Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported results for the quarter and year-to-date periods ended October 31, 2015.
| Quarter | Year to Date | ||||||||||||||||||||||||||||
| ($ in millions) | 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||||||||||||
| Sales | $ | 4,427 | $ | 4,374 | 1.2 | % | $ | 12,817 | $ | 12,686 | 1.0 | % | |||||||||||||||||
| Comparable store sales | 1.0 | % | (1.8 | )% | - | 0.8 | % | (2.2 | )% | - | |||||||||||||||||||
| Gross margin | 37.1 | % | 37.2 | % | (10) bp | 37.7 | % | 37.7 | % | - | |||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
| Reported | $ | 120 | $ | 142 | (15 | )% | $ | 377 | $ | 498 | (24 | )% | |||||||||||||||||
| Excluding loss on | |||||||||||||||||||||||||||||
| extinguishment of debt | $ | 144 | $ | 142 | 1 | % | $ | 484 | $ | 498 | (3 | )% | |||||||||||||||||
| Diluted earnings per share | |||||||||||||||||||||||||||||
| Reported | $ | 0.63 | $ | 0.70 | (10 | )% | $ | 1.92 | $ | 2.43 | (21 | )% | |||||||||||||||||
| Excluding loss on | |||||||||||||||||||||||||||||
| extinguishment of debt | $ | 0.75 | $ | 0.70 | 7 | % | $ | 2.46 | $ | 2.43 | 1 | % | |||||||||||||||||
Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "Our 1% increase in sales was driven by strong back-to-school and late October selling periods offset by a weak September. Most of our key initiatives enjoyed strong success while weakness was concentrated in seasonal businesses."
Dividend
On November 11, 2015, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.45 per share. The dividend is payable December 23, 2015 to shareholders of record at the close of business on December 9, 2015.
Store Update
Kohl’s ended the quarter with 1,166 stores in 49 states, compared with 1,163 stores at the same time last year.
Loss on Extinguishment of Debt
During the quarter, the Company completed its $1.1 billion debt refinancing when it settled $318 million of debt that had been called in the second quarter. In conjunction with the refinancing, the Company incurred a debt extinguishment loss of $169 million, including $38 million which was recognized in the third quarter.
Third Quarter 2015 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on November 12, 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 for both the live call and the replay is 346897. 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 1,166 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® 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://www.youtube.com/Kohls)
| KOHL'S CORPORATION | |||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||
| (In Millions, except per share data) | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| October 31, | November 1, | October 31, | November 1, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
| Net sales | $ | 4,427 | $ | 4,374 | $ | 12,817 | $ | 12,686 | |||||||||||||
| Cost of merchandise sold | 2,784 | 2,746 | 7,990 | 7,908 | |||||||||||||||||
| Gross margin | 1,643 | 1,628 | 4,827 | 4,778 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Selling, general, and administrative | 1,099 | 1,097 | 3,120 | 3,078 | |||||||||||||||||
| Depreciation and amortization | 236 | 227 | 695 | 665 | |||||||||||||||||
| Operating income | 308 | 304 | 1,012 | 1,035 | |||||||||||||||||
| Interest expense, net | 81 | 85 | 248 | 255 | |||||||||||||||||
| Loss on extinguishment of debt | 38 | — | 169 | — | |||||||||||||||||
| Income before income taxes | 189 | 219 | 595 | 780 | |||||||||||||||||
| Provision for income taxes | 69 | 77 | 218 | 282 | |||||||||||||||||
| Net income | $ | 120 | $ | 142 | $ | 377 | $ | 498 | |||||||||||||
| Basic net income per share | $ | 0.63 | $ | 0.70 | $ | 1.93 | $ | 2.44 | |||||||||||||
| Average number of shares | 191 | 202 | 196 | 204 | |||||||||||||||||
| Diluted net income per share | $ | 0.63 | $ | 0.70 | $ | 1.92 | $ | 2.43 | |||||||||||||
| Average number of shares | 192 | 203 | 197 | 205 | |||||||||||||||||
| As a percent of net sales: | |||||||||||||||||||||
| Gross margin | 37.1 | % | 37.2 | % | 37.7 | % | 37.7 | % | |||||||||||||
| Selling, general and | |||||||||||||||||||||
| administrative expenses | 24.8 | % | 25.1 | % | 24.3 | % | 24.3 | % | |||||||||||||
| Operating income | 7.0 | % | 6.9 | % | 7.9 | % | 8.2 | % | |||||||||||||
| Net income | 2.7 | % | 3.2 | % | 2.9 | % | 3.9 | % | |||||||||||||
