KSS
$44.93
Kohl's
($.25)
(.55%)
Earnings Details
3rd Quarter October 2020
Tuesday, November 17, 2020 7:00:00 AM
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Summary

Kohl's Beats

Kohl's (KSS) reported 3rd Quarter October 2020 earnings of $0.01 per share on revenue of $4.0 billion. The consensus estimate was a loss of $0.43 per share on revenue of $4.1 billion. The Earnings Whisper number was for a loss of $0.28 per share. Revenue fell 14.0% compared to the same quarter a year ago.

Kohl' Corp operates department stores that sell moderately priced exclusive and national brand apparel, footwear, accessories, beauty and home products.

Results
Reported Earnings
$0.01
Earnings Whisper
($0.28)
Consensus Estimate
($0.43)
Reported Revenue
$3.98 Bil
Revenue Estimate
$4.06 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Kohl's Reports Third Quarter Fiscal 2020 Financial Results

  • Third quarter sales and earnings exceed company expectations, with significant improvement from the second quarter
  • Strengthened financial position during the quarter by fully repaying revolver and ending with $1.9 billion in cash
  • Strong operating cash flow year-to-date of $910 million
  • Third quarter comparable sales decrease 13.3%
  • Third quarter loss per share of ($0.08); adjusted diluted earnings per share(2) of $0.01

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended October 31, 2020.

 

Three Months

Nine Months

($ in millions, except per share data)

2020

2019

Change

2020

2019

Change

Total revenue

$

3,979

 

$

4,625

 

 

(14.0

)%

$

9,814

 

$

13,142

 

 

(25.3

%)

Net sales(1)

 

(13.3

)%

 

(0.3

)%

 

 

 

 

(25.9

)%

 

(2.2

)%

 

 

 

Gross margin

 

35.8

%

 

36.3

%

(48) bps

 

 

30.5

%

 

37.3

%

(680) bps

 

Selling, general, and administrative expenses

$

1,302

 

$

1,419

 

 

(8.2

)%

$

3,418

 

$

3,962

 

 

(13.7

%)

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(12

)

$

123

 

 

(110

)%

$

(506

)

$

426

 

 

(219

)%

Diluted earnings (loss) per share

$

(0.08

)

$

0.78

 

 

(110

)%

$

(3.28

)

$

2.67

 

 

(223

)%

Non-GAAP(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income (loss)

$

2

 

$

116

 

 

(98

)%

$

(532

)

$

460

 

 

(216

)%

Adjusted diluted earnings (loss) per share

$

0.01

 

$

0.74

 

 

(99

)%

$

(3.45

)

$

2.89

 

 

(219

)%

(1)

Represents change in Net sales vs. prior year period.

(2)

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

“I continue to be very proud of how our organization is navigating through the COVID-19 pandemic. Our third quarter results exceeded our expectations with significant sequential sales and profitability improvement. Digital sales growth remained strong and our actions to improve our gross margin showed great progress. We also further strengthened our financial position and fully repaid our revolver during the period, which underscores the solid cash flow generation of our business,” said Michelle Gass, Kohl’s chief executive officer.

“We entered the holiday season well-positioned and prepared to serve our customers with more omnichannel conveniences in place to deliver the great experience they always expect from Kohl’s. As we look ahead, we are incredibly focused on executing against our new strategic framework, which represents our greatest opportunity to drive long-term sales and profit growth and create shareholder value in the coming years,” said Gass. “In addition, through disciplined capital management we plan to reinstate a dividend during the first half of 2021.”

Third Quarter 2020 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 9:00 am ET on November 17, 2020. 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 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, 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 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.

KSS-IR

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

Nine Months Ended

(Dollars in Millions, Except per Share Data)

October 31,

2020

November 2,

2019

October 31,

2020

November 2,

2019

Net sales

$

3,779

 

$

4,358

 

$

9,152

 

$

12,348

 

Other revenue

 

200

 

 

267

 

 

662

 

 

794

 

Total revenue

 

3,979

 

 

4,625

 

 

9,814

 

 

13,142

 

Cost of merchandise sold

 

2,424

 

 

2,775

 

 

6,360

 

 

7,740

 

Gross margin rate

 

35.8

%

 

36.3

%

 

30.5

%

 

37.3

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

1,302

 

 

1,419

 

 

3,418

 

 

3,962

 

As a percent of total revenue

 

32.7

%

 

30.7

%

 

34.8

%

 

30.1

%

Depreciation and amortization

 

210

 

 

227

 

 

656

 

 

687

 

Impairments, store closing, and other

 

21

 

 

 

 

85

 

 

55

 

(Gain) on sale of real estate

 

 

 

 

 

(127

)

 

 

Operating income (loss)

 

22

 

 

204

 

 

(578

)

 

698

 

Interest expense, net

 

78

 

 

52

 

 

214

 

 

157

 

(Gain) loss on extinguishment of debt

 

 

 

(9

)

 

 

 

(9

)

(Loss) income before income taxes

 

(56

)

 

161

 

 

(792

)

 

550

 

(Benefit) provision for income taxes

 

(44

)

 

38

 

 

(286

)

 

124

 

Net (loss) income

$

(12

)

$

123

 

$

(506

)

$

426

 

Average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

154

 

 

156

 

 

154

 

 

158

 

Diluted

 

154

 

 

157

 

 

154

 

 

159

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.08

)

$

0.79

 

$

(3.28

)

$

2.69

 

Diluted

$

(0.08

)

$

0.78

 

