EX-99.2 3 d92340dex992.htm EX-99.2

Exhibit 99.2 Q4 2020 Results Presentation March 2, 2021Exhibit 99.2 Q4 2020 Results Presentation March 2, 2021

Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as believes, anticipates, plans, may, intends, will, should, expects, and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, comments about Kohl's future financial plans, capital generation, management and deployment strategies, adequacy of capital resources and the competitive environment. 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, and in Item 1A of Part II in the Company's Quarterly Report on Form 10-Q for the quarter ended May 2, 2020, which are expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC. Any number of risks and uncertainties could cause actual results to differ materially from those Kohl’s expresses in its forward-looking statements, including the short and long-term impact of COVID-19 on the economy and the pace of recovery thereafter. Forward-looking statements speak as of the date they are made, and Kohl’s undertakes no obligation to update them.   Non-GAAP Financial Measures In addition, this presentation contains non-GAAP financial measures, including Adjusted EPS, Adjusted Net Income, Adjusted EBITDA, Adjusted ROI, and Free Cash Flow. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are included in the Appendix of this presentation. 2Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as believes, anticipates, plans, may, intends, will, should, expects, and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, comments about Kohl's future financial plans, capital generation, management and deployment strategies, adequacy of capital resources and the competitive environment. 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, and in Item 1A of Part II in the Company's Quarterly Report on Form 10-Q for the quarter ended May 2, 2020, which are expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC. Any number of risks and uncertainties could cause actual results to differ materially from those Kohl’s expresses in its forward-looking statements, including the short and long-term impact of COVID-19 on the economy and the pace of recovery thereafter. Forward-looking statements speak as of the date they are made, and Kohl’s undertakes no obligation to update them. Non-GAAP Financial Measures In addition, this presentation contains non-GAAP financial measures, including Adjusted EPS, Adjusted Net Income, Adjusted EBITDA, Adjusted ROI, and Free Cash Flow. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are included in the Appendix of this presentation. 2

Important Shareholder Information and Where You Can Find It Kohl’s intends to file a proxy statement and BLUE proxy card with the SEC in connection with the solicitation of proxies for Kohl’s 2021 Annual Meeting of shareholders (the “Proxy Statement” and such meeting the “2021 Annual Meeting”). Kohl’s, its directors and certain of its executive officers will be participants in the solicitation of proxies from shareholders in respect of the 2021 Annual Meeting. Information regarding the names of Kohl’s directors and executive officers and their respective interests in Kohl’s by security holdings or otherwise is set forth in Kohl’s proxy statement for the 2020 Annual Meeting of shareholders, filed with the SEC on March 26, 2020 (the “2020 Proxy Statement”). To the extent holdings of such participants in Kohl’s securities have changed since the amounts described in the 2020 Proxy Statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC or will be filed within the time period specified by Section 16 of the Securities Exchange Act of 1934, as amended, and the regulations thereunder. Additional information is available in Kohl’s Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended January 30, 2021 filed with the SEC on June 5, 2020, September 3, 2020 and December 3, 2020, respectively. Details concerning the nominees of Kohl’s Board of Directors for election at the 2021 Annual Meeting will be included in the Proxy Statement. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SHAREHOLDERS OF KOHL’S ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING KOHL’S DEFINITIVE PROXY STATEMENT, ANY SUPPLEMENTS THERETO AND THE ACCOMPANYING WHITE PROXY CARD BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain a copy of the definitive Proxy Statement and other documents filed by Kohl’s free of charge from the SEC’s website, www.sec.gov. Copies will also be available at no charge on the Kohl’s website at investors.kohls.com. 3Important Shareholder Information and Where You Can Find It Kohl’s intends to file a proxy statement and BLUE proxy card with the SEC in connection with the solicitation of proxies for Kohl’s 2021 Annual Meeting of shareholders (the “Proxy Statement” and such meeting the “2021 Annual Meeting”). Kohl’s, its directors and certain of its executive officers will be participants in the solicitation of proxies from shareholders in respect of the 2021 Annual Meeting. Information regarding the names of Kohl’s directors and executive officers and their respective interests in Kohl’s by security holdings or otherwise is set forth in Kohl’s proxy statement for the 2020 Annual Meeting of shareholders, filed with the SEC on March 26, 2020 (the “2020 Proxy Statement”). To the extent holdings of such participants in Kohl’s securities have changed since the amounts described in the 2020 Proxy Statement, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC or will be filed within the time period specified by Section 16 of the Securities Exchange Act of 1934, as amended, and the regulations thereunder. Additional information is available in Kohl’s Quarterly Reports on Form 10-Q for the first three quarters of the fiscal year ended January 30, 2021 filed with the SEC on June 5, 2020, September 3, 2020 and December 3, 2020, respectively. Details concerning the nominees of Kohl’s Board of Directors for election at the 2021 Annual Meeting will be included in the Proxy Statement. BEFORE MAKING ANY VOTING DECISION, INVESTORS AND SHAREHOLDERS OF KOHL’S ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH OR FURNISHED TO THE SEC, INCLUDING KOHL’S DEFINITIVE PROXY STATEMENT, ANY SUPPLEMENTS THERETO AND THE ACCOMPANYING WHITE PROXY CARD BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain a copy of the definitive Proxy Statement and other documents filed by Kohl’s free of charge from the SEC’s website, www.sec.gov. Copies will also be available at no charge on the Kohl’s website at investors.kohls.com. 3

Q4 2020 10 Driving Top Line Growth Results   COVID-19 Update 5 Presentation Q4 2020 Results 7 2021 Outlook 12 Our Strategy 14 4Q4 2020 10 Driving Top Line Growth Results COVID-19 Update 5 Presentation Q4 2020 Results 7 2021 Outlook 12 Our Strategy 14 4

COVID-19 Update 5COVID-19 Update 5

We established two priorities in response to the COVID-19 crisis + 6 Protecting the health and   Preserving our safety of our associates   financial position and customers Protecting Associates and Customers Financial Liquidity Strengthened financial position with cash of $2.3 billion at year end 2020 Continue to prioritize the health and safety of Kohl’s customers • • and associates Strong operating cash flow of $1.3 billion FY 2020 • We received an “A” grade from ShopSafely, an organization that • scores retailers on the safety of their shopping experience during the COVID-19 pandemic Strong customer satisfaction with our new safety and cleanliness • procedures 6We established two priorities in response to the COVID-19 crisis + 6 Protecting the health and Preserving our safety of our associates financial position and customers Protecting Associates and Customers Financial Liquidity Strengthened financial position with cash of $2.3 billion at year end 2020 Continue to prioritize the health and safety of Kohl’s customers • • and associates Strong operating cash flow of $1.3 billion FY 2020 • We received an “A” grade from ShopSafely, an organization that • scores retailers on the safety of their shopping experience during the COVID-19 pandemic Strong customer satisfaction with our new safety and cleanliness • procedures 6

