KOHLS Corp - FORM 8-K - EX-99.1 - PRESS RELEASE DATED NOVEMBER 10, 2016 - November 10, 2016

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Kohl's Corporation Reports Third Quarter Financial Results

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--November 10, 2016-- Kohl’s Corporation (NYSE:KSS) today reported results for the three and nine month periods ended October 29, 2016.

 
Three Months
 
Nine Months
($ in millions)
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Sales
$
4,327

 
$
4,427

 
(2.3)%
 
$
12,481

 
$
12,817

 
(2.6)%
Comparable store sales
(1.7
)%
 
1.0
%
 
—
 
(2.4
)%
 
0.8
%
 
—
Gross margin
37.1
 %
 
37.1
%
 
2 bp
 
37.4
 %
 
37.7
%
 
(26) bp
Selling, general, and administrative expenses
$
1,080

 
$
1,099

 
(2)%
 
$
3,074

 
$
3,120

 
(1)%
Reported
 
 
 
 
 
 
 
 
 
 
 
Net income
$
146

 
$
120

 
22%
 
$
303

 
$
377

 
(20)%
Diluted earnings per share
$
0.83

 
$
0.63

 
32%
 
$
1.68

 
$
1.92

 
(13)%
 
 
 
 
 
 
 
 
 
 
 
 
Excluding Non-Recurring Items
 
 
 
 
 
 
 
 
 
 
 
Net income
$
142

 
$
144

 
(1)%
 
$
420

 
$
484

 
(13)%
Diluted earnings per share
$
0.80

 
$
0.75

 
7%
 
$
2.33

 
$
2.46

 
(5)%

Kevin Mansell, Kohl's chairman, chief executive officer and president, said, "We are pleased to see continued improvement in our sales trends.  Our back-to-school season was strong, followed by a soft September, and progressive improvement throughout October.  We are encouraged by these trends as we enter the Holiday season.  Our teams did an excellent job managing inventory.  Expenses were also well-controlled as substantially all teams outperformed their plans."

Capital Structure
On November 9, 2016, the 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 December 21, 2016 to shareholders of record at the close of business on December 7, 2016.

Kohl's Board of Directors also increased the Company's outstanding share purchase authorization under its existing share repurchase program to $2.0 billion. Kohl's expects to repurchase shares in open market transactions, subject to market conditions, over the next three years.

Store Update
Kohl’s ended the quarter with 1,155 Kohl's stores, 12 FILA Outlet stores, and three Off/Aisle clearance centers in 49 states, compared with 1,166 Kohl's stores at the same time last year.

Earnings Guidance Update
The company reaffirmed its prior fiscal 2016 diluted earnings per share guidance of $3.12 to $3.32 per diluted share. Excluding impairments, store closing and other costs, fiscal 2016 diluted earnings per share is expected to be $3.80 to $4.00.

Third Quarter 2016 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on November 10, 2016. The phone number for the conference call is (800) 230-1074. Replays of the call will be available for




30 days by dialing (800) 475-6701. The conference ID for both the live call and the replay is 386530. The conference call and replays are also accessible via the Company's web site at http://corporate.kohls.com/investors/events-and-presentations.

Cautionary Statement Regarding Forward-Looking Information
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Kohl's 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 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, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC.

About Kohl's
Kohl’s (NYSE: KSS) is a leading specialty department store with more than 1,100 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store, online at Kohls.com and via mobile devices. Committed to its communities, Kohl’s has raised nearly $300 million for children’s initiatives nationwide through its Kohl’s Cares® cause merchandise program, which operates under Kohl's Cares, LLC, a wholly-owned subsidiary of Kohl's Department Stores, Inc. For additional information about Kohl’s philanthropic and environmental initiatives, visit www.Kohls.com/Cares.  For a list of store locations and information, or for the added convenience of shopping online, visit  www.Kohls.com.

Connect with Kohl’s: 
Facebook (http://www.facebook.com/Kohls)
Twitter (http://twitter.com/Kohls)
Google+ (http://plus.google.com/+Kohls)
Pinterest (http://pinterest.com/Kohls)
Instagram (http://instagram.com/Kohls)
YouTube (http://www.youtube.com/Kohls)

Contacts
Investor Relations:
Wes McDonald, Chief Financial Officer, (262) 703-1893

Media:
Jen Johnson, VP Corporate Communications, (262) 703-5241




KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, except per share data)
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
October 29,
2016
 
October 31,
2015
 
October 29, 2016
 
October 31, 2015
Net sales
$
4,327

 
$
4,427

 
$
12,481

 
$
12,817

Cost of merchandise sold
2,720

 
2,784

 
7,812

 
7,990

 
 
 
 
 
 
 
 
Gross margin
1,607

 
1,643

 
4,669

 
4,827

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Selling, general, and administrative
1,080

 
1,099

 
3,074

 
3,120

Depreciation and amortization
232

 
236

 
700

 
695

Impairments, store closing and other costs
(6
)
 
—

 
186

 
—

 
 
 
 
 
 
 
 
Operating income
301

 
308

 
709

 
1,012

 
 
 
 
 
 
 
 
