Kohl's Q3 net income falls to US$97M from US$243M last year; total revenue falls to US$4.28B from US$4.60B as comparable sales fall 6.9%, net sales fall 7.2%

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MENOMONEE FALLS, Wisconsin , November 17, 2022 (press release) –

  • Third quarter comparable sales decrease 6.9% and net sales decrease 7.2%
  • Third quarter diluted earnings per share of $0.82
  • Kohl’s Board has formed search committee to oversee the search for a new CEO while Tom Kingsbury has agreed to serve as Interim CEO during the transition period

Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended October 29, 2022.

 

Three Months

Nine Months

($ in millions, except per share data)

October 29,

2022

October 30,

2021

Change

October 29,

2022

October 30,

2021

Change

Total revenue

$

4,277

 

$

4,600

 

 

(7.0

%)

$

12,079

 

$

12,934

 

 

(6.6

%)

Net sales(1)

 

(7.2

%)

 

15.5

%

 

 

 

 

(7.1

%)

 

33.9

%

 

 

 

Gross margin

 

37.3

%

 

39.9

%

(263) bps

 

 

38.4

%

 

40.6

%

(215) bps

 

Selling, general, and administrative expenses

$

1,334

 

$

1,380

 

 

(3.3

%)

$

3,910

 

$

3,791

 

 

3.1

%

Reported

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

97

 

$

243

 

 

(60

%)

$

254

 

$

639

 

 

(60

%)

Diluted earnings per share

$

0.82

 

$

1.65

 

 

(50

%)

$

2.02

 

$

4.19

 

 

(52

%)

Non-GAAP(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

$

97

 

$

243

 

 

(60

%)

$

254

 

$

790

 

 

(68

%)

Adjusted diluted earnings per share

$

0.82

 

$

1.65

 

 

(50

%)

$

2.02

 

$

5.18

 

 

(61

%)

(1)

Represents change in Net sales vs. prior year period.  

(2)

Amounts shown for the three and nine months ended October 29, 2022 and the three months ended October 30, 2021 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. 

   

“The Kohl’s Board is focused on supporting the management team during this CEO transition period, as well as the Board’s search committee in its pursuit of finding the next CEO to lead Kohl’s. We look forward to partnering with Interim CEO Tom Kingsbury and the entire leadership team to execute at the highest level this holiday season, while also capitalizing on opportunities to strengthen the business. Kohl’s is a great company with extremely bright prospects and I am confident we will find the right candidate to successfully position Kohl’s to drive sales, grow earnings and create shareholder value. On behalf of the Board, I want to thank all of our associates for their dedication and hard work,” said Peter Boneparth, Kohl’s Independent Board Chair.

2022 Outlook Commentary
Given the recent volatility in business trends, the significant macroeconomic headwinds, along with the unexpected CEO transition, the Company will not be providing guidance for the fourth quarter, and therefore is withdrawing its prior full year 2022 guidance.

Accelerated Share Repurchase Agreement
On November 2, 2022, the Company’s $500 million accelerated share repurchase agreement (ASR) was completed, with final settlement occurring on November 7, 2022. In total, the Company received 17.9 million shares, including 11.8 million shares in the third quarter and the remaining 6.1 million shares in the fourth quarter.

Dividend
As previously announced, on November 9, 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 December 21, 2022 to shareholders of record at the close of business on December 7, 2022.

Third Quarter 2022 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on November 17, 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 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 Item 1A of Part II of the Company’s Quarterly Report on Form 10-Q for the first quarter of fiscal 2022, 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

Nine Months Ended

(Dollars in Millions, Except per Share Data)

October 29,

2022

October 30,

2021

October 29,

2022

October 30,

2021

Net sales

$

4,052

 

$

4,366

 

$

11,386

 

$

12,251

 

Other revenue

 

225

 

 

234

 

 

693

 

 

683

 

Total revenue

 

4,277

 

 

4,600

 

 

12,079

 

 

12,934

 

Cost of merchandise sold

 

2,541

 

 

2,623

 

 

7,013

 

 

7,282

 

Gross margin rate

 

37.3

%

 

39.9

%

 

38.4

%

 

40.6

%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

1,334

 

 

1,380

 

 

3,910

 

 

3,791

 

As a percent of total revenue

 

31.2

%

 

30.0

%

 

32.4

%

 

29.3

%

Depreciation and amortization

 

202

 

 

210

 

 

608

 

 

631

 

Operating income

 

200

 

 

387

 

 

548

 

 

1,230

 

Interest expense, net

 

81

 

 

66

 

 

226

 

 

195

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

201

 

Income before income taxes

 

119

 

 

321

 

 

322

 

 

834

 

Provision for income taxes

 

22

 

 

78

 

 

68

 

 

195

 

Net income

$

97

 

$

243

 

$

254

 

$

639

 