Q4 2020 Results 7Q4 2020 Results 7

Q4 2020 Results Key Takeaways • Q4 2020 earnings exceeded company expectations, with significant improvement from Q3 2020 • Digital sales growth remained strong and accounted for 42% of net sales, with stores playing a critical role in supporting the heightened demand • Actions to improve gross margin showed further progress and expenses managed tightly to drive strong operating cash flow • Further strengthened financial position ending the period with $2.3 billion of cash Q4 2020 Results • Net sales declined 10%, with digital sales +22% as compared to last year • Gross margin contracted 73 bps with disciplined inventory management and further optimization in promotion strategies offset by higher shipping costs driven by increased digital penetration and freight surcharges • SG&A expense declined 8% in Q4, and declined 10% excluding COVID-19 expenses (1) • Adjusted EBITDA of $538 million in Q4 2020 (1) • Adjusted diluted EPS $2.22 vs $1.99 in prior year, including $1.15 per share of incremental tax benefit driven by tax planning strategies • Inventory declined 27% versus prior year and inventory turn reached a 10 year high • Strong operating cash flow of $428 million in Q4 2020 and $1.3 billion in FY 2020 8 (1) - Adjusted EBITDA, and Adjusted EPS are non-GAAP financial measures. Please refer to the reconciliation included in the Appendix for more information. 8Q4 2020 Results Key Takeaways • Q4 2020 earnings exceeded company expectations, with significant improvement from Q3 2020 • Digital sales growth remained strong and accounted for 42% of net sales, with stores playing a critical role in supporting the heightened demand • Actions to improve gross margin showed further progress and expenses managed tightly to drive strong operating cash flow • Further strengthened financial position ending the period with $2.3 billion of cash Q4 2020 Results • Net sales declined 10%, with digital sales +22% as compared to last year • Gross margin contracted 73 bps with disciplined inventory management and further optimization in promotion strategies offset by higher shipping costs driven by increased digital penetration and freight surcharges • SG&A expense declined 8% in Q4, and declined 10% excluding COVID-19 expenses (1) • Adjusted EBITDA of $538 million in Q4 2020 (1) • Adjusted diluted EPS $2.22 vs $1.99 in prior year, including $1.15 per share of incremental tax benefit driven by tax planning strategies • Inventory declined 27% versus prior year and inventory turn reached a 10 year high • Strong operating cash flow of $428 million in Q4 2020 and $1.3 billion in FY 2020 8 (1) - Adjusted EBITDA, and Adjusted EPS are non-GAAP financial measures. Please refer to the reconciliation included in the Appendix for more information. 8

Q4 & 2020 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) January 30, 2021 February 1, 2020 Net Sales $ 5,879 $ 6,537 Total Revenue 6,141 6,832 Gross Margin Rate 32.0% 32.7% SG&A 1,603 1,742 Depreciation 218 232 (Gain) on Sale of Real Estate — — Impairments, Store Closings, and Other Costs 4 57 Operating Income $ 316 $ 401 Interest Expense 70 50 (Gain) on extinguishment of debt — — Provision for Income Taxes (97) 86 Net Income $ 343 $ 265 Diluted EPS $2.20 $1.72 (1) $ 346 $ 308 Adjusted Net Income (Non-GAAP) (1) $2.22 $1.99 Adjusted Diluted EPS (Non-GAAP) Key Balance Sheet Items January 30, 2021 February 1, 2020 (Dollars in Millions) Cash and Cash Equivalents $ 2,271 $ 723 Merchandise Inventories 2,590 3,537 Accounts Payable 1,476 1,206 Long-term Debt 2,451 1,856 Key Cash Flow items January 30, 2021 (Dollars in Millions) Three Months Ended Twelve Months Ended Operating Cash Flow $ 428 $ 1,338 Capital Expenditures (70) (334) Net, Finance lease and financing obligations (28) (96) (1) $ 330 $ 908 Free Cash Flow 9 9 (1) - Adjusted Net Income, Adjusted EPS, and Free Cash Flow are non-GAAP financial measures. Please refer to the reconciliation included in the Appendix for more information. 9Q4 & 2020 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) January 30, 2021 February 1, 2020 Net Sales $ 5,879 $ 6,537 Total Revenue 6,141 6,832 Gross Margin Rate 32.0% 32.7% SG&A 1,603 1,742 Depreciation 218 232 (Gain) on Sale of Real Estate — — Impairments, Store Closings, and Other Costs 4 57 Operating Income $ 316 $ 401 Interest Expense 70 50 (Gain) on extinguishment of debt — — Provision for Income Taxes (97) 86 Net Income $ 343 $ 265 Diluted EPS $2.20 $1.72 (1) $ 346 $ 308 Adjusted Net Income (Non-GAAP) (1) $2.22 $1.99 Adjusted Diluted EPS (Non-GAAP) Key Balance Sheet Items January 30, 2021 February 1, 2020 (Dollars in Millions) Cash and Cash Equivalents $ 2,271 $ 723 Merchandise Inventories 2,590 3,537 Accounts Payable 1,476 1,206 Long-term Debt 2,451 1,856 Key Cash Flow items January 30, 2021 (Dollars in Millions) Three Months Ended Twelve Months Ended Operating Cash Flow $ 428 $ 1,338 Capital Expenditures (70) (334) Net, Finance lease and financing obligations (28) (96) (1) $ 330 $ 908 Free Cash Flow 9 9 (1) - Adjusted Net Income, Adjusted EPS, and Free Cash Flow are non-GAAP financial measures. Please refer to the reconciliation included in the Appendix for more information. 9