Interest expense, net
76

 
81

 
233


248

Loss on extinguishment of debt
—

 
38

 
—

 
169

 
 
 
 
 
 
 
 
Income before income taxes
225

 
189

 
476

 
595

Provision for income taxes
79

 
69

 
173

 
218

 
 
 
 
 
 
 
 
Net income
$
146

 
$
120

 
$
303

 
$
377

 
 
 
 
 
 
 
 
Basic net income per share
$
0.82

 
$
0.63

 
$
1.68

 
$
1.93

Average number of shares
177

 
191

 
180

 
196

 
 
 
 
 
 
 
 
Diluted net income per share
$
0.83

 
$
0.63

 
$
1.68

 
$
1.92

Average number of shares
177

 
192

 
180

 
197

 
 
 
 
 
 
 
 
As a percent of net sales:
 
 
 
 
 
 
 
Gross margin
37.1
%
 
37.1
%
 
37.4
%
 
37.7
%
Selling, general and administrative expenses
25.0
%
 
24.8
%
 
24.6
%
 
24.3
%
Operating income
7.0
%
 
7.0
%
 
5.7
%
 
7.9
%
Net income
3.4
%
 
2.7
%
 
2.4
%
 
2.9
%
 
 
 
 
 
 
 
 
Excluding non-recurring items*
 
 
 
 
 
 
 
Net income
$
142

 
$
144

 
$
420

 
$
484

Diluted net income per share
$
0.80

 
$
0.75

 
$
2.33

 
$
2.46

As a percent of net sales:
 
 
 
 
 
 
 
Operating income
6.8
%
 
7.0
%
 
7.2
%
 
7.9
%
Net income
3.3
%
 
3.3
%
 
3.4
%
 
3.8
%

*Excludes impairments, store closing and other costs in 2016 and Loss on extinguishment of debt in 2015.






KOHL'S CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
 
 
 
 
 
 
 
October 29,
2016
 
October 31,
2015
Assets
 
 
 
 
Current assets:
 
 
 
 
  Cash and cash equivalents
 
$
597

 
$
501

  Merchandise inventories
 
4,721

 
5,254

  Other
 
336

 
312

 
 
 
 
 
  Total current assets
 
5,654

 
6,067

 
 
 
 
 
Property and equipment, net
 
8,203

 
8,499

Other assets
 
219

 
228

 
 
 
 
 
  Total assets
 
$
14,076

 
$
14,794

 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
2,097

 
$
2,141

Accrued liabilities
 
1,235

 
1,244

Income taxes payable
 
66

 
28

Short-term debt
 
—

 
400

Current portion of capital lease
 
 
 
 
  and financing obligations
 
128

 
126

 
 
 
 
 
  Total current liabilities
 
3,526

 
3,939

 
 
 
 
 
Long-term debt
 
2,794

 
2,792

Capital lease and financing obligations
 
1,702

 
1,817

Deferred income taxes
 
298

 
216

Other long-term liabilities
 
649

 
556

Shareholders' equity
 
5,107

 
5,474

 
 
 
 
 
  Total liabilities and shareholders' equity
 
$
14,076

 
$
14,794







KOHL'S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
 
Nine Months Ended
 
October 29,
2016
 
October 31,
2015
Operating activities
 
 
 
Net income
$
303

 
$
377

Adjustments to reconcile net income to net cash
 
 
 
provided by operating activities:
 
 
 
Depreciation and amortization
700

 
695

Share-based compensation
31

 
36

Excess tax benefits from share-based compensation
(4
)
 
(10
)
Deferred income taxes
40

 
(84
)
Loss on extinguishment of debt
—

 
169

Impairments, store closing and other costs
57

 
—

Other non-cash revenues and expenses
20

 
23

Changes in operating assets and liabilities:
 
 
 
Merchandise inventories
(679
)
 
(1,433
)
Other current and long-term assets
20

 
74

Accounts payable
846

 
630

Accrued and other long-term liabilities
23

 
(6
)
Income taxes
(77
)
 
(64
)
Net cash provided by operating activities
1,280

 
407

 
 
 
 
Investing activities
 
 
 
Acquisition of property and equipment
(591
)
 
(551
)
Other
7

 
3

Net cash used in investing activities
(584
)
 
(548
)
 
 
 
 
Financing activities
 
 
 
Treasury stock purchases
(441
)
 
(789
)
Shares withheld for taxes on vested restricted shares
(15
)
 
(26
)
Dividends paid
(270
)
 
(264
)
Proceeds from issuance of debt, net
—

 
1,088

Net borrowings under credit facilities
—

 
400

Reduction of long-term borrowings
—

 
(1,085
)
Premium paid on redemption of debt
—

 
(163
)
Capital lease and financing obligation payments
(95
)
 
(83
)
Proceeds from stock option exercises
6

 
146

Excess tax benefits from share-based compensation
4

 
10

Proceeds from financing obligations
5

 
1

Net cash used in financing activities
(806
)
 
(765
)
 
 
 
 
Net decrease in cash and cash equivalents
(110
)
 
(906
)
Cash and cash equivalents at beginning of period
707

 
1,407

Cash and cash equivalents at end of period
$
597

 
$
501



KOHLS Corp Reports