EX-99.1 2 d905029dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Kohl’s Corporation Reports Financial Results

 

   

Significantly increased financial flexibility during quarter, ending with $2.0 billion in cash

 

   

Swift and aggressive actions taken in response to COVID-19 resulted in positive operating cash flow

 

   

First quarter net sales decrease (43.5%)

 

   

First quarter diluted loss per share of ($3.50); adjusted diluted loss per share(2) of ($3.20)

MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—May 19, 2020— Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended May 2, 2020.

 

     Three Months  

($ in millions, except per share data)

   2020     2019     Change  

Total revenue

   $ 2,428     $ 4,087       (40.6 )% 

Net sales(1)

     (43.5 )%      (3.3 )%   

Gross margin

     17.3     36.8     (1,950) bps  

Selling, general, and administrative expenses

   $ 1,066     $ 1,275       (16.4 )% 

Reported

      

Net (loss) income

   $ (541   $ 62       (973 )% 

Diluted (loss) earnings per share

   $ (3.50   $ 0.38       (1,021 )% 

Non-GAAP(2)

      

Adjusted net (loss) income

   $ (495   $ 98       (605 )% 

Adjusted diluted (loss) earnings per share

   $ (3.20   $ 0.61       (625 )% 

 

  (1)

Not reporting comparable sales due to store closures

  (2)

Excludes Impairments, store closing, and other costs

“We entered the year in a strong financial position and our business was tracking to our expectations prior to the onset of the crisis. We immediately responded with actions to protect the health and safety of our associates and customers and to preserve our financial position. I am incredibly proud of how our associates stepped up to face this unprecedented challenge with speed and agility. Our actions to manage cash outflow and increase liquidity have been instrumental in enhancing our position to navigate this crisis, and we believe our history of prudent capital management will continue to serve us well,” said Michelle Gass, Kohl’s chief executive officer.

“We have begun the rebuilding process, recently reopening about 50% of our stores across the country. In doing so, we have taken special care to equip our stores with the latest health and safety measures as we welcome back our associates and customers,” said Gass. “As we look ahead, we know this experience will have a lasting impact to customer behavior and the retail landscape, and we are evolving our strategies to ensure our relevance and to capture market share.”

Actions Taken In Response to COVID-19

As part of the COVID-19 response, the Company has taken the following actions to preserve financial liquidity and financial flexibility:

 

   

Managed inventory receipts meaningfully lower,

 

   

Significantly reduced expenses across the business inclusive of marketing, technology, operations and payroll,

 

   

Decreased planned capital expenditures by approximately $500 million,

 

   

Suspended share repurchase program,

 

   

Suspended regular quarterly cash dividend beginning in the second quarter of 2020,

 

   

Replaced and upsized revolver to $1.5 billion secured facility, and

 

   

Issued $600 million notes due 2025.

First Quarter 2020 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 9:00 am ET on May 19, 2020. A webcast of the conference call and the related presentation materials will be available via the Company’s web site at http://corporate.kohls.com/investors/events-and-presentations, both live and after the call.

Cautionary Statement Regarding Forward-Looking Information and Non-GAAP Measures

This current report on Form 8-K 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, which is 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 (loss) income and adjusted diluted (loss) 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 (loss) income and adjusted diluted (loss) 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. With a commitment to inspiring and empowering families to lead fulfilled lives, Kohl’s offers amazing national and exclusive brands, incredible savings and an easy shopping experience in our stores, online at Kohls.com and on Kohl’s mobile app. Since its founding, Kohl’s has given more than $750 million to support communities nationwide, with a focus on family health and wellness. 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.

Contacts

Investor Relations:

Mark Rupe, (262) 703-1266, mark.rupe@kohls.com

Media:

Jen Johnson, (262) 703-5241, jen.johnson@kohls.com


KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three Months Ended  

(Dollars in Millions, Except per Share Data)

   May 2, 2020     May 4, 2019  

Net sales

   $ 2,160     $ 3,821  

Other revenue

     268       266  
  

 

 

   

 

 

 

Total revenue

     2,428       4,087  

Cost of merchandise sold

     1,787       2,415  

Gross margin rate

     17.3 %      36.8 % 

Operating expenses:

    

Selling, general, and administrative

     1,066       1,275  

As a percent of total revenue

     43.9     31.2 % 

Depreciation and amortization

     227       230  

Impairments, store closing, and other costs

     66       49  
  

 