2020 Gross Margin Performance Actions to improve gross margin showed great progress through the year, driven by our key margin enhancing initiatives, including • inventory management and price and promotion optimization In Q4 2020, strong merchandise margin improvement helped to offset increased shipping costs related to elevated digital sales • penetration and incremental freight surcharges during the holiday period Q4 Q1 Q2 Q3 17.3% 33.1% 35.8% 32.0% % Change Y/Y (48) bps (73) bps (569) bps Inventory Inventory Management Management Mix / Promos Pricing / Promos Cost of Shipping Pricing / Promos Cost of Shipping Cost of Shipping Freight Surcharges (1,950) bps ~(60) bps Inventory Actions Cost of Shipping Mix / Other 102020 Gross Margin Performance Actions to improve gross margin showed great progress through the year, driven by our key margin enhancing initiatives, including • inventory management and price and promotion optimization In Q4 2020, strong merchandise margin improvement helped to offset increased shipping costs related to elevated digital sales • penetration and incremental freight surcharges during the holiday period Q4 Q1 Q2 Q3 17.3% 33.1% 35.8% 32.0% % Change Y/Y (48) bps (73) bps (569) bps Inventory Inventory Management Management Mix / Promos Pricing / Promos Cost of Shipping Pricing / Promos Cost of Shipping Cost of Shipping Freight Surcharges (1,950) bps ~(60) bps Inventory Actions Cost of Shipping Mix / Other 10

Enhanced Liquidity Position Key Balance Sheet & Cash Flow Items: Q4 / 2020 February 1, 2020 Beginning Cash $723M Key Takeaways Sources • Long history of disciplined and prudent   capital management Operating Cash Flow $1,338M • More than two decades of maintaining   New Debt $600M Investment Grade rating Sale-leaseback $193M • Effectively navigating through the crisis and   further strengthened liquidity position in Q4 2020 Uses • Well-positioned to capitalize on evolving customer Capex ($334M) behaviors and the retail industry disruption  Dividend ($108M) Share Repurchase ($8M) January 30, 2021 Ending Cash $2,271M 11Enhanced Liquidity Position Key Balance Sheet & Cash Flow Items: Q4 / 2020 February 1, 2020 Beginning Cash $723M Key Takeaways Sources • Long history of disciplined and prudent capital management Operating Cash Flow $1,338M • More than two decades of maintaining New Debt $600M Investment Grade rating Sale-leaseback $193M • Effectively navigating through the crisis and further strengthened liquidity position in Q4 2020 Uses • Well-positioned to capitalize on evolving customer Capex ($334M) behaviors and the retail industry disruption Dividend ($108M) Share Repurchase ($8M) January 30, 2021 Ending Cash $2,271M 11

2021 Outlook 122021 Outlook 12

2021 Outlook Metric Full Year Guidance Mid-teens percent Net Sales increase versus 2020 Operating Margin 4.5% to 5.0% EPS $2.45 to $2.95 Resuming Capital Allocation Strategy • Capex: $550 million to $600 million • Dividend reinstated: $0.25 quarterly dividend payable on March 31, 2021 • Share Repurchase Program: $200 million to $300 million • Employing liability management strategies: improve leverage ratio, including debt repurchases 132021 Outlook Metric Full Year Guidance Mid-teens percent Net Sales increase versus 2020 Operating Margin 4.5% to 5.0% EPS $2.45 to $2.95 Resuming Capital Allocation Strategy • Capex: $550 million to $600 million • Dividend reinstated: $0.25 quarterly dividend payable on March 31, 2021 • Share Repurchase Program: $200 million to $300 million • Employing liability management strategies: improve leverage ratio, including debt repurchases 13

Our Strategy 14Our Strategy 14

Kohl’s has built a powerful foundation Customers Digital Digital sales 40% penetration in 2020 Active Customers 65M Website visits 1.6B in 2020 Loyalty Members 30M Kohl’s App user 18% growth in Q4 2020 Kohl’s Charge Stores 29M Card holders $5.9B 90% 95% $4.5B $4B of stores of Kohl’s stores $3.6B generated $1M+ in are off-mall $3B $2.7B 4-wall cash flow Accessible and Aspirational Brand 1,162 80% 2015 2016 2017 2018 2019 2020 Portfolio stores in of Americans live Digital Sales Growth 49 states at within 15 miles of a year end 2020 Kohl’s store 43% 10% of digital sales higher digital sales fulfilled by stores in markets In 2020 with stores 600M store visits 15 All figures are 2019 except as noted 17% CAGRKohl’s has built a powerful foundation Customers Digital Digital sales 40% penetration in 2020 Active Customers 65M Website visits 1.6B in 2020 Loyalty Members 30M Kohl’s App user 18% growth in Q4 2020 Kohl’s Charge Stores 29M Card holders $5.9B 90% 95% $4.5B $4B of stores of Kohl’s stores $3.6B generated $1M+ in are off-mall $3B $2.7B 4-wall cash flow Accessible and Aspirational Brand 1,162 80% 2015 2016 2017 2018 2019 2020 Portfolio stores in of Americans live Digital Sales Growth 49 states at within 15 miles of a year end 2020 Kohl’s store 43% 10% of digital sales higher digital sales fulfilled by stores in markets In 2020 with stores 600M store visits 15 All figures are 2019 except as noted 17% CAGR

Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organizational Margin Management Core Drive Top Line Growth Destination for Differentiated Agile, Active & Casual Leading with Omni-channel Operating Margin Maintain Strong Accountable & Lifestyle Loyalty & Value Experience Goal of 7% to 8% Balance Sheet Inclusive Culture Expand Active and Outdoor Best-in-class loyalty Healthy store base in End-to-end supply chain Sustain Investment Grade Innovative and adaptive • • • • • • evolving landscape transformation rating learning approach Reignite growth in Women’s Drive productivity • • through deeper Modernize the store SG&A efficiency through Solid cash flow Focused on diversity • • • • Build a sizable Beauty • engagement experience store labor, marketing, generation and inclusion business and technology Deliver personalized Continue digital growth Committed to returning ESG stewardship • • • • Drive category productivity • experiences Operational excellence capital to shareholders • and inventory turn Further enhance omni- • channel capabilities Capture market share from • retail industry disruption Creating Long-term Shareholder Value Expand operating margin Return to growth Solid cash flow generation Return capital to shareholders Maintain strong balance sheet 16Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organizational Margin Management Core Drive Top Line Growth Destination for Differentiated Agile, Active & Casual Leading with Omni-channel Operating Margin Maintain Strong Accountable & Lifestyle Loyalty & Value Experience Goal of 7% to 8% Balance Sheet Inclusive Culture Expand Active and Outdoor Best-in-class loyalty Healthy store base in End-to-end supply chain Sustain Investment Grade Innovative and adaptive • • • • • • evolving landscape transformation rating learning approach Reignite growth in Women’s Drive productivity • • through deeper Modernize the store SG&A efficiency through Solid cash flow Focused on diversity • • • • Build a sizable Beauty • engagement experience store labor, marketing, generation and inclusion business and technology Deliver personalized Continue digital growth Committed to returning ESG stewardship • • • • Drive category productivity • experiences Operational excellence capital to shareholders • and inventory turn Further enhance omni- • channel capabilities Capture market share from • retail industry disruption Creating Long-term Shareholder Value Expand operating margin Return to growth Solid cash flow generation Return capital to shareholders Maintain strong balance sheet 16

