MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Kohl’s Corporation (NYSE:KSS) today reported results for the three and six month periods ended July 30, 2016.
Three Months | Six Months | |||||||||||||||||||||
($ in millions) | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||
Sales | $ | 4,182 | $ | 4,267 | (2.0)% | $ | 8,154 | $ | 8,390 | (2.8)% | ||||||||||||
Comparable store sales | (1.8 | )% | 0.1 | % | — | (2.8 | )% | 0.8 | % | — | ||||||||||||
Gross margin | 39.5 | % | 38.9 | % | 53 bp | 37.6 | % | 38.0 | % | (40) bp | ||||||||||||
Selling, general, and administrative expenses | $ | 986 | $ | 1,005 | (2)% | $ | 1,994 | $ | 2,021 | (1)% | ||||||||||||
Reported | ||||||||||||||||||||||
Net income | $ | 140 | $ | 130 | 8% | $ | 157 | $ | 257 | (39)% | ||||||||||||
Diluted earnings per share | $ | 0.77 | $ | 0.66 | 17% | $ | 0.86 | $ | 1.29 | (33)% | ||||||||||||
Excluding Non-Recurring Items | ||||||||||||||||||||||
Net income | $ | 221 | $ | 211 | 5% | $ | 279 | $ | 340 | (18)% | ||||||||||||
Diluted earnings per share | $ | 1.22 | $ | 1.07 | 14% | $ | 1.53 | $ | 1.70 | (10)% | ||||||||||||
Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "Our sales improved over our first quarter results, but were below our expectations. We are encouraged by the performance of juniors and young men's as we enter the Back-to-School season. Our inventory management initiatives helped us to achieve a strong increase in gross margin with ending inventory per store down significantly from last year. Our associates throughout the organization continue to effectively manage expenses in response to changing sales trends and I appreciate all of their efforts."
Dividend
On August 9, 2016, the Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.50 per share. The dividend is payable September 21, 2016 to shareholders of record at the close of business on September 7, 2016.
Store Update
Kohl’s ended the quarter with 1,150 Kohl's stores, 12 FILA Outlet stores, and three Off/Aisle clearance centers in 49 states, compared with 1,164 Kohl's stores at the same time last year.
Earnings Guidance Update
The Company now expects its fiscal 2016 diluted earnings per share to be $3.12 to $3.32 per diluted share. Excluding impairments, store closing and other costs, fiscal 2016 diluted earnings per share is expected to be $3.80 to $4.00, compared to the Company’s prior guidance of $4.05 to $4.25.
Second Quarter 2016 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on August 11, 2016. 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 386529. The conference call and replays are also accessible via the Company's web site at http://corporate.kohls.com/investors/events-and-presentations.
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 more than 1,100 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 nearly $300 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 | Six Months Ended | |||||||||||||||||
July 30, | August 1, | July 30, | August 1, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||||
Net sales | $ | 4,182 | $ | 4,267 | $ | 8,154 | $ | 8,390 | ||||||||||
Cost of merchandise sold | 2,532 | 2,605 | 5,092 | 5,206 | ||||||||||||||
Gross margin | 1,650 | 1,662 | 3,062 | 3,184 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Selling, general, and administrative | 986 | 1,005 | 1,994 | 2,021 | ||||||||||||||
Depreciation and amortization | 234 | 233 | 468 | 459 | ||||||||||||||
Impairments, store closing and other costs (1) | 128 | — | 192 | — | ||||||||||||||
Operating income | 302 | 424 | 408 | 704 | ||||||||||||||
Interest expense | 78 | 84 | 157 | 168 | ||||||||||||||
Loss on extinguishment of debt | — | 131 | — | 131 | ||||||||||||||
Income before income taxes | 224 | 209 | 251 | 405 | ||||||||||||||
Provision for income taxes | 84 | 79 | 94 | 148 | ||||||||||||||
Net income | $ | 140 | $ | 130 | $ | 157 | $ | 257 | ||||||||||
Basic net income per share | $ | 0.77 | $ | 0.66 | $ | 0.86 | $ | 1.30 | ||||||||||
Average number of shares | 180 | 196 | 182 | 198 | ||||||||||||||
Diluted net income per share | $ | 0.77 | $ | 0.66 | $ | 0.86 | $ | 1.29 | ||||||||||
Average number of shares | 181 | 197 | 182 | 199 | ||||||||||||||
As a percent of net sales: | ||||||||||||||||||
Gross margin | 39.5 | % | 38.9 | % | 37.6 | % | 38.0 | % | ||||||||||
Selling, general and administrative expenses | 23.6 | % | 23.6 | % | 24.5 | % | 24.1 | % | ||||||||||
Operating income | 7.2 | % | 9.9 | % | 5.0 | % | 8.4 | % | ||||||||||
Net income | 3.3 | % | 3.0 | % | 1.9 | % | 3.1 | % | ||||||||||
