- First quarter net sales and comparable sales decrease 5.2%
- First quarter diluted earnings per share of $0.11
- Updates full year 2022 financial outlook
- Board continues to run a robust process to explore all
strategic initiatives to maximize value
Kohl’s Corporation (NYSE:KSS) today reported results for the
quarter ended April 30, 2022.
Three Months
($ in millions, except per share
data)
2022
2021
Change
Total revenue
$
3,715
$
3,887
(4.4
%)
Net sales(1)
(5.2
%)
69.5
%
Gross margin
38.3
%
39.0
%
(69) bps
Selling, general, and administrative
expenses
$
1,293
$
1,170
10.5
%
Reported
Net income
$
14
$
14
0
%
Diluted earnings per share
$
0.11
$
0.09
22
%
Non-GAAP(2)
Adjusted net income
$
14
$
165
(92
%)
Adjusted diluted earnings per share
$
0.11
$
1.05
(90
%)
(1)
Represents change in Net sales
vs. prior year period.
(2)
Amounts shown for the three
months ended April 30, 2022 are GAAP as there are no adjustments to
Non-GAAP. These amounts are shown for comparability purposes.
“The year has started out below our expectations. Following a
strong start to the quarter with positive low-single digits comps
through late March, sales considerably weakened in April as we
encountered macro headwinds related to lapping last year’s stimulus
and an inflationary consumer environment. We remain committed to
our long-term strategy and are encouraged that our updated store
experience, with Sephora at Kohl’s shops, delivered positive
comparable store sales across these 200 locations for the quarter.
We continue to expect our business to improve as the year
progresses, with growth in the second half as we benefit from the
roll out of 400 additional Sephora stores, enhanced loyalty rewards
and further investment in our stores,” said Michelle Gass, Kohl’s
chief executive officer.
“Regarding our review of strategic alternatives, we continue to
engage with multiple interested parties. We have formally
communicated the specific procedures for the submission of
actionable bids due in the coming weeks. We continue with our
detailed diligence phase and are pleased with the number of parties
who recognize the value of our business and plan,” said Gass.
Updated 2022 Financial
Outlook
The Company is updating its full year 2022 financial outlook to
include the following:
- Net sales is now expected to be in the range of 0% to 1%
as compared to the prior year
- Operating margin is now expected to be in the range of
7.0% to 7.2%
- Earnings per share is now expected to be in the range of
$6.45 to $6.85, excluding any non-recurring charges
Process Update
The Kohl’s Board is thoroughly testing the Company’s standalone
strategic plan against potential alternatives and has designated
its Finance Committee to lead the ongoing review of expressions of
interest. The Board engaged Goldman Sachs to conduct a broad
process to explore strategic alternatives, which to date has
included engagement with over 25 parties. Multiple bidders have
been invited to a data room containing over 550,000 pages across
over 55,000 documents, as well as meetings with management. While
preliminary, non-binding proposals have been received, further
diligence is ongoing and the Board has requested fully-financed
final bids to be submitted in the coming weeks.
Dividend
As previously announced, on May 10, 2022, Kohl's Board of
Directors declared a quarterly cash dividend on the Company's
common stock of $0.50 per share. The dividend is payable June 22,
2022 to shareholders of record at the close of business on June 8,
2022.
First Quarter 2022 Earnings Conference
Call
Kohl's will host its quarterly earnings conference call at 9:00
am ET on May 19, 2022. A webcast of the conference call and the
related presentation materials will be available via the Company's
web site at investors.kohls.com, both live and after the call.
Cautionary Statement Regarding
Forward-Looking Information and Non-GAAP Measures
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. The Company intends forward-looking terminology such as
“believes,” “expects,” “may,” “will,” “should,” “anticipates,”
“plans,” or similar expressions to identify forward-looking
statements. Such statements, including statements regarding the
outcome and timing of the strategic review process, 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, and there can be no guarantee that the
process will result in an agreement to sell the Company or that any
such agreement will ultimately be consummated. 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
are expressly incorporated herein by reference, and other factors
as may periodically be described in the Company’s filings with the
SEC. Forward-looking statements relate to the date initially made,
and Kohl’s undertakes no obligation to update them.
In this press release, the Company provides information
regarding adjusted net income and adjusted diluted earnings per
share, which are not recognized terms under U.S. generally accepted
accounting principles (“GAAP”) and do not purport to be
alternatives to net income as a measure of operating performance. A
reconciliation of adjusted net income and adjusted diluted earnings
per share is provided in this release. The Company believes that
the use of these non-GAAP financial measures provides investors
with enhanced visibility into its results with respect to the
impact of certain costs. Because not all companies use identical
calculations, these presentations may not be comparable to other
similarly titled measures of other companies.
About Kohl's
Kohl’s (NYSE: KSS) is a leading omnichannel retailer. With more
than 1,100 stores in 49 states and the online convenience of
Kohls.com and the Kohl's App, Kohl's offers amazing national and
exclusive brands at incredible savings for families nationwide.