Driving top line growth Grow Active to Beauty Growth Reignite Extend Casual 30% of Sales with Sephora Women’s Growth Lifestyle to Home • Fuel growth with key national • Highly complementary strategic • New organization structure and • Expand soft home category brands, Nike, Under Armour and partnership to establish Kohl’s as leadership to drive improved (e.g. Koolaburra by Ugg, Sonoma) Adidas a leading beauty destination performance • Expand underdeveloped • Expand Active space by at least • Comprehensive digital launch • Significant portfolio reinvention categories (e.g. decor, kid’s 20% in 2021 August 2021 with exit of 10 downtrending brands bedroom, storage) • Drive athleisure through launch of • Launch in 200 stores Fall 2021 • Refresh and differentiate a more • Lean into healthy home FLX, our new private brand, Calvin and expand to at least 850 stores focused portfolio of private brands (e.g. sleep and cookware) Klein basics and loungewear, and by 2023 (e.g. Sonoma, So, LC Lauren expand assortment of Champion Conrad) • Assortment will include 100+ • Grow outdoor through expansion of emerging and established brands • Distort denim opportunity Lands’ End and launch of Eddie emulating freestanding Sephora (e.g. Levi’s, key private brands) Bauer store • Improving merchandising and • Expected to drive significant traffic clarity through significant choice and acquisition of new younger count reduction and building depth customer 17Driving top line growth Grow Active to Beauty Growth Reignite Extend Casual 30% of Sales with Sephora Women’s Growth Lifestyle to Home • Fuel growth with key national • Highly complementary strategic • New organization structure and • Expand soft home category brands, Nike, Under Armour and partnership to establish Kohl’s as leadership to drive improved (e.g. Koolaburra by Ugg, Sonoma) Adidas a leading beauty destination performance • Expand underdeveloped • Expand Active space by at least • Comprehensive digital launch • Significant portfolio reinvention categories (e.g. decor, kid’s 20% in 2021 August 2021 with exit of 10 downtrending brands bedroom, storage) • Drive athleisure through launch of • Launch in 200 stores Fall 2021 • Refresh and differentiate a more • Lean into healthy home FLX, our new private brand, Calvin and expand to at least 850 stores focused portfolio of private brands (e.g. sleep and cookware) Klein basics and loungewear, and by 2023 (e.g. Sonoma, So, LC Lauren expand assortment of Champion Conrad) • Assortment will include 100+ • Grow outdoor through expansion of emerging and established brands • Distort denim opportunity Lands’ End and launch of Eddie emulating freestanding Sephora (e.g. Levi’s, key private brands) Bauer store • Improving merchandising and • Expected to drive significant traffic clarity through significant choice and acquisition of new younger count reduction and building depth customer 17

Driving top line growth Investing in Omni-channel Loyalty Members are Transforming the Role Enhance Digital Capabilities More Productive of the Store to Drive Growth • Recently launched Kohl’s Rewards loyalty • Modernizing the store experience through refresh • Continue to invest in the evolution of the digital program, adding new features, enhancing program and category reflow to highlight outsized experience (e.g. Kohls.com, App) personalization and simplifying rewards in growth businesses • Expanding digital brand portfolio (e.g. Fanatics, Kohl’s Cash • Simplified and edited shopping experience through Sephora, Lands’ End, Eddie Bauer) fixture de-densification (standard to small strategy) • Kohl’s Cash: Iconic and differentiated loyalty device that provides a fly-wheel effect on • New e-commerce fulfillment center opening in 2021 • Inspired solutions and product storytelling through customer return visits will be significantly more productive continued investments in merchandising (e.g. expanding the learnings from the Outfit Bar concept) • Kohl’s Card: Provides more opportunities for customers to save • Evolve existing omni experiences: BOPUS/BOSS, Store Drive Up, Amazon Returns • Continue to pursue innovation and discovery (e.g. Curated by Kohl’s, emerging brands) 30 million loyalty members spend 2x more than non-loyalty members and Omni-customer is 4x more productive than highest tier Kohl’s Card members store-only shopper and 6x more productive (“Most Valuable Customer”) spend 10x more than non-loyalty members than digital-only customer 18Driving top line growth Investing in Omni-channel Loyalty Members are Transforming the Role Enhance Digital Capabilities More Productive of the Store to Drive Growth • Recently launched Kohl’s Rewards loyalty • Modernizing the store experience through refresh • Continue to invest in the evolution of the digital program, adding new features, enhancing program and category reflow to highlight outsized experience (e.g. Kohls.com, App) personalization and simplifying rewards in growth businesses • Expanding digital brand portfolio (e.g. Fanatics, Kohl’s Cash • Simplified and edited shopping experience through Sephora, Lands’ End, Eddie Bauer) fixture de-densification (standard to small strategy) • Kohl’s Cash: Iconic and differentiated loyalty device that provides a fly-wheel effect on • New e-commerce fulfillment center opening in 2021 • Inspired solutions and product storytelling through customer return visits will be significantly more productive continued investments in merchandising (e.g. expanding the learnings from the Outfit Bar concept) • Kohl’s Card: Provides more opportunities for customers to save • Evolve existing omni experiences: BOPUS/BOSS, Store Drive Up, Amazon Returns • Continue to pursue innovation and discovery (e.g. Curated by Kohl’s, emerging brands) 30 million loyalty members spend 2x more than non-loyalty members and Omni-customer is 4x more productive than highest tier Kohl’s Card members store-only shopper and 6x more productive (“Most Valuable Customer”) spend 10x more than non-loyalty members than digital-only customer 18

