income
$
97
$
243
$
254
$
639
Average number of shares:
Basic
118
145
124
151
Diluted
119
147
126
153
Earnings per share:
Basic
$
0.82
$
1.67
$
2.05
$
4.24
Diluted
$
0.82
$
1.65
$
2.02
$
4.19
ADJUSTED NET INCOME AND
DILUTED EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
Nine Months Ended
(Dollars in Millions, Except per Share
Data)
October 29,
2022
October 30,
2021
October 29,
2022
October 30,
2021
Net income
GAAP
$
97
$
243
$
254
$
639
Loss on extinguishment of debt
—
—
—
201
Income tax impact of items noted above
—
—
—
(50
)
Adjusted (non-GAAP)
$
97
$
243
$
254
$
790
Diluted earnings per share
GAAP
$
0.82
$
1.65
$
2.02
$
4.19
Loss on extinguishment of debt
—
—
—
1.32
Income tax impact of items noted above
—
—
—
(0.33
)
Adjusted (non-GAAP)(1)
$
0.82
$
1.65
$
2.02
$
5.18
(1)
Amounts shown for the three and nine
months ended October 29, 2022 and the three months ended October
30, 2021 are GAAP as there are no adjustments to Non-GAAP. These
amounts are shown for comparability purposes.
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in Millions)
October 29,
2022
October 30,
2021
Assets
Current assets:
Cash and cash equivalents
$
194
$
1,873
Merchandise inventories
4,874
3,642
Other
366
373
Total current assets
5,434
5,888
Property and equipment, net
8,117
7,329
Operating leases
2,318
2,293
Other assets
365
441
Total assets
$
16,234
$
15,951
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
2,014
$
2,135
Accrued liabilities
1,436
1,545
Borrowings under revolving credit
facility
668
—
Current portion of:
Long-term debt
164
—
Finance leases and financing
obligations
95
117
Operating leases
109
142
Total current liabilities
4,486
3,939
Long-term debt
1,747
1,909
Finance leases and financing
obligations
2,791
2,072
Operating leases
2,595
2,537
Deferred income taxes
165
196
Other long-term liabilities
354
367
Shareholders' equity
4,096
4,931
Total liabilities and shareholders'
equity
$
16,234
$
15,951
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
(Dollars in Millions)
October 29,
2022
October 30,
2021
Operating activities
Net income
$
254
$
639
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization
608
631
Share-based compensation
37
35
Deferred income taxes
(41
)
(103
)
Loss on extinguishment of debt
—
201
Non-cash lease expense
81
107
Other non-cash expenses
12
10
Changes in operating assets and
liabilities:
Merchandise inventories
(1,802
)
(1,044
)
Other current and long-term assets
102
574
Accounts payable
331
659
Accrued and other long-term
liabilities
76
172
Operating lease liabilities
(83
)
(107
)
Net cash (used in) provided by operating
activities
(425
)
1,774
Investing activities
Acquisition of property and equipment
(733
)
(426
)
Proceeds from sale of real estate
31
35
Net cash used in investing activities
(702
)
(391
)
Financing activities
Proceeds from issuance of debt
—
500
Net borrowings under revolving credit
facility
668
—
Deferred financing costs
—
(8
)
Treasury stock purchases
(658
)
(807
)
Shares withheld for taxes on vested
restricted shares
(21
)
(26
)
Dividends paid
(184
)
(114
)
Reduction of long-term borrowings
—
(1,044
)
Premium paid on redemption of debt
—
(192
)
Finance lease and financing obligation
payments
(81
)
(96
)
Proceeds from financing obligations
9
8
Proceeds from stock option exercises
1
1
Other
—
(3
)
Net cash used in financing activities
(266
)
(1,781
)
Net decrease in cash and cash
equivalents
(1,393
)
(398
)
Cash and cash equivalents at beginning of
period
1,587
2,271
Cash and cash equivalents at end of
period
$
194
$
1,873
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221117005168/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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