Excluding Non-Recurring Items | ||||||||||||||||||
Net income | $ | 221 | $ | 211 | $ | 279 | $ | 340 | ||||||||||
Diluted net income per share | $ | 1.22 | $ | 1.07 | $ | 1.53 | $ | 1.70 | ||||||||||
As a percent of net sales: | ||||||||||||||||||
Operating income | 10.3 | % | 9.9 | % | 7.4 | % | 8.4 | % | ||||||||||
Net income | 5.3 | % | 5.0 | % | 3.4 | % | 4.1 | % |
(1) Impairments, store closing, and other costs includes the following costs resulting from the store closures and organizational realignment at our corporate office which were announced in February:
Three Months | Six Months | |||||||
Ended | Ended | |||||||
July 30, 2016 | July 30, 2016 | |||||||
Store leases: | ||||||||
Record future obligations | $119 | $119 | ||||||
Write-off net obligations | (21 | ) | (21 | ) | ||||
Impairment: | ||||||||
Software licenses | 23 | 23 | ||||||
Buildings and other store assets | — | 53 | ||||||
Severance and other | 7 | 18 | ||||||
Total | $128 | $192 | ||||||
KOHL'S CORPORATION | |||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||
(In Millions) | |||||||||
(Unaudited) | |||||||||
July 30, | August 1, | ||||||||
2016 | 2015 | ||||||||
Assets |
|||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 700 | $ | 934 | |||||
Merchandise inventories | 3,928 | 4,252 | |||||||
Other | 327 | 310 | |||||||
Total current assets | 4,955 | 5,496 | |||||||
Property and equipment, net | 8,192 | 8,528 | |||||||
Other assets | 213 | 232 | |||||||
Total assets | $ | 13,360 | $ | 14,256 | |||||
Liabilities and Shareholders' Equity |
|||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 1,375 | $ | 1,566 | |||||
Accrued liabilities | 1,146 | 1,125 | |||||||
Income taxes payable | 155 | 53 | |||||||
Short-term debt | — | 317 | |||||||
Current portion of capital lease | |||||||||
and financing obligations | 127 | 117 | |||||||
Total current liabilities | 2,803 | 3,178 | |||||||
Long-term debt | 2,793 | 2,791 | |||||||
Capital lease and financing obligations | 1,709 | 1,821 | |||||||
Deferred income taxes | 184 | 235 | |||||||
Other long-term liabilities | 656 | 554 | |||||||
Shareholders' equity | 5,215 | 5,677 | |||||||
Total liabilities and shareholders' equity | $ | 13,360 | $ | 14,256 | |||||
KOHL'S CORPORATION | ||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
(In Millions) | ||||||||||
(Unaudited) | ||||||||||
Six Months Ended | ||||||||||
July 30, | August 1, | |||||||||
2016 | 2015 | |||||||||
Operating activities | ||||||||||
Net income | $ | 157 | $ | 257 | ||||||
Adjustments to reconcile net income to net cash | ||||||||||
provided by operating activities: | ||||||||||
Depreciation and amortization | 468 | 459 | ||||||||
Share-based compensation | 22 | 24 | ||||||||
Excess tax benefits from share-based compensation | — | (10 | ) | |||||||
Deferred income taxes | (74 | ) | (65 | ) | ||||||
Loss on extinguishment of debt | — | 131 | ||||||||
Impairments, store closing and other costs | 57 | — | ||||||||
Other non-cash revenues and expenses | 14 | 17 | ||||||||
Changes in operating assets and liabilities: | ||||||||||
Merchandise inventories | 114 | (433 | ) | |||||||
Other current and long-term assets | 8 | 60 | ||||||||
Accounts payable | 124 | 55 | ||||||||
Accrued and other long-term liabilities | (69 | ) | (121 | ) | ||||||
Income taxes | 25 | (21 | ) | |||||||
Net cash provided by operating activities | 846 | 353 | ||||||||
Investing activities | ||||||||||
Acquisition of property and equipment | (340 | ) | (377 | ) | ||||||
Other | 3 | 3 | ||||||||
Net cash used in investing activities | (337 | ) | (374 | ) | ||||||
Financing activities | ||||||||||
Treasury stock purchases | (267 | ) | (543 | ) | ||||||
Shares withheld for taxes on vested restricted shares | (14 | ) | (23 | ) | ||||||
Dividends paid | (182 | ) | (178 | ) | ||||||
Proceeds from issuance of debt | — | 1,089 | ||||||||
Reduction of long-term borrowings | — | (767 | ) | |||||||
Premium paid on redemption of debt | — | (126 | ) | |||||||
Capital lease and financing obligation payments | (63 | ) | (54 | ) | ||||||
Proceeds from stock option exercises | 6 | 140 | ||||||||
Excess tax benefits from share-based compensation | — | 10 | ||||||||
Proceeds from financing obligations | 4 | — | ||||||||
Net cash used in financing activities | (516 | ) | (452 | ) | ||||||
Net decrease in cash and cash equivalents | (7 | ) | (473 | ) | ||||||
Cash and cash equivalents at beginning of period | 707 | 1,407 | ||||||||
Cash and cash equivalents at end of period | $ | 700 | $ | 934 | ||||||