Kohl’s is uniquely positioned to deliver against its strategy and
its vision to be the most trusted retailer of choice for the active
and casual lifestyle. Kohl’s is committed to progress in its
diversity and inclusion pledges, and the company's environmental,
social and corporate governance (ESG) stewardship. For a list of
store locations or to shop online, visit Kohls.com. For more
information about Kohl’s impact in the community or how to join our
winning team, visit Corporate.Kohls.com or follow @KohlsNews on
Twitter.
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
(Dollars in Millions, Except per Share
Data)
April 30, 2022
May 1, 2021
Net sales
$
3,471
$
3,662
Other revenue
244
225
Total revenue
3,715
3,887
Cost of merchandise sold
2,140
2,233
Gross margin rate
38.3
%
39.0
%
Operating expenses:
Selling, general, and administrative
1,293
1,170
As a percent of total revenue
34.8
%
30.1
%
Depreciation and amortization
200
211
Operating income
82
273
Interest expense, net
68
67
Loss on extinguishment of debt
—
201
Income before income taxes
14
5
(Benefit) for income taxes
—
(9
)
Net income
$
14
$
14
Average number of shares:
Basic
127
154
Diluted
129
156
Earnings per share:
Basic
$
0.11
$
0.09
Diluted
$
0.11
$
0.09
ADJUSTED NET INCOME AND
DILUTED EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES
(Unaudited)
(Dollars in Millions, Except per Share
Data)
Three Months Ended
April 30, 2022
May 1, 2021
Net income
GAAP
$
14
$
14
Loss on extinguishment of debt
—
201
Income tax impact of items noted above
—
(50
)
Adjusted (non-GAAP)(1)
$
14
$
165
Diluted earnings per share
GAAP
$
0.11
$
0.09
Loss on extinguishment of debt
—
1.29
Income tax impact of items noted above
—
(0.33
)
Adjusted (non-GAAP)(1)
$
0.11
$
1.05
(1)
Amounts shown for the three
months ended April 30, 2022 are GAAP as there are no adjustments to
Non-GAAP. These amounts are shown for comparability purposes.
KOHL’S CORPORATION
CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(Dollars in Millions)
April 30, 2022
May 1, 2021
Assets
Current assets:
Cash and cash equivalents
$
646
$
1,609
Merchandise inventories
3,736
2,667
Other
381
919
Total current assets
4,763
5,195
Property and equipment, net
7,790
6,653
Operating leases
2,224
2,392
Other assets
476
449
Total assets
$
15,253
$
14,689
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable
$
1,679
$
1,378
Accrued liabilities
1,316
1,289
Current portion of:
Long-term debt
164
—
Finance leases and financing
obligations
108
112
Operating leases
127
159
Total current liabilities
3,394
2,938
Long-term debt
1,746
1,909
Finance leases and financing
obligations
2,584
1,473
Operating leases
2,474
2,620
Deferred income taxes
209
242
Other long-term liabilities
390
390
Shareholders' equity
4,456
5,117
Total liabilities and shareholders'
equity
$
15,253
$
14,689
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
Three Months Ended
(Dollars in Millions)
April 30, 2022
May 1, 2021
Operating activities
Net income
$
14
$
14
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization
200
211
Share-based compensation
18
12
Deferred income tax expense
2
(65
)
Loss on extinguishment of debt
—
201
Non-cash lease expense
31
38
Other non-cash expense
3
7
Changes in operating assets and
liabilities:
Merchandise inventories
(668
)
(75
)
Other current and long-term assets
(42
)
31
Accounts payable
(4
)
(99
)
Accrued and other long-term
liabilities
17
42
Operating lease liabilities
(31
)
(39
)
Net cash (used in) provided by operating
activities
(460
)
278
Investing activities
Acquisition of property and equipment
(221
)
(59
)
Proceeds from sale of real estate
4
2
Net cash used in investing activities
(217
)
(57
)
Financing activities
Proceeds from issuance of debt
—
500
Deferred financing costs
—
(5
)
Treasury stock purchases
(158
)
(46
)
Shares withheld for taxes on vested
stock-based awards
(18
)
(22
)
Dividends paid
(63
)
(39
)
Reduction of long-term borrowings
—
(1,044
)
Premium paid on redemption of debt
—
(192
)
Finance lease and financing obligation
payments
(29
)
(33
)
Proceeds from financing obligations
4
—
Proceeds from stock option exercises
—
1
Other
—
(3
)
Net cash used in financing activities
(264
)
(883
)
Net decrease in cash and cash
equivalents
(941
)
(662
)
Cash and cash equivalents at beginning of
period
1,587
2,271
Cash and cash equivalents at end of
period
$
646
$
1,609
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220519005214/en/
Investor Relations: Mark Rupe, (262) 703-1266,
mark.rupe@kohls.com
Media: Jen Johnson, (262) 703-5241,
jen.johnson@kohls.com
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