We are confident in our ability to expand operating margin to 7% to 8% by 2023 SG&A Gross Margin Expense Rate ~36% Goal ~27% to ~28% Goal +20 to +40 basis points +70 to +150 basis points increase 7.0% to 8.0% improvement 6.1% Inventory Digital Stores management penetration / Marketing cost of shipping Sourcing Technology Pricing / Promo Corporate optimization Wage inflation Supply chain transformation FY 2019 Gross Margin SG&A FY 2023 Adj. Operating Margin * 19 * Adjusted Operating Margin is a non-GAAP financial measure. For reference, the reconciliation can be found in the Appendix.We are confident in our ability to expand operating margin to 7% to 8% by 2023 SG&A Gross Margin Expense Rate ~36% Goal ~27% to ~28% Goal +20 to +40 basis points +70 to +150 basis points increase 7.0% to 8.0% improvement 6.1% Inventory Digital Stores management penetration / Marketing cost of shipping Sourcing Technology Pricing / Promo Corporate optimization Wage inflation Supply chain transformation FY 2019 Gross Margin SG&A FY 2023 Adj. Operating Margin * 19 * Adjusted Operating Margin is a non-GAAP financial measure. For reference, the reconciliation can be found in the Appendix.

Focused on expanding gross margin through four key initiatives Targeting 20 basis points to 40 basis points improvement in gross margin to ~36.0% as compared to 35.7% in 2019 • Merchandise margin improvement will more than oﬀset cost of shipping headwind at digital sales penetration of 40% of sales • Inventory Optimizing Price / Supply Chain Management Sourcing Promotion Strategies Transformation • Optimal inventory deployment: • Increase inventory turnover: Goal of • Reduce product costs: Goal of • Simplifying pricing: Reducing Leveraging real-time demand insight at least 4.0x lowering costs of proprietary brands number of general promotional and improving supply chain visibility to by $125M to $175M by 2022 offers and stackable offers, while allocate goods closer to demand, • De-densification strategy: Executing increasing usage of price-led events resulting in increased sell-through and standard to small initiative across • Enable centralized sourcing to offer more value everyday inventory turn balance of chain in 2021 to improve • Insource direct factory negotiations customer experience as we lean into • Optimizing promotions: Increasing • Minimize fulfillment costs: Manage more productive categories. Key deployment of targeted and fulfillment costs lower (e.g. new EFC 6) • Reduce reliance on 3rd part agents driver of improved gross margin and personalized offers (e.g. > 50%) and and further leverage stores to drive inventory turn in 2017-2018 (500 introduction of real-time offers to customer pickup and get closer to the stores). drive customer behavior customer • Improving clarity: Reducing choice • Better insight: Continued investment • Enhancing sourcing engine: Optimize count through brand portfolio in consumer data and analytics to units per carton, proximity to transformation and building depth drive offer efficiency customer, and markdown and stock out avoidance • Better inventory allocation: Leveraging technology to drive • Demand shaping: Creating better dynamic inventory allocation leading connections between digital customer to higher regular sell through and demand and local/regional supply, to reduced clearance levels fulfill orders more profitably 20Focused on expanding gross margin through four key initiatives Targeting 20 basis points to 40 basis points improvement in gross margin to ~36.0% as compared to 35.7% in 2019 • Merchandise margin improvement will more than oﬀset cost of shipping headwind at digital sales penetration of 40% of sales • Inventory Optimizing Price / Supply Chain Management Sourcing Promotion Strategies Transformation • Optimal inventory deployment: • Increase inventory turnover: Goal of • Reduce product costs: Goal of • Simplifying pricing: Reducing Leveraging real-time demand insight at least 4.0x lowering costs of proprietary brands number of general promotional and improving supply chain visibility to by $125M to $175M by 2022 offers and stackable offers, while allocate goods closer to demand, • De-densification strategy: Executing increasing usage of price-led events resulting in increased sell-through and standard to small initiative across • Enable centralized sourcing to offer more value everyday inventory turn balance of chain in 2021 to improve • Insource direct factory negotiations customer experience as we lean into • Optimizing promotions: Increasing • Minimize fulfillment costs: Manage more productive categories. Key deployment of targeted and fulfillment costs lower (e.g. new EFC 6) • Reduce reliance on 3rd part agents driver of improved gross margin and personalized offers (e.g. > 50%) and and further leverage stores to drive inventory turn in 2017-2018 (500 introduction of real-time offers to customer pickup and get closer to the stores). drive customer behavior customer • Improving clarity: Reducing choice • Better insight: Continued investment • Enhancing sourcing engine: Optimize count through brand portfolio in consumer data and analytics to units per carton, proximity to transformation and building depth drive offer efficiency customer, and markdown and stock out avoidance • Better inventory allocation: Leveraging technology to drive • Demand shaping: Creating better dynamic inventory allocation leading connections between digital customer to higher regular sell through and demand and local/regional supply, to reduced clearance levels fulfill orders more profitably 20

