EX-99.1 2 d905029dex991.htm 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 |