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Kohl’s Corporation Reports Financial Results

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Kohl’s Corporation (NYSE:KSS) . Kohl’s Corporation today reported results for the quarter and year ended January 31, 2015.

Quarter Year
($ in millions, except per share amounts) 2014 2013 Change 2014 2013 Change
Total sales $6,337 $6,099 3.9 % $19,023 $19,031

%
Comparable store sales 3.7 % (2.0 )% (0.3 )% (1.2 )%

Net income $369 $334

10

%

$867 $889

(2

)%

Diluted earnings per share $1.83 $1.56

17

%

$4.24 $4.05

5

%

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “Our fourth quarter results showed significant improvement as many of our Greatness Agenda initiatives took hold. Our 3.7% increase in comparable sales was driven by both transactions per store – a key area of focus – and average transaction value. The sales strength was broad as all lines of business and all geographic regions reported higher sales. Our teams managed both expenses and inventories well, allowing us to exceed our previous earnings guidance.”

Dividend

On February 25, 2015 Kohl’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.45 per share, a 15% increase over its prior dividend. The dividend is payable March 25, 2015 to shareholders of record at the close of business on March 11, 2015.

Store Update

Kohl’s ended the fiscal year with 1,162 stores in 49 states. During 2014, the Company opened seven stores in new locations, relocated two existing stores, and closed three stores.

Initial 2015 Earnings Guidance

The Company expects earnings per diluted share of $4.40 to $4.60 for fiscal 2015. This guidance is based on the following assumptions:

  • Total sales increase of 1.8% to 2.8%
  • Comparable sales increase of 1.5% to 2.5%
  • Gross margin as a percentage of sales to increase 0 to 20 basis points over 2014
  • SG&A expense to increase 1.5% to 2.5% over 2014
  • Depreciation expense to be $940 million
  • Interest expense to be $335 million
  • Effective tax rate of 37%
  • $1 billion in share repurchases at an average price of $70 per share
  • Capital expenditures of $800 million

Fourth Quarter 2014 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 8:30 am ET on February 26, 2015. The phone number for the conference call is (800) 230-1074. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID is 346898. The conference call and replays are also accessible via the Company’s web site at http://www.kohlscorporation.com/InvestorRelations/event-calendar.htm.

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 2015 earnings guidance. 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

Kohl’s (NYSE:KSS) is a leading specialty department store with 1,162 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store, online at Kohls.com and via mobile devices. Committed to its communities, Kohl’s has raised more than $274 million for children’s initiatives nationwide through its Kohl’s Cares(R) cause merchandise program, which operates under Kohl’s Cares, LLC, a wholly-owned subsidiary of Kohl’s Department Stores, Inc. For additional information about Kohl’s philanthropic and environmental initiatives, visit www.Kohls.com/Cares. For a list of store locations and information, or for the added convenience of shopping online, visit www.Kohls.com.

Connect with Kohl’s:

Facebook (http://www.facebook.com/Kohls)
Twitter (http://twitter.com/Kohls)
Google+ (http://plus.google.com/+Kohls)
Pinterest (http://pinterest.com/Kohls)
Instagram (http://instagram.com/Kohls)
YouTube (http://youtube.com/Kohls)

KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
Quarter Ended Year Ended
Jan 31, Feb 1, Jan 31, Feb 1,
2015 2014 2015 2014
Net sales $ 6,337 $ 6,099 $ 19,023 $ 19,031
Cost of merchandise sold 4,190 4,024 12,098 12,087
Gross margin 2,147 2,075 6,925 6,944
Operating expenses:
Selling, general, and administrative 1,272 1,242 4,350 4,313
Depreciation and amortization 221 224 886 889
Operating income 654 609 1,689 1,742
Interest expense, net 84 87 340 338
Income before income taxes 570 522 1,349 1,404
Provision for income taxes 201 188 482 515
Net income $ 369 $ 334 $ 867 $ 889
Basic net income per share $ 1.85 $ 1.57 $ 4.28 $ 4.08
Average number of shares 199 213 203 218
Diluted net income per share $ 1.83 $ 1.56 $ 4.24 $ 4.05
Average number of shares 201 215 204 220
As a percent of net sales:
Gross margin 33.9 % 34.0 % 36.4 % 36.5 %
Selling, general and
administrative expenses 20.1 % 20.4 % 22.9 % 22.7 %
Operating income 10.3 % 10.0 % 8.9 % 9.2 %
Net income 5.8 % 5.5 % 4.6 % 4.7 %
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
Jan 31,
2015
Feb 1,
2014

Assets

Current assets:
Cash and cash equivalents $ 1,407 $ 971
Merchandise inventories 3,814 3,874
Deferred income taxes 116 142
Other 361 327
Total current assets 5,698 5,314
Property and equipment, net 8,515 8,745
Other assets 218 298
Total assets $ 14,431 $ 14,357

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $ 1,511 $ 1,365
Accrued liabilities 1,160 1,138
Income taxes payable 78 116
Current portion of capital lease
and financing obligations 110 139
Total current liabilities 2,859 2,758
Long-term debt 2,793 2,792
Capital lease and financing obligations 1,858 1,930
Deferred income taxes 368 339
Other long-term liabilities 562 560
Shareholders’ equity 5,991 5,978
Total liabilities and shareholders’ equity $ 14,431 $ 14,357
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
2014 2013
Operating activities
Net income $ 867 $ 889
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 886 889
Share-based compensation 48 55
Excess tax benefits from share-based compensation (3 ) (3 )
Deferred income taxes 46 (11 )
Other non-cash revenues and expenses 31 43
Changes in operating assets and liabilities:
Merchandise inventories 68 (116 )
Other current and long-term assets (33 ) (19 )
Accounts payable 146 58
Accrued and other long-term liabilities 33 149
Income taxes (65 ) (50 )
Net cash provided by operating activities 2,024 1,884
Investing activities
Acquisition of property and equipment (682 ) (643 )
Sales of investments in auction rate securities 82 1
Other 7 19
Net cash used in investing activities (593 ) (623 )
Financing activities
Treasury stock purchases (677 ) (799 )
Shares withheld for restricted shares (19 ) (13 )
Dividends paid (317 ) (302 )
Proceeds from issuance of debt, net - 296
Proceeds from financing obligations 6 1
Capital lease and financing obligation payments (114 ) (115 )
Proceeds from stock option exercises 123 102
Excess tax benefits from share-based compensation 3 3
Net cash used in financing activities (995 ) (827 )
Net increase in cash and cash equivalents 436 434
Cash and cash equivalents at beginning of period 971 537
Cash and cash equivalents at end of period $ 1,407 $ 971

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