Focused on lowering our SG&A expense rate through four key areas Targeting 70 basis points to 150 basis points improvement in SG&A expense rate to ~27% to ~28% from 28.6% in 2019 • SG&A expense initiatives to more than oﬀset ongoing wage inﬂation assumed at rate experienced in recent years • Transform Lower Marketing Store Labor Expense Rate Technology Efficiency Corporate Cost Actions • Increase self service: Goal to grow • Reduce spend rate: Goal of • More efficient future: Leveraging • 2020 organizational restructuring self service (e.g. checkout, returns, marketing to sales rate of 4.0% tech investments made in recent actions: Annualized expense savings and order pickup) to more than 25% or below years to support future growth and of more than $100 million of total in-store transactions drive improved profitability • Increase marketing ROI: Shifting • Ongoing focus on efficiency: Will • Localized operating hours: more of spend towards digital and • Rebalancing technology staffing: continue to leverage operational Improving cost efficiency by improving response from existing Shifted to a more balanced internal excellence discipline to seek cost operating with localized hours channels like direct mail (e.g. versus external model efficiencies across the business targeting, personalization) • Improve store fulfillment efficiency: • Evolving technology vision: • Reduced management layers and Leveraging technology to improve • In-house capabilities: Driving Increased discipline around streamlined processes to more fully associate productivity (e.g. finding significant efficiency with in-house investments and greater agility will empower our teams and picking orders) digital marketing capabilities be key contributors to improved ROIC • Leveraging technology: Accelerating use of machine learning algorithms to drive customer productivity through behavior and product preferences insight 21Focused on lowering our SG&A expense rate through four key areas Targeting 70 basis points to 150 basis points improvement in SG&A expense rate to ~27% to ~28% from 28.6% in 2019 • SG&A expense initiatives to more than oﬀset ongoing wage inﬂation assumed at rate experienced in recent years • Transform Lower Marketing Store Labor Expense Rate Technology Efficiency Corporate Cost Actions • Increase self service: Goal to grow • Reduce spend rate: Goal of • More efficient future: Leveraging • 2020 organizational restructuring self service (e.g. checkout, returns, marketing to sales rate of 4.0% tech investments made in recent actions: Annualized expense savings and order pickup) to more than 25% or below years to support future growth and of more than $100 million of total in-store transactions drive improved profitability • Increase marketing ROI: Shifting • Ongoing focus on efficiency: Will • Localized operating hours: more of spend towards digital and • Rebalancing technology staffing: continue to leverage operational Improving cost efficiency by improving response from existing Shifted to a more balanced internal excellence discipline to seek cost operating with localized hours channels like direct mail (e.g. versus external model efficiencies across the business targeting, personalization) • Improve store fulfillment efficiency: • Evolving technology vision: • Reduced management layers and Leveraging technology to improve • In-house capabilities: Driving Increased discipline around streamlined processes to more fully associate productivity (e.g. finding significant efficiency with in-house investments and greater agility will empower our teams and picking orders) digital marketing capabilities be key contributors to improved ROIC • Leveraging technology: Accelerating use of machine learning algorithms to drive customer productivity through behavior and product preferences insight 21

We are focused on maintaining a balanced capital allocation strategy Long history of disciplined financial management with more than two decades of maintaining Investment Grade rating • Aggressive actions taken in 2020 to preserve financial flexibility during peak of pandemic, including suspending the dividend • and share repurchase program, expanding our credit facility, issuing new debt and completing a sale-leaseback of two facilities Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Invest in   Share   Dividend complementary  the business repurchases M&A Resuming capital allocation strategy in 2021 22We are focused on maintaining a balanced capital allocation strategy Long history of disciplined financial management with more than two decades of maintaining Investment Grade rating • Aggressive actions taken in 2020 to preserve financial flexibility during peak of pandemic, including suspending the dividend • and share repurchase program, expanding our credit facility, issuing new debt and completing a sale-leaseback of two facilities Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Invest in Share Dividend complementary the business repurchases M&A Resuming capital allocation strategy in 2021 22

We have a history of investing in our business and generating strong free cash flow Capex ($ in millions) Solid Free Cash Flow ($ in millions) Adjusted ROI Base Capital $1,403 Omnichannel Store Strategies $855 Technology 14.0% 14.0% 13.4% $672 $881 $908 $578 $700 $334 4.9% 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 • Remain committed to investing in the business • Focused on driving free cash flow • Investments have been focused on driving technology and omni-channel initiatives • More than $2.0 billion cumulative Capex during • $3.0 billion cumulative free cash flow generated 2017-2019, of which ~70% supported our omni- from 2017 through 2019 • Stores have been upgraded and digital channel strategy capabilities have been enhanced • Strong free cash flow generation of $908 million • Reduced Capex in 2020 due to COVID-19 during 2020 pandemic • Expectation that adjusted ROI will return to prior pandemic year high levels with achievement of 7% to 8% operating margin • 2021 Capex expected to be in range of $550 to $600 million with installation of 200 Sephora at • 2020 Adjusted ROI was significantly impacted Kohl's and new digital fulfillment center being by the COVID-19 pandemic key drivers 23 Free Cash Flow and Adjusted ROI are non-GAAP financial measures. For reference, the reconciliations can be found in the Appendix.We have a history of investing in our business and generating strong free cash flow Capex ($ in millions) Solid Free Cash Flow ($ in millions) Adjusted ROI Base Capital $1,403 Omnichannel Store Strategies $855 Technology 14.0% 14.0% 13.4% $672 $881 $908 $578 $700 $334 4.9% 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 • Remain committed to investing in the business • Focused on driving free cash flow • Investments have been focused on driving technology and omni-channel initiatives • More than $2.0 billion cumulative Capex during • $3.0 billion cumulative free cash flow generated 2017-2019, of which ~70% supported our omni- from 2017 through 2019 • Stores have been upgraded and digital channel strategy capabilities have been enhanced • Strong free cash flow generation of $908 million • Reduced Capex in 2020 due to COVID-19 during 2020 pandemic • Expectation that adjusted ROI will return to prior pandemic year high levels with achievement of 7% to 8% operating margin • 2021 Capex expected to be in range of $550 to $600 million with installation of 200 Sephora at • 2020 Adjusted ROI was significantly impacted Kohl's and new digital fulfillment center being by the COVID-19 pandemic key drivers 23 Free Cash Flow and Adjusted ROI are non-GAAP financial measures. For reference, the reconciliations can be found in the Appendix.

Long history of returning capital to shareholders and optimizing our capital structure Dividend ($ in millions) Share Repurchases ($ in millions) Long-term Debt ($ in millions) $2,797 $470 $423 $400 $396 $368 $2,451 $306 $1,861 $1,856 $108 $8 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 • Long-term commitment to paying a dividend • Thoughtful execution of share repurchases over • Modest pre-COVID-19 debt structure (2.5x time, including reducing share count by more leverage at year-end 2019) in relation to cash • Prior to pandemic-driven suspension in 2020, than 50% since 2007 flow generation distributed $3.2 billion in dividends from inception in 2011 • Repurchased shares valued at $1.1 billion from • Reduced debt by over $940 million in 2018-2019 2017 to 2019 • Reinstated a $0.25 per share quarterly dividend • Sought capital in early 2020 to manage the payable on March 31, 2021 • Program suspended in 2020 due to COVID-19 uncertainty related to the COVID-19 pandemic pandemic • Employing liability management strategies in • Plan to resume share repurchase program in 2021 to improve leverage ratio, including debt 2021: $200 million to $300 million repurchases 24Long history of returning capital to shareholders and optimizing our capital structure Dividend ($ in millions) Share Repurchases ($ in millions) Long-term Debt ($ in millions) $2,797 $470 $423 $400 $396 $368 $2,451 $306 $1,861 $1,856 $108 $8 2017 2018 2019 2020 2017 2018 2019 2020 2017 2018 2019 2020 • Long-term commitment to paying a dividend • Thoughtful execution of share repurchases over • Modest pre-COVID-19 debt structure (2.5x time, including reducing share count by more leverage at year-end 2019) in relation to cash • Prior to pandemic-driven suspension in 2020, than 50% since 2007 flow generation distributed $3.2 billion in dividends from inception in 2011 • Repurchased shares valued at $1.1 billion from • Reduced debt by over $940 million in 2018-2019 2017 to 2019 • Reinstated a $0.25 per share quarterly dividend • Sought capital in early 2020 to manage the payable on March 31, 2021 • Program suspended in 2020 due to COVID-19 uncertainty related to the COVID-19 pandemic pandemic • Employing liability management strategies in • Plan to resume share repurchase program in 2021 to improve leverage ratio, including debt 2021: $200 million to $300 million repurchases 24