$

(3.28

)

$

2.67

 

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

(Unaudited)

 

Three Months Ended

Nine Months Ended

(Dollars in Millions, Except per Share Data)

October 31,

2020

November 2,

2019

October 31,

2020

November 2,

2019

Net (loss) income

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

(12

)

$

123

 

$

(506

)

$

426

 

Impairments, store closing, and other

 

21

 

 

 

 

85

 

 

55

 

(Gain) on sale of real estate

 

 

 

 

 

(127

)

 

 

(Gain) loss on extinguishment of debt

 

 

 

(9

)

 

 

 

(9

)

Income tax impact of items noted above

 

(7

)

 

2

 

 

16

 

 

(12

)

Adjusted (non-GAAP)

$

2

 

$

116

 

$

(532

)

$

460

 

Diluted (loss) earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

GAAP(1)

$

(0.08

)

$

0.78

 

$

(3.28

)

$

2.67

 

Impairments, store closing, and other

 

0.14

 

 

 

 

0.55

 

 

0.35

 

(Gain) on sale of real estate

 

 

 

 

 

(0.82

)

 

 

(Gain) loss on extinguishment of debt

 

 

 

(0.06

)

 

 

 

(0.06

)

Income tax impact of items noted above

 

(0.05

)

 

0.02

 

 

0.10

 

 

(0.07

)

Adjusted (non-GAAP)(2)

$

0.01

 

$

0.74

 

$

(3.45

)

$

2.89

 

(1)

Weighted average diluted shares outstanding for purposes of calculating diluted adjusted (loss) earnings per share for the three months ended October 31, 2020 was 154 million as the effect of including dilutive shares would be antidilutive.

(2)

Weighted average diluted shares outstanding for purpose of calculating diluted earnings per share for the three months ended October 31, 2020 was 155 million, which includes the dilutive effect of share-based awards as determined under the treasury stock method.

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in Millions)

October 31,

2020

November 2,

2019

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

1,939

 

$

490

 

Merchandise inventories

 

3,607

 

 

4,887

 

Income tax receivable

 

115

 

 

25

 

Other

 

335

 

 

379

 

Total current assets

 

5,996

 

 

5,781

 

Property and equipment, net

 

6,876

 

 

7,364

 

Operating leases

 

2,422

 

 

2,427

 

Other assets

 

150

 

 

167

 

Total assets

$

15,444

 

$

15,739

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

2,184

 

$

2,454

 

Accrued liabilities

 

1,272

 

 

1,347

 

Income taxes payable

 

 

 

2

 

Current portion of:

 

 

 

 

 

 

Finance leases and financing obligations

 

127

 

 

110

 

Operating leases

 

160

 

 

162

 

Total current liabilities

 

3,743

 

 

4,075

 

Long-term debt

 

2,450

 

 

1,856

 

Finance leases and financing obligations

 

1,402

 

 

1,332

 

Operating leases

 

2,644

 

 

2,643

 

Deferred income taxes

 

74

 

 

258

 

Other long-term liabilities

 

293

 

 

220

 

Shareholders' equity

 

4,838

 

 

5,355

 

Total liabilities and shareholders' equity

$

15,444

 

$

15,739

 

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended

(Dollars in Millions)

October 31,

2020

November 2,

2019

Operating activities

 

 

 

 

 

 

Net (loss) income

$

(506

)

$

426

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

656

 

 

687

 

Share-based compensation

 

26

 

 

47

 

Deferred income tax (benefit) expense

 

(181

)

 

45

 

Impairments, store closing, and other costs

 

49

 

 

45

 

(Gain) loss on extinguishment of debt

 

 

 

(9

)

(Gain) on sale of real estate

 

(127

)

 

 

Non-cash inventory costs

 

187

 

 

 

Non-cash lease expense

 

111

 

 

112

 

Other non-cash expense (income)

 

15

 

 

(3

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Merchandise inventories

 

(251

)

 

(1,405

)

Other current and long-term assets

 

54

 

 

34

 

Accounts payable

 

978

 

 

1,266

 

Accrued and other long-term liabilities

 

159

 

 

(26

)

Income taxes

 

(147

)

 

(49

)

Operating lease liabilities

 

(113

)

 

(125

)

Net cash provided by operating activities

 

910

 

 

1,045

 

Investing activities

 

 

 

 

 

 

Acquisition of property and equipment

 

(264

)

 

(678

)

Proceeds from sale of real estate

 

194

 

 

 

Other

 

 

 

8

 

Net cash used in investing activities

 

(70

)

 

(670

)

Financing activities

 

 

 

 

 

 

Proceeds from issuance of debt

 

2,097

 

 

 

Deferred financing costs

 

(19

)

 

 

Treasury stock purchases

 

(8

)

 

(387

)

Shares withheld for taxes on vested restricted shares

 

(21

)

 

(32

)

Dividends paid

 

(108

)

 

(319

)

Reduction of long-term borrowings

 

(1,497

)

 

(6

)

Finance lease and financing obligation payments

 

(72

)

 

(88

)

Proceeds from stock option exercises

 

 

 

2

 

Proceeds from financing obligations

 

4

 

 

11

 

Net cash provided by (used in) financing activities

 

376

 

 

(819

)

Net increase (decrease) in cash and cash equivalents

 

1,216

 

 

(444

)

Cash and cash equivalents at beginning of period

 

723

 

 

934

 

Cash and cash equivalents at end of period

$

1,939

 

$

490

 

 

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

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

Source: Kohl’s Corporation