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 [phone] and the conference ID is 15140640. Replays of the call will be available for 30 days by dialing [phone] or [phone] 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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