Agile, accountable & inclusive culture We are evolving how we work Kohl’s is committed to to accelerate our path forward ESG Leadership Excellence Award Recipient 2020 • Kohl’s management, led by CEO Michelle Gass, is committed to fostering a diverse, • Kohl’s ESG journey began more than a equitable, and inclusive environment for the Company’s associates, customers and decade ago suppliers. • Kohl’s is committed to the environment and has • A diversity and inclusion framework was established in 2020, which includes a number of established 2025 goals related to climate key initiatives across three pillars: Our People, Our Customers, and Our Communities. change, waste and recycling, and sustainable sourcing. • Committed to strong culture (ethics, governance, talent acquisition and associate development, Business Resource Groups) • The Company’s ESG efforts have earned frequent recognition • Kohl’s and Kohl’s Cares have donated nearly $785 million since program inception benefiting various national and hometown organizations 25Agile, accountable & inclusive culture We are evolving how we work Kohl’s is committed to to accelerate our path forward ESG Leadership Excellence Award Recipient 2020 • Kohl’s management, led by CEO Michelle Gass, is committed to fostering a diverse, • Kohl’s ESG journey began more than a equitable, and inclusive environment for the Company’s associates, customers and decade ago suppliers. • Kohl’s is committed to the environment and has • A diversity and inclusion framework was established in 2020, which includes a number of established 2025 goals related to climate key initiatives across three pillars: Our People, Our Customers, and Our Communities. change, waste and recycling, and sustainable sourcing. • Committed to strong culture (ethics, governance, talent acquisition and associate development, Business Resource Groups) • The Company’s ESG efforts have earned frequent recognition • Kohl’s and Kohl’s Cares have donated nearly $785 million since program inception benefiting various national and hometown organizations 25

Appendix 26Appendix 26

Sale-Leaseback Considerations As an investment grade rated company, sale-leaseback transactions are typically an inefficient means to accessing capital Company has readily available and more optimal financial alternatives • Company has utilized sale-leaseback transactions in the past when it was a clear efficient cost of capital (e.g. May 2020) • A sale-leaseback transaction would add operating risk and likely negatively impact our investment grade rated status • Transaction would significantly increase rent expense and is contrary to Company's focus on expanding operating margin • Transaction would also increase Company's leverage, which would likely result in a credit downgrade to high yield • Both outcomes would raise the Company's overall cost of capital Company has a robust capital return strategy that will not be enhanced by a sale-leaseback • Company generates significant annual cash flow and it has a long history of returning a meaningful portion to shareholders • Prior to suspending the dividend due to the pandemic, Company distributed $3.2 billion in dividends since inception in 2011 • Company's share repurchase program reduced share count by more than 50% since 2007 • Sale-leaseback transactions would divert cash flow to addressing higher rent and interest expense Company's bond indenture has restrictions on its ability to execute sale-leaseback transactions • Covenant on consolidated net tangible assets ( CNTA ) is a common feature in the bond indentures of many of the Company's retail peers • CNTA of 15% provides a lien basket that currently is mostly utilized by the Company's $1.5 billion revolver and sale-leaseback transaction last year • Inability to skirt covenant due to past legal precedent and need for high percentage of bond investors consent on each tranche of debt 27 27Sale-Leaseback Considerations As an investment grade rated company, sale-leaseback transactions are typically an inefficient means to accessing capital Company has readily available and more optimal financial alternatives • Company has utilized sale-leaseback transactions in the past when it was a clear efficient cost of capital (e.g. May 2020) • A sale-leaseback transaction would add operating risk and likely negatively impact our investment grade rated status • Transaction would significantly increase rent expense and is contrary to Company's focus on expanding operating margin • Transaction would also increase Company's leverage, which would likely result in a credit downgrade to high yield • Both outcomes would raise the Company's overall cost of capital Company has a robust capital return strategy that will not be enhanced by a sale-leaseback • Company generates significant annual cash flow and it has a long history of returning a meaningful portion to shareholders • Prior to suspending the dividend due to the pandemic, Company distributed $3.2 billion in dividends since inception in 2011 • Company's share repurchase program reduced share count by more than 50% since 2007 • Sale-leaseback transactions would divert cash flow to addressing higher rent and interest expense Company's bond indenture has restrictions on its ability to execute sale-leaseback transactions • Covenant on consolidated net tangible assets ( CNTA ) is a common feature in the bond indentures of many of the Company's retail peers • CNTA of 15% provides a lien basket that currently is mostly utilized by the Company's $1.5 billion revolver and sale-leaseback transaction last year • Inability to skirt covenant due to past legal precedent and need for high percentage of bond investors consent on each tranche of debt 27 27

