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Kohl's Corporation Reports Third Quarter Financial Results

Earnings Guidance

The Company provided initial guidance for the fiscal quarter ending February 2, 2013 of $2.00 to $2.08 per diluted share. The guidance is based on total sales growth of 7 to 8 percent and comparable store sales growth of 3 to 4 percent and includes expected fourth quarter share repurchases of $300 million. After incorporating its third quarter results and fourth quarter outlook, the Company now expects to earn $4.52 to $4.60 per diluted share for fiscal 2012 versus its previous guidance of $4.50 to $4.65 per diluted share.

Third Quarter 2012 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 8:30 am ET on November 8, 2012. The phone number for the conference call is (706) 902-0486 and the conference ID is 15140640. Replays of the call will be available for 30 days by dialing (855) 859-2056 or (404) 537-3406 and referencing Conference ID 15140640. The conference call is 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 guidance on the Company'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, 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. With a commitment to environmental leadership, Kohl's operates 1,146 stores in 49 states. In support of the communities it serves, Kohl's has raised more than $208 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, or join the discussion on Facebook  http://www.facebook.com/kohls or Twitter  http://twitter.com/Kohls.

 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
Subject to Reclassification
       
Three Months Nine Months
Oct 27, Oct 29, Oct 27, Oct 29,
2012 2011 2012 2011
 
Net sales $ 4,490 $ 4,376 $ 12,937 $ 12,786
Cost of merchandise sold 2,778   2,688   8,059   7,784  
 
Gross margin 1,712 1,688 4,878 5,002
 
Operating expenses:
Selling, general, and administrative 1,077 1,071 3,055 3,066
Depreciation and amortization 210   202   620   583  
 
Operating income 425 415 1,203 1,353
 
Interest expense, net 80   75   243   223  
 
Income before income taxes 345 340 960 1,130
Provision for income taxes 130   129   351   419  
 
Net income $ 215   $ 211   $ 609   $ 711  
 
Basic net income per share $ 0.92 $ 0.80 $ 2.56 $ 2.58
Average number of shares 233 264 238 276
 
Diluted net income per share $ 0.91 $ 0.80 $ 2.54 $ 2.56
Average number of shares 235 265 240 278
 
As a percent of net sales:
Gross margin 38.1 % 38.6 % 37.7 % 39.1 %
Selling, general and
administrative expenses 24.0 % 24.5 % 23.6 % 24.0 %
Operating income 9.5 % 9.5 % 9.3 % 10.6 %
Net income 4.8 % 4.8 % 4.7 % 5.6 %
 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
Subject to Reclassification
   
Oct 27, Oct 29,
2012 2011

Assets

Current assets:
Cash and cash equivalents $ 550 $ 760
Merchandise inventories 4,818 4,130
Income tax receivable 105
Deferred income taxes 124 128
Other 281  

 

257
 
Total current assets 5,773 5,380
 
Property and equipment, net 9,009 8,918
Long-term investments 90 158
Other assets 256   263
 
Total assets $ 15,128   $ 14,719
 

Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable $ 2,429 $ 2,080
Accrued liabilities 1,094 1,025
Income taxes payable 48
Current portion of capital lease
and financing obligations 100   95
 
Total current liabilities 3,671 3,200
 
Long-term debt 2,492 2,141
Capital lease and financing obligations 1,986 2,003
Deferred income taxes 395 445
Other long-term liabilities 478 459
Shareholders' equity 6,106   6,471
 
Total liabilities and shareholders' equity $ 15,128   $ 14,719
 
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Subject to Reclassification
   
Nine Months Ended
Oct 27, Oct 29,
2012 2011
Operating activities
Net income $ 609 $ 711
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 620 583
Share-based compensation 37 43
Excess tax benefits from share-based compensation (3 ) (2 )
Deferred income taxes (46 ) 146
Other non-cash revenues and expenses 26 19
Changes in operating assets and liabilities:
Merchandise inventories (1,613 ) (1,091 )
Other current and long-term assets 30 (1 )
Accounts payable 1,196 942
Accrued and other long-term liabilities (62 ) (16 )
Income taxes (91 ) (238 )
 
Net cash provided by operating activities 703   1,096  
 
Investing activities
Acquisition of property and equipment (641 ) (755 )
Sales of investments in auction rate securities 68 143
Other 5   (20 )
 
Net cash used in investing activities (568 ) (632 )
 
Financing activities
Treasury stock purchases (883 ) (1,956 )
Dividends paid (227 ) (207 )
Proceeds from issuance of debt 350 646
Deferred financing costs (3 ) (8 )
Long-term debt payments (400 )
Interest rate hedge payments (48 )
Proceeds from financing obligations 7 12
Capital lease and financing obligation payments (87 ) (69 )
Proceeds from stock option exercises 50 47
Excess tax benefits from share-based compensation 3   2  
 
Net cash used in financing activities (790 ) (1,981 )
 
Net decrease in cash and cash equivalents (655 ) (1,517 )
Cash and cash equivalents at beginning of period 1,205   2,277  
 
Cash and cash equivalents at end of period $ 550   $ 760  




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