- Second quarter comparable sales decrease 7.7% and net sales
decrease 8.5%
- Second quarter diluted earnings per share of $1.11
- Updates full year 2022 financial outlook
- Company enters into $500 million accelerated share repurchase
agreement
Kohl’s Corporation (NYSE:KSS) today reported results for the
quarter ended July 30, 2022.
Three Months
Six Months
($ in millions, except per share
data)
July 30,
2022
July 31,
2021
Change
July 30,
2022
July 31,
2021
Change
Total revenue
$
4,087
$
4,447
(8.1
%)
$
7,802
$
8,334
(6.4
%)
Net sales(1)
(8.5
%)
31.4
%
(7.0
%)
46.8
%
Gross margin
39.6
%
42.5
%
(290) bps
39.0
%
40.9
%
(189) bps
Selling, general, and administrative
expenses
$
1,283
$
1,241
3.4
%
$
2,576
$
2,411
6.8
%
Reported
Net income
$
143
$
382
(63
%)
$
157
$
396
(60
%)
Diluted earnings per share
$
1.11
$
2.48
(55
%)
$
1.22
$
2.55
(52
%)
Non-GAAP(2)
Adjusted net income
$
143
$
382
(63
%)
$
157
$
547
(71
%)
Adjusted diluted earnings per share
$
1.11
$
2.48
(55
%)
$
1.22
$
3.52
(65
%)
(1)
Represents change in Net sales vs. prior
year period.
(2)
Amounts shown for the three and six months
ended July 30, 2022 and the three months ended July 31, 2021 are
GAAP as there are no adjustments to Non-GAAP. These amounts are
shown for comparability purposes.
“Second quarter results were impacted by a weakening macro
environment, high inflation and dampened consumer spending, which
especially pressured our middle-income customers. We have adjusted
our plans, implementing actions to reduce inventory and lower
expenses to account for a softer demand outlook. Kohl’s has
navigated difficult periods in the past and I am confident in our
ability to successfully manage through the current uncertainty. I
want to thank our incredible associates around the country for
their commitment to Kohl’s and for providing excellent service to
our customers every day. We continue to execute on our
transformation strategy and are pleased to deliver outsized
performance in the nearly 600 stores which have been refreshed and
elevated, featuring Sephora as a key cornerstone,” said Michelle
Gass, Kohl’s chief executive officer.
“While 2022 has turned out to be more challenging than initially
expected, Kohl’s remains a financially strong company with
significant long-term growth potential. Our $500 million
accelerated share repurchase underscores our steadfast confidence
in Kohl’s future and focus on creating shareholder value. We also
remain firmly committed to our current dividend,” said Gass.
Updated 2022 Financial
Outlook
The Company is updating its full year 2022 financial outlook to
include the following:
- Net sales is now expected to decline in the range of
(5%) to (6%) as compared to the prior year
- Operating margin is now expected to be in the range of
4.2% to 4.5%
- Earnings per share is now expected to be in the range of
$2.80 to $3.20, excluding any non-recurring charges
Accelerated Share Repurchase
Agreement
On August 18, 2022, the Company entered into an accelerated
share repurchase agreement (ASR), pursuant to its previously
announced share repurchase program, to repurchase approximately
$500 million of the Company’s common stock.
Dividend
As previously announced, on August 9, 2022, 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, 2022 to shareholders of record at the close of business on
September 7, 2022.
Second Quarter 2022 Earnings Conference
Call
Kohl’s will host its quarterly earnings conference call at 9:00
am ET on August 18, 2022. A webcast of the conference call and the
related presentation materials will be available via the Company's
web site at investors.kohls.com, both live and after the call.
Cautionary Statement Regarding
Forward-Looking Information and Non-GAAP Measures
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. The Company 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 the Company’s actual results to
differ materially from those anticipated by the forward-looking
statements. These risks and uncertainties include, but are not
limited to, risks described more fully in Item 1A in the Company’s
Annual Report on Form 10-K and Item 1A of Part II of the Company’s
Quarterly Report on Form 10-Q for the first quarter of fiscal 2022,
which are expressly incorporated herein by reference, and other
factors as may periodically be described in the Company’s filings
with the SEC. Forward-looking statements relate to the date
initially made, and Kohl’s undertakes no obligation to update
them.
In this press release, the Company provides information
regarding adjusted net income and adjusted diluted earnings per
share, which are not recognized terms under U.S. generally accepted
accounting principles (“GAAP”) and do not purport to be
alternatives to net income as a measure of operating performance. A
reconciliation of adjusted net income and adjusted diluted earnings
per share is provided in this release. The Company believes that
the use of these non-GAAP financial measures provides investors
with enhanced visibility into its results with respect to the
impact of certain costs. Because not all companies use identical
calculations, these presentations may not be comparable to other
similarly titled measures of other companies.
About Kohl's
Kohl’s (NYSE: KSS) is a leading omnichannel retailer. With more
than 1,100 stores in 49 states and the online convenience of
Kohls.com and the Kohl's App, Kohl's offers amazing national and
exclusive brands at incredible savings for families nationwide.
Kohl’s is uniquely positioned to deliver against its strategy and
its vision to be the most trusted retailer of choice for the active
and casual lifestyle. Kohl’s is committed to progress in its
diversity and inclusion pledges, and the company's environmental,
social and corporate governance (ESG) stewardship. For a list of
store locations or to shop online, visit Kohls.com. For more
information about Kohl’s impact in the community or how to join our
winning team, visit Corporate.Kohls.com or follow @KohlsNews on
Twitter.