Average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

118

 

 

145

 

 

124

 

 

151

 

Diluted

 

119

 

 

147

 

 

126

 

 

153

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.82

 

$

1.67

 

$

2.05

 

$

4.24

 

Diluted

$

0.82

 

$

1.65

 

$

2.02

 

$

4.19

 

 
 
 
 

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

 

 

Three Months Ended

Nine Months Ended

(Dollars in Millions, Except per Share Data)

October 29,

2022

October 30,

2021

October 29,

2022

October 30,

2021

Net income

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

97

 

$

243

 

$

254

 

$

639

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

201

 

Income tax impact of items noted above

 

 

 

 

 

 

 

(50

)

Adjusted (non-GAAP)

$

97

 

$

243

 

$

254

 

$

790

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

 

 

GAAP

$

0.82

 

$

1.65

 

$

2.02

 

$

4.19

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

1.32

 

Income tax impact of items noted above

 

 

 

 

 

 

 

(0.33

)

Adjusted (non-GAAP)(1)

$

0.82

 

$

1.65

 

$

2.02

 

$

5.18

 

(1)

Amounts shown for the three and nine months ended October 29, 2022 and the three months ended October 30, 2021 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)

October 29,

2022

October 30,

2021

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

194

 

$

1,873

 

Merchandise inventories

 

4,874

 

 

3,642

 

Other

 

366

 

 

373

 

Total current assets

 

5,434

 

 

5,888

 

Property and equipment, net

 

8,117

 

 

7,329

 

Operating leases

 

2,318

 

 

2,293

 

Other assets

 

365

 

 

441

 

Total assets

$

16,234

 

$

15,951

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

2,014

 

$

2,135

 

Accrued liabilities

 

1,436

 

 

1,545

 

Borrowings under revolving credit facility

 

668

 

 

 

Current portion of:

 

 

 

 

 

 

Long-term debt

 

164

 

 

 

Finance leases and financing obligations

 

95

 

 

117

 

Operating leases

 

109

 

 

142

 

Total current liabilities

 

4,486

 

 

3,939

 

Long-term debt

 

1,747

 

 

1,909

 

Finance leases and financing obligations

 

2,791

 

 

2,072

 

Operating leases

 

2,595

 

 

2,537

 

Deferred income taxes

 

165

 

 

196

 

Other long-term liabilities

 

354

 

 

367

 

Shareholders' equity

 

4,096

 

 

4,931

 

Total liabilities and shareholders' equity

$

16,234

 

$

15,951

 

 
 
 
 

KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) 

 

 

Nine Months Ended

(Dollars in Millions)

October 29,

2022

October 30,

2021

Operating activities

 

 

 

 

Net income

$

254

 

$

639

 

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

 

 

 

 

Depreciation and amortization

 

608

 

 

631

 

Share-based compensation

 

37

 

 

35

 

Deferred income taxes

 

(41

)

 

(103

)

Loss on extinguishment of debt

 

 

 

201

 

Non-cash lease expense

 

81

 

 

107

 

Other non-cash expenses

 

12

 

 

10

 

Changes in operating assets and liabilities:

 

 

 

 

Merchandise inventories

 

(1,802

)

 

(1,044

)

Other current and long-term assets

 

102

 

 

574

 

Accounts payable

 

331

 

 

659

 

Accrued and other long-term liabilities

 

76

 

 

172

 

Operating lease liabilities

 

(83

)

 

(107

)

Net cash (used in) provided by operating activities

 

(425

)

 

1,774

 

Investing activities

 

 

 

 

Acquisition of property and equipment

 

(733

)

 

(426

)

Proceeds from sale of real estate

 

31

 

 

35

 

Net cash used in investing activities

 

(702

)

 

(391

)

Financing activities

 

 

 

 

Proceeds from issuance of debt

 

 

 

500

 

Net borrowings under revolving credit facility

 

668

 

 

 

Deferred financing costs

 

 

 

(8

)

Treasury stock purchases

 

(658

)

 

(807

)

Shares withheld for taxes on vested restricted shares

 

(21

)

 

(26

)

Dividends paid

 

(184

)

 

(114

)

Reduction of long-term borrowings

 

 

 

(1,044

)

Premium paid on redemption of debt

 

 

 

(192

)

Finance lease and financing obligation payments

 

(81

)

 

(96

)

Proceeds from financing obligations

 

9

 

 

8

 

Proceeds from stock option exercises

 

1

 

 

1

 

Other

 

 

 

(3

)

Net cash used in financing activities

 

(266

)

 

(1,781

)

Net decrease in cash and cash equivalents

 

(1,393

)

 

(398

)

Cash and cash equivalents at beginning of period

 

1,587

 

 

2,271

 

Cash and cash equivalents at end of period

$

194

 

$

1,873

 

         
         

 

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

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

Source: Kohl’s

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