Company Announcements

Kohl's Reports Second Quarter Fiscal 2021 Financial Results

  • Second quarter net sales and earnings exceed expectations and company raises full year 2021 financial outlook
  • Second quarter net sales increase 31.4%
  • Record second quarter diluted earnings per share of $2.48 and company raises full year 2021 guidance to $5.80 to $6.10
  • Strengthened financial position during the quarter, ending with $2.6 billion in cash
  • Repurchased $255 million of shares in the quarter and now plans to repurchase $500 million to $700 million of shares in 2021

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Aug. 19, 2021-- Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended July 31, 2021.

 

Three Months

Six Months

($ in millions, except per share data)

July 31,

2021

August 1,

2020

Change

July 31,

2021

August 1,

2020

Change

Total revenue

$

4,447

 

$

3,407

 

 

30.5

%

$

8,334

 

$

5,835

 

 

42.8

%

Net sales(1)

 

31.4

%

 

(22.9

)%

 

 

 

 

46.8

%

 

(32.8

)%

 

 

 

Gross margin

 

42.5

%

 

33.1

%

942 bps

 

 

40.9

%

 

26.8

%

1,415 bps

 

Selling, general, and administrative expenses

$

1,241

 

$

1,050

 

 

18.2

%

$

2,411

 

$

2,116

 

 

13.9

%

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

382

 

$

47

 

 

100

%+

$

396

 

$

(494)

 

 

100

%+

Diluted earnings (loss) per share

$

2.48

 

$

0.30

 

 

100

%+

$

2.55

 

$

(3.21)

 

 

100

%+

Non-GAAP(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net (loss) income

$

382

 

$

(39

)

 

100

%+

$

547

 

$

(534)

 

 

100

%+

Adjusted diluted (loss) earnings per share

$

2.48

 

$

(0.25

)

 

100

%+

$

3.52

 

$

(3.47)

 

 

100

%+

(1)

Represents change in Net sales vs. prior year period.

(2)

Excludes Loss on extinguishment of debt, Impairments, store closing, and other costs, and Gain on sale of real estate.

“Our performance in the second quarter marked another important step in further establishing Kohl’s as the leading destination for the active and casual lifestyle. We delivered record second quarter earnings with sales and margins materially exceeding expectations. As pleased as we are with our ongoing strategic progress, much of our opportunity is still ahead of us. We are on the eve of launching several transformational partnerships that will drive sustainable growth for years to come,” said Michelle Gass, Kohl’s chief executive officer.

“Based on our results, we are raising our full year 2021 guidance, which positions us to achieve many of our 2023 strategic goals this year, well ahead of our plan. In addition, we have accelerated our share repurchase activity, underscoring our confidence in the business and our commitment to creating shareholder value,” said Gass.

Updated 2021 Financial Outlook

The Company is raising its full year 2021 financial outlook to include the following:

  • Net sales is now expected to increase in the low-twenties percentage range compared to the previous expectation of mid-to-high teens percentage range increase
  • Operating margin is now expected to be in the range of 7.4% to 7.6% compared to the previous expectation of 5.7% to 6.1%
  • Adjusted earnings per share is now expected to be in the range of $5.80 to $6.10, excluding any non-recurring charges, compared to the previous expectation of $3.80 to $4.20

Dividend

As previously announced, on August 10, 2021, Kohl’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.25 per share. The dividend is payable September 22, 2021 to shareholders of record at the close of business on September 8, 2021.

Second Quarter 2021 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 9:00 am ET on August 19, 2021. 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, 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 income (loss) and adjusted diluted earnings (loss) 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 (loss) and adjusted diluted earnings (loss) 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 31,

2021

August 1,

2020

July 31,

2021

August 1,

2020

Net sales

$

4,223

 

$

3,213

 

$

7,885

 

$

5,373

 

Other revenue

 

224

 

 

194

 

 

449

 

 

462

 

Total revenue

 

4,447

 

 

3,407

 

 

8,334

 

 

5,835

 

Cost of merchandise sold

 

2,426

 

 

2,149

 

 

4,659

 

 

3,936

 

Gross margin rate

 

42.5

%

 

33.1

%

 

40.9

%

 

26.8

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

1,241

 

 

1,050

 

 

2,411

 

 

2,116

 

As a percent of total revenue

 

27.9

%

 

30.8

%

 

28.9

%

 

36.3

%

Depreciation and amortization

 

210

 

 

219

 

 

421

 

 

446

 

Impairments, store closing, and other

 

 

 

(2

)

 

 

 

64

 

(Gain) on sale of real estate

 

 

 

(127

)

 

 

 

(127

)

Operating income (loss)

 

570

 

 

118

 

 

843

 

 

(600

)

Interest expense, net

 

62

 

 

78

 

 

129

 

 

136

 

Loss on extinguishment of debt

 

 

 

 

 

201

 

 

 

Income (loss) before income taxes

 

508

 

 

40

 

 

513

 

 

(736

)

Provision (benefit) for income taxes

 

126

 

 

(7

)

 

117

 

 

(242

)

Net income (loss)

$

382

 

$

47

 

$

396

 

$

(494

)

Average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

152

 

 

154

 

 

153

 

 

154

 

Diluted

 

154

 

 

155

 

 

155

 

 

154

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

2.51

 

$

0.31

 

$

2.58

 

$

(3.21

)

Diluted

$

2.48

 

$

0.30

 

$

2.55

 

$

(3.21

)

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

(Unaudited)

 

 

Three Months Ended

Six Months Ended

(Dollars in Millions, Except per Share Data)

July 31,

2021

August 1,

2020

July 31,

2021

August 1,

2020

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

382

 