| Excluding loss on | |||||||||||||||||||||
| extinguishment of debt: | |||||||||||||||||||||
| Net income | $ | 144 | $ | 142 | $ | 484 | $ | 498 | |||||||||||||
| Diluted net income per share | $ | 0.75 | $ | 0.70 | $ | 2.46 | $ | 2.43 | |||||||||||||
| Net income as a percent of net sales | 3.3 | % | 3.2 | % | 3.8 | % | 3.9 | % | |||||||||||||
| KOHL'S CORPORATION | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (In Millions) | ||||||||||
| (Unaudited) | ||||||||||
| October 31, | November 1, | |||||||||
| 2015 | 2014 | |||||||||
Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 501 | $ | 631 | ||||||
| Merchandise inventories | 5,254 | 4,973 | ||||||||
| Income tax receivable | 36 | 76 | ||||||||
| Deferred income taxes | 136 | 125 | ||||||||
| Other | 276 | 295 | ||||||||
| Total current assets | 6,203 | 6,100 | ||||||||
| Property and equipment, net | 8,499 | 8,671 | ||||||||
| Other assets | 196 | 243 | ||||||||
| Total assets | $ | 14,898 | $ | 15,014 | ||||||
Liabilities and Shareholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 2,141 | $ | 2,384 | ||||||
| Accrued liabilities | 1,244 | 1,162 | ||||||||
| Income taxes payable | 28 | 24 | ||||||||
| Short-term debt | 400 | — | ||||||||
| Current portion of capital lease | ||||||||||
| and financing obligations | 126 | 109 | ||||||||
| Total current liabilities | 3,939 | 3,679 | ||||||||
| Long-term debt | 2,792 | 2,779 | ||||||||
| Capital lease and financing obligations | 1,817 | 1,886 | ||||||||
| Deferred income taxes | 305 | 293 | ||||||||
| Other long-term liabilities | 571 | 572 | ||||||||
| Shareholders' equity | 5,474 | 5,805 | ||||||||
| Total liabilities and shareholders' equity | $ | 14,898 | $ | 15,014 | ||||||
| KOHL'S CORPORATION | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (In Millions) | |||||||||||
| (Unaudited) | |||||||||||
| Nine Months Ended | |||||||||||
| October 31, | November 1, | ||||||||||
| 2015 | 2014 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 377 | $ | 498 | |||||||
| Adjustments to reconcile net income to net cash | |||||||||||
| provided by operating activities: | |||||||||||
| Depreciation and amortization | 695 | 665 | |||||||||
| Share-based compensation | 36 | 38 | |||||||||
| Excess tax benefits from share-based compensation | (10 | ) | (2 | ) | |||||||
| Deferred income taxes | (84 | ) | (37 | ) | |||||||
| Other non-cash revenues and expenses | 23 | 19 | |||||||||
| Loss on extinguishment of debt | 169 | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Merchandise inventories | (1,433 | ) | (1,093 | ) | |||||||
| Other current and long-term assets | 74 | (1 | ) | ||||||||
| Accounts payable | 630 | 1,019 | |||||||||
| Accrued and other long-term liabilities | (6 | ) | (1 | ) | |||||||
| Income taxes | (64 | ) | (175 | ) | |||||||
| Net cash provided by operating activities | 407 | 930 | |||||||||
| Investing activities | |||||||||||
| Acquisition of property and equipment | (551 | ) | (561 | ) | |||||||
| Sales of investments in auction rate securities | — | 59 | |||||||||
| Other | 3 | 6 | |||||||||
| Net cash used in investing activities | (548 | ) | (496 | ) | |||||||
| Financing activities | |||||||||||
| Treasury stock purchases | (789 | ) | (549 | ) | |||||||
| Shares withheld for taxes on vested restricted shares | (26 | ) | (17 | ) | |||||||
| Dividends paid | (264 | ) | (239 | ) | |||||||
| Proceeds from issuance of debt | 1,098 | — | |||||||||
| Net borrowings under credit facilities | 400 | — | |||||||||
| Deferred financing costs | (10 | ) | — | ||||||||
| Reduction of long-term borrowings | (1,085 | ) | — | ||||||||
| Premium paid on redemption of debt | (163 | ) | — | ||||||||
| Capital lease and financing obligation payments | (83 | ) | (87 | ) | |||||||
| Proceeds from stock option exercises | 146 | 111 | |||||||||
| Excess tax benefits from share-based compensation | 10 | 2 | |||||||||
| Proceeds from financing obligations | 1 | 5 | |||||||||
| Net cash used in financing activities | (765 | ) | (774 | ) | |||||||
| Net decrease in cash and cash equivalents | (906 | ) | (340 | ) | |||||||
| Cash and cash equivalents at beginning of period | 1,407 | 971 | |||||||||
| Cash and cash equivalents at end of period | $ | 501 | $ | 631 | |||||||
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or
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