Kohl's Corporation Reports Second Quarter Financial Results

Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the quarter ended August 2, 2014.
         
  Quarter   Year to Date
($ in millions)   2014   2013   Change   2014   2013   Change
Sales $ 4,242   $ 4,289   (1.1 )% $ 8,312   $ 8,488  

(2.1

)%
Comparable store sales (1.3 )%

 

0.9

%

-

 

(2.3

)%

 

(0.5

)%
-
Net income $ 232 $ 231

%

$

357
$ 378 (6 )%
Diluted earnings per share   $ 1.13     $ 1.04     9 %   $ 1.73     $ 1.70     2 %
 

Kevin Mansell, Kohl's chairman, president and chief executive officer, said, “We are pleased with the improvement we saw in sales as the quarter progressed. The improvement was the most dramatic in the month of July where we achieved a positive comp. As they consistently do, our teams did a great job of managing expenses throughout the quarter. We enter the back-to-school season with fresh, new inventory and encouraging momentum."

Dividend

On August 12, 2014, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.39 per share. The dividend is payable September 24, 2014 to shareholders of record at the close of business on September 10, 2014.

Store Update

Kohl’s ended the quarter with 1,160 stores in 49 states, compared with 1,155 stores at the same time last year. The Company opened four new store locations, relocated one existing store and permanently closed two stores during the first quarter of 2014. It expects to open four new stores this Fall, including one store which was temporarily closed in the first quarter for a complete re-build.

Second Quarter 2014 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 8:30 am ET on August 14, 2014. The phone number for the conference call is (800) 230-1096. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID for both the live call and the replay is 333513. 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. 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 1,160 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 our communities, Kohl’s has raised more than $257 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 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)
 
KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
       
Three Months Ended Six Months Ended
August 2,

August 3,
August 2, August 3,
2014 2013 2014 2013
Net sales $ 4,242 $ 4,289 $ 8,312 $ 8,488
Cost of merchandise sold 2,588   2,613   5,162   5,284  
 
Gross margin 1,654 1,676 3,150 3,204
 
Operating expenses:
Selling, general, and administrative 981 1,000 1,981 1,997
Depreciation and amortization 222   225   438   439  
 
Operating income 451 451 731 768
 
Interest expense, net 85   84   170   167  
 
Income before income taxes 366 367 561 601
Provision for income taxes 134   136   204   223  
 
Net income $ 232   $ 231   $ 357   $ 378  
 
Basic net income per share $ 1.14 $ 1.05 $ 1.74 $ 1.71
Average number of shares 204 220 205 221
 
Diluted net income per share $ 1.13 $ 1.04 $ 1.73 $ 1.70
Average number of shares 205 222 206 222
 
As a percent of net sales:
Gross margin 39.0 % 39.1 % 37.9 % 37.7 %

Selling, general and administrative expenses
23.1 % 23.3 % 23.8 % 23.5 %
Operating income 10.6 % 10.5 % 8.8 % 9.0 %
Net income 5.5 % 5.4 % 4.3 % 4.5 %
 
KOHL'S CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
   
August 2, August 3,
2014 2013

Assets
Current assets:
Cash and cash equivalents $ 746 $ 592
Merchandise inventories 3,899 3,856
Deferred income taxes 132 150
Other 300 284
 
Total current assets 5,077 4,882
 
Property and equipment, net 8,686 8,891
Other assets 338 324
 
Total assets $ 14,101 $ 14,097
 

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 1,479 $ 1,396
Accrued liabilities 1,057 1,065
Income taxes payable 43 75

Current portion of capital lease and financing obligations
105 147
 
Total current liabilities 2,684 2,683
 
Long-term debt 2,792 2,492
Capital lease and financing obligations 1,896 1,948
Deferred income taxes 358 381
Other long-term liabilities 562 540
Shareholders' equity 5,809 6,053
 
Total liabilities and shareholders' equity $ 14,101 $ 14,097
 
KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
 
 

Six Months Ended
August 2,   August 3,
2014 2013
Operating activities
Net income $ 357 $ 378

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 438 439
Share-based compensation 24 27
Excess tax benefits from share-based compensation (2 ) (2 )
Deferred income taxes (17 ) (12 )
Other non-cash revenues and expenses 11 18
Changes in operating assets and liabilities:
Merchandise inventories (20 ) (103 )
Other current and long-term assets 3 22
Accounts payable 114 89
Accrued and other long-term liabilities (103 ) (20 )
Income taxes (75 ) (74 )
 
Net cash provided by operating activities 730   762  
 
Investing activities
Acquisition of property and equipment (374 ) (284 )
Other 6   14  
 
Net cash used in investing activities (368 ) (270 )
 
Financing activities
Treasury stock purchases (392 ) (266 )
Shares withheld for taxes on vested restricted shares (16 ) (13 )
Dividends paid (160 ) (153 )
Proceeds from financing obligations 3
Capital lease and financing obligation payments (61 ) (52 )
Proceeds from stock option exercises 37 46
Excess tax benefits from share-based compensation 2 2
Deferred financing costs   (1 )
 
Net cash used in financing activities (587 )   (437 )
 
Net increase (decrease) in cash and cash equivalents (225 ) 55
Cash and cash equivalents at beginning of period 971   537  
 
Cash and cash equivalents at end of period $ 746   $ 592  

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