$

47

 

 

$

396

 

 

$

(494

)

 

Impairments, store closing, and other

 

 

 

(2

)

 

 

 

 

 

64

 

 

(Gain) on sale of real estate

 

 

 

(127

)

 

 

 

 

 

(127

)

 

Loss on extinguishment of debt

 

 

 

 

 

 

201

 

 

 

 

 

Income tax impact of items noted above

 

 

 

43

 

 

 

(50

)

 

 

23

 

 

Adjusted (non-GAAP)

$

382

 

$

(39

)

 

$

547

 

 

$

(534

)

 

Diluted earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

$

2.48

 

$

0.30

 

 

$

2.55

 

 

$

(3.21

)

 

Impairments, store closing, and other

 

 

 

(0.01

)

 

 

 

 

 

0.41

 

 

(Gain) on sale of real estate

 

 

 

(0.82

)

 

 

 

 

 

(0.82

)

 

Loss on extinguishment of debt

 

 

 

 

 

 

1.29

 

 

 

 

 

Income tax impact of items noted above

 

 

 

0.28

 

 

 

(0.32

)

 

0.15

 

 

Adjusted (non-GAAP)(2)

$

2.48

 

$

(0.25

)

 

$

3.52

 

 

$

(3.47

)

 

(1)

Weighted average diluted shares outstanding for purpose of calculating diluted earnings per share for the three months ended August 1, 2020 was 155 million, which includes the dilutive effect of share-based awards as determined under the treasury stock method.

(2)

Weighted average diluted shares outstanding for purposes of calculating diluted adjusted (loss) earnings per share for the three months ended August 1, 2020 was 154 million as the effect of including dilutive shares would be antidilutive.

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in Millions)

July 31,

2021

August 1,

2020

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

2,569

 

$

2,428

 

Merchandise inventories

 

2,733

 

 

2,698

 

Other

 

356

 

 

562

 

Total current assets

 

5,658

 

 

5,688

 

Property and equipment, net

 

7,107

 

 

6,970

 

Operating leases

 

2,301

 

 

2,418

 

Other assets

 

440

 

 

159

 

Total assets

$

15,506

 

$

15,235

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

1,495

 

$

1,064

 

Accrued liabilities

 

1,554

 

 

1,216

 

Current portion of:

 

 

 

 

 

 

Finance leases and financing obligations

 

117

 

 

126

 

Operating leases

 

143

 

 

160

 

Total current liabilities

 

3,309

 

 

2,566

 

Long-term debt

 

1,909

 

 

3,450

 

Finance leases and financing obligations

 

1,906

 

 

1,356

 

Operating leases

 

2,532

 

 

2,637

 

Deferred income taxes

 

245

 

 

122

 

Other long-term liabilities

 

386

 

 

267

 

Shareholders' equity

 

5,219

 

 

4,837

 

Total liabilities and shareholders' equity

$

15,506

 

$

15,235

 

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Six Months Ended

(Dollars in Millions)

July 31,

2021

August 1,

2020

Operating activities

 

 

 

 

 

 

Net income (loss)

$

396

 

 

$

(494

)

Adjustments to reconcile net income (loss) to net cash provided

 

 

 

 

 

 

by operating activities:

Depreciation and amortization

 

421

 

 

 

446

 

 

Share-based compensation

 

25

 

 

 

14

 

 

Deferred income taxes

 

(57

)

 

(132

)

Impairments, store closing, and other costs

 

 

 

 

48

 

 

(Gain) on sale of real estate

 

 

 

 

(127

)

Loss on extinguishment of debt

 

201

 

 

 

 

 

Non-cash inventory costs

 

 

 

 

187

 

 

Non-cash lease expense

 

74

 

 

 

74

 

 

Other non-cash expenses

 

9

 

 

 

10

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Merchandise inventories

 

(138

)

 

 

656

 

 

Other current and long-term assets

 

590

 

 

 

(170

)

 

Accounts payable

 

19

 

 

 

(142

)

Accrued and other long-term liabilities

 

228

 

 

 

16

 

 

Operating lease liabilities

 

(76

)

 

(82

)

Net cash provided by operating activities

 

1,692

 

 

 

304

 

 

Investing activities

 

 

 

 

 

 

Acquisition of property and equipment

 

(191

)

 

(196

)

Proceeds from sale of real estate

 

4

 

 

 

193

 

 

Net cash used in investing activities

 

(187

)

 

(3

)

Financing activities

 

 

 

 

 

 

Proceeds from issuance of debt

 

500

 

 

 

2,097

 

 

Deferred financing costs

 

(5

)

 

(19

)

Treasury stock purchases

 

(301

)

 

(8

)

Shares withheld for taxes on vested restricted shares

 

(25

)

 

(20

)

Dividends paid

 

(77

)

 

(108

)

Reduction of long-term borrowings

 

(1,044

)

 

(497

)

Premium paid on redemption of debt

 

(192

)

 

 

 

Finance lease and financing obligation payments

 

(65

)

 

(44

)

Proceeds from financing obligations

 

4

 

 

 

3

 

 

Proceeds from stock option exercises

 

1

 

 

 

 

 

Other

 

(3

)

 

 

 

 

Net cash provided by (used in) financing activities

 

(1,207

)

 

 

1,404

 

 

Net increase in cash and cash equivalents

 

298

 

 

 

1,705

 

 

Cash and cash equivalents at beginning of period

 

2,271

 

 

 

723

 

 

Cash and cash equivalents at end of period

$

2,569

 

 

$

2,428

 

 

 

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

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

Source: Kohl's