 

   

 

 

 

Operating (loss) income

     (718     118  

Interest expense, net

     58       52  
  

 

 

   

 

 

 

(Loss) income before income taxes

     (776     66  

Provision for income taxes

     (235     4  
  

 

 

   

 

 

 

Net (loss) income

   $ (541   $ 62  
  

 

 

   

 

 

 

Average number of shares:

    

Basic

     154       161  

Diluted

     155       162  

(Loss) earnings per share:

    

Basic

   $ (3.52   $ 0.38  

Diluted

   $ (3.50   $ 0.38  

ADJUSTED NET (LOSS) INCOME AND DILUTED (LOSS) EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES

(Unaudited)

 

     Three Months Ended  

(Dollars in Millions, Except per Share Data)

   May 2, 2020     May 4, 2019  

Net (loss) income

    

GAAP

   $ (541   $ 62  

Impairments, store closing, and other costs

     46       36  
  

 

 

   

 

 

 

Adjusted (non-GAAP)

   $ (495   $ 98  
  

 

 

   

 

 

 

Diluted (loss) earnings per share

    

GAAP

   $ (3.50   $ 0.38  

Impairments, store closing, and other costs

     0.30       0.23  
  

 

 

   

 

 

 

Adjusted (non-GAAP)

   $ (3.20   $ 0.61  
  

 

 

   

 

 

 


KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in Millions)

   May 2, 2020      May 4, 2019  

Assets

     

Current assets:

     

Cash and cash equivalents

   $ 2,039      $ 543  

Merchandise inventories

     3,557        3,680  

Income tax receivable

     174        15  

Other

     400        397  
  

 

 

    

 

 

 

Total current assets

     6,170        4,635  

Property and equipment, net

     7,169        7,211  

Operating leases

     2,373        2,453  

Other assets

     157        167  
  

 

 

    

 

 

 

Total assets

   $ 15,869      $ 14,466  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Current liabilities:

     

Accounts payable

   $ 1,866      $ 1,295  

Accrued liabilities

     1,070        1,184  

Income taxes payable

     68        40  

Current portion of:

     

Finance leases and financing obligations

     124        115  

Operating leases

     159        158  
  

 

 

    

 

 

 

Total current liabilities

     3,287        2,792  

Long-term debt

     3,449        1,855  

Finance leases and financing obligations

     1,351        1,225  

Operating leases

     2,605        2,680  

Deferred income taxes

     165        233  

Other long-term liabilities

     222        239  

Shareholders’ equity

     4,790        5,442  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 15,869      $ 14,466  
  

 

 

    

 

 

 


KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Three Months Ended  

(Dollars in Millions)

   May 2, 2020     May 4, 2019  

Operating activities

    

Net (loss) income

   $ (541   $ 62  

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

    

Depreciation and amortization

     227       230  

Share-based compensation

     15       15  

Deferred income taxes

     (91     18  

Impairments, store closing, and other costs

     51       49  

Non-cash inventory costs

     187       —    

Non-cash lease expense

     37       37  

Other non-cash expenses

     5       2  

Changes in operating assets and liabilities:

    

Merchandise inventories

     (205     (202

Other current and long-term assets

     (21     6  

Accounts payable

     660       108  

Accrued and other long-term liabilities

     (98     (141

Income taxes

     (139     1  

Operating lease liabilities

     (34     (49
  

 

 

   

 

 

 

Net cash provided by operating activities

     53       136  
  

 

 

   

 

 

 

Investing activities

    

Acquisition of property and equipment

     (162     (238
  

 

 

   

 

 

 

Net cash used in investing activities

     (162     (238
  

 

 

   

 

 

 

Financing activities

    

Proceeds from issuance of debt

     2,097       —    

Deferred financing costs

     (19     —    

Treasury stock purchases

     (8     (121

Shares withheld for taxes on vested restricted shares

     (20     (25

Dividends paid

     (108     (108

Reduction of long-term borrowings

     (497     (6

Finance lease and financing obligation payments

     (23     (31

Proceeds from stock option exercises

     —         2  

Proceeds from financing obligations

     3       —    
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     1,425       (289
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     1,316       (391

Cash and cash equivalents at beginning of period

     723       934  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 2,039     $ 543