Reconciliations Adjusted Net (Loss) Income and Diluted (Loss) Earnings per Share, Non-GAAP Financial Measures (unaudited) Three Months Ended Twelve Months Ended (Dollars in Millions, Except per Share Data) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020 Net Income (Loss) GAAP $ 343 $ 265 $ (163) $ 691 Impairments, store closing, and other 4 57 89 113 (Gain) on sale of real estate — — (127) — (Gain) on extinguishment of debt — — — (9) Income tax impact of items noted above (1) (14) 15 (26) Adjusted (non-GAAP) $ 346 $ 308 $ (186) $ 769 Diluted (Loss) Earnings per Share GAAP $ 2.20 $ 1.72 $ (1.06) $ 4.37 Impairments, store closing, and other 0.03 0.37 0.58 0.71 (Gain) on sale of real estate — — (0.82) — (Gain) on extinguishment of debt — — — (0.06) Income tax impact of items noted above (0.01) (0.10) 0.09 (0.16) Adjusted (non-GAAP) $ 2.22 $ 1.99 $ (1.21) $ 4.86 28Reconciliations Adjusted Net (Loss) Income and Diluted (Loss) Earnings per Share, Non-GAAP Financial Measures (unaudited) Three Months Ended Twelve Months Ended (Dollars in Millions, Except per Share Data) January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020 Net Income (Loss) GAAP $ 343 $ 265 $ (163) $ 691 Impairments, store closing, and other 4 57 89 113 (Gain) on sale of real estate — — (127) — (Gain) on extinguishment of debt — — — (9) Income tax impact of items noted above (1) (14) 15 (26) Adjusted (non-GAAP) $ 346 $ 308 $ (186) $ 769 Diluted (Loss) Earnings per Share GAAP $ 2.20 $ 1.72 $ (1.06) $ 4.37 Impairments, store closing, and other 0.03 0.37 0.58 0.71 (Gain) on sale of real estate — — (0.82) — (Gain) on extinguishment of debt — — — (0.06) Income tax impact of items noted above (0.01) (0.10) 0.09 (0.16) Adjusted (non-GAAP) $ 2.22 $ 1.99 $ (1.21) $ 4.86 28

Reconciliations Adjusted Operating Income Adjusted EBITDA Free Cash Flow January 30, 2021 Three Months Ended ($ in millions) January 30, 2021 ($ in millions) ($ in millions) Three Months Twelve Months 2019 Ended Ended Net cash provided by $ 428 $ 1,338 Operating Income $ 316 Operating Income $ 1,099 operating activities Acquisition of property and Depreciation and Impairments, store 218 (70) (334) 113 equipment Amortization closing, and other Finance lease and financing Adjusted Operating EBITDA 534 (33) (105) 1,212 obligation payments Income Impairments, store Proceeds from financing Total Revenue $ 19,974 4 5 9 closing, and other obligations (Gain) on sale of real Adjusted Operating — Free cash flow $ 330 $ 908 estate Income as a % of 6.1% Total Revenue Adjusted EBITDA $ 538 29Reconciliations Adjusted Operating Income Adjusted EBITDA Free Cash Flow January 30, 2021 Three Months Ended ($ in millions) January 30, 2021 ($ in millions) ($ in millions) Three Months Twelve Months 2019 Ended Ended Net cash provided by $ 428 $ 1,338 Operating Income $ 316 Operating Income $ 1,099 operating activities Acquisition of property and Depreciation and Impairments, store 218 (70) (334) 113 equipment Amortization closing, and other Finance lease and financing Adjusted Operating EBITDA 534 (33) (105) 1,212 obligation payments Income Impairments, store Proceeds from financing Total Revenue $ 19,974 4 5 9 closing, and other obligations (Gain) on sale of real Adjusted Operating — Free cash flow $ 330 $ 908 estate Income as a % of 6.1% Total Revenue Adjusted EBITDA $ 538 29

Reconciliations Adjusted ROI ($ in millions) 2017 2018 2019 2020 Operating income 1,416 1,361 1,099 (262) Depreciation and amortization 991 964 917 874 Rent expense 293 301 314 314 EBITDAR 2,700 2,626 2,330 926 Impairments, store closing and other costs - 104 113 89 (Gain) on Sale of real estate - - - (127) Adjusted EBITDAR 2,700 2,730 2,443 888 Average: (a) Total assets 13,467 13,161 14,802 15,288 Cash equivalents and long-term investments (b) (629) (753) (393) (1,704) Other assets (32) (33) (31) (30) Accumulated depreciation and amortization 7,217 7,812 6,854 7,414 Accounts payable (1,548) (1,580) (1,495) (1,559) Accrued liabilities (1,213) (1,235) (1,264) (1,193) Other long-term liabilities (674) (658) (231) (275) Capitalized rent (c) 2,767 2,831 - - Gross investment ( AGI ) 19,355 19,545 18,242 17,941 ROI (d) 14.0% 13.4% 12.8% 5.2% Adjusted ROI (d) 14.0% 14.0% 13.4% 4.9% (a) - Represents average of five most recent quarter-end balances. For 2019, fourth quarter 2018 balances were adjusted to reflect the impact of the new lease accounting standard. (b) - Represents excess cash not required for operations. (c) - Represents ten times store rent and five times equipment/other rent. This is not applicable in 2020 & 2019 as operating leases are now recorded on the balance sheet due to the adoption of the new lease accounting standard. 30 (d) - EBITDAR or adjusted EBITDAR, as applicable, divided by gross investment.Reconciliations Adjusted ROI ($ in millions) 2017 2018 2019 2020 Operating income 1,416 1,361 1,099 (262) Depreciation and amortization 991 964 917 874 Rent expense 293 301 314 314 EBITDAR 2,700 2,626 2,330 926 Impairments, store closing and other costs - 104 113 89 (Gain) on Sale of real estate - - - (127) Adjusted EBITDAR 2,700 2,730 2,443 888 Average: (a) Total assets 13,467 13,161 14,802 15,288 Cash equivalents and long-term investments (b) (629) (753) (393) (1,704) Other assets (32) (33) (31) (30) Accumulated depreciation and amortization 7,217 7,812 6,854 7,414 Accounts payable (1,548) (1,580) (1,495) (1,559) Accrued liabilities (1,213) (1,235) (1,264) (1,193) Other long-term liabilities (674) (658) (231) (275) Capitalized rent (c) 2,767 2,831 - - Gross investment ( AGI ) 19,355 19,545 18,242 17,941 ROI (d) 14.0% 13.4% 12.8% 5.2% Adjusted ROI (d) 14.0% 14.0% 13.4% 4.9% (a) - Represents average of five most recent quarter-end balances. For 2019, fourth quarter 2018 balances were adjusted to reflect the impact of the new lease accounting standard. (b) - Represents excess cash not required for operations. (c) - Represents ten times store rent and five times equipment/other rent. This is not applicable in 2020 & 2019 as operating leases are now recorded on the balance sheet due to the adoption of the new lease accounting standard. 30 (d) - EBITDAR or adjusted EBITDAR, as applicable, divided by gross investment.