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
Six Months Ended
(Dollars in Millions, Except per Share
Data)
July 30,
2022
July 31,
2021
July 30,
2022
July 31,
2021
Net sales
$
3,863
$
4,223
$
7,334
$
7,885
Other revenue
224
224
468
449
Total revenue
4,087
4,447
7,802
8,334
Cost of merchandise sold
2,332
2,426
4,472
4,659
Gross margin rate
39.6
%
42.5
%
39.0
%
40.9
%
Operating expenses:
Selling, general, and administrative
1,283
1,241
2,576
2,411
As a percent of total revenue
31.4
%
27.9
%
33.0
%
28.9
%
Depreciation and amortization
206
210
406
421
Operating income
266
570
348
843
Interest expense, net
77
62
145
129
Loss on extinguishment of debt
—
—
—
201
Income before income taxes
189
508
203
513
Provision for income taxes
46
126
46
117
Net income
$
143
$
382
$
157
$
396
Average number of shares:
Basic
127
152
127
153
Diluted
128
154
129
155
Earnings per share:
Basic
$
1.13
$
2.51
$
1.24
$
2.58
Diluted
$
1.11
$
2.48
$
1.22
$
2.55
ADJUSTED NET INCOME AND
DILUTED EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES
(Unaudited)
Three Months Ended
Six Months Ended
(Dollars in Millions, Except per Share
Data)
July 30,
2022
July 31,
2021
July 30,
2022
July 31,
2021
Net income
GAAP
$
143
$
382
$
157
$
396
Loss on extinguishment of debt
—
—
—
201
Income tax impact of items noted above
—
—
—
(50)
Adjusted (non-GAAP)
$
143
$
382
$
157
$
547
Diluted earnings per share
GAAP
$
1.11
$
2.48
$
1.22
$
2.55
Loss on extinguishment of debt
—
—
—
1.29
Income tax impact of items noted above
—
—
—
(0.32)
Adjusted (non-GAAP)(1)
$
1.11
$
2.48
$
1.22
$
3.52
(1)
Amounts shown for the three and six months
ended July 30, 2022 and the three months ended July 31, 2021 are
GAAP as there are no adjustments to Non-GAAP. These amounts are
shown for comparability purposes.
KOHL’S CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in Millions)
July 30,
2022
July 31,
2021
Assets
Current assets:
Cash and cash equivalents
$
222
$
2,569
Merchandise inventories
4,034
2,733
Other
374
356
Total current assets
4,630
5,658
Property and equipment, net
8,228
7,107
Operating leases
2,296
2,301
Other assets
469
440
Total assets
$
15,623
$
15,506
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
1,497
$
1,495
Accrued liabilities
1,426
1,554
Borrowings under revolving credit
facility
79
—
Current portion of:
Long-term debt
164
—
Finance leases and financing
obligations
96
117
Operating leases
108
143
Total current liabilities
3,370
3,309
Long-term debt
1,747
1,909
Finance leases and financing
obligations
2,830
1,906
Operating leases
2,568
2,532
Deferred income taxes
194
245
Other long-term liabilities
370
386
Shareholders' equity
4,544
5,219
Total liabilities and shareholders'
equity
$
15,623
$
15,506
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Six Months Ended
(Dollars in Millions)
July 30,
2022
July 31,
2021
Operating activities
Net income
$
157
$
396
Adjustments to reconcile net income to net
cash
(used in) provided by operating
activities:
Depreciation and amortization
406
421
Share-based compensation
26
25
Deferred income taxes
(12
)
(57
)
Loss on extinguishment of debt
—
201
Non-cash lease expense
56
74
Other non-cash expenses
5
9
Changes in operating assets and
liabilities:
Merchandise inventories
(964)
(138)
Other current and long-term assets
(29)
590
Accounts payable
(185)
19
Accrued and other long-term
liabilities
51
228
Operating lease liabilities
(57
)
(76
)
Net cash (used in) provided by operating
activities
(546)
1,692
Investing activities
Acquisition of property and equipment
(548
)
(191
)
Proceeds from sale of real estate
4
4
Net cash used in investing activities
(544
)
(187
)
Financing activities
Proceeds from issuance of debt
—
500
Net borrowings under revolving credit
facility
79
—
Deferred financing costs
—
(5
)
Treasury stock purchases
(158
)
(301
)
Shares withheld for taxes on vested
restricted shares
(20
)
(25
)
Dividends paid
(127
)
(77
)
Reduction of long-term borrowings
—
(1,044
)
Premium paid on redemption of debt
—
(192
)
Finance lease and financing obligation
payments
(55
)
(65
)
Proceeds from financing obligations
5
4
Proceeds from stock option exercises
1
1
Other
—
(3)
Net cash used in financing activities
(275)
(1,207)
Net (decrease) increase in cash and cash
equivalents
(1,365)
298
Cash and cash equivalents at beginning of
period
1,587
2,271
Cash and cash equivalents at end of
period
$
222
$
2,569
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220818005106/en/
Investor Relations: Mark Rupe, (262) 703-1266,
mark.rupe@kohls.com
Media: Jen Johnson, (262) 703-5241,
jen.johnson@kohls.com
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