UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2018
KOHL’S CORPORATION
(Exact name of registrant as specified in its charter)
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Wisconsin |
001-11084 |
39-1630919 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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N56 W17000 Ridgewood Drive Menomonee Falls, Wisconsin |
53051 |
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(Address of principal executive offices) |
(Zip Code) |
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Registrant's telephone number, including area code: (262) 703-7000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition .
On March 1, 2018, Kohl's Corporation issued a press release reporting its earnings for the quarter and year ended February 3, 2018 and providing earnings guidance for fiscal 2018. A copy of the press release is attached as Exhibit 99.1 and incorporated by reference herein.
The information in this Item 2.02, including the exhibit attached hereto, is furnished solely pursuant to Item 2.02 of Form 8-K. Consequently, such information is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. Further, the information in this Item 2.02, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933.
Item 7.01. Regulation FD Disclosure .
See Item 2.02.
On February 28, 2018 the Kohl's Board of Directors declared a quarterly dividend of $0.61 per common share. The dividend will be paid on March 28, 2018 to all shareholders of record at the close of business on March 14, 2018.
Kohl’s plans to shift its earnings reporting cadence in fiscal 2018 and expects to report its first quarter 2018 financial results during the week of May 20, 2018.
Cautionary Statement Regarding Forward-Looking Information
This current report on Form 8-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including 2018 earnings guidance. 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.
Item 9.01. Financial Statements and Exhibits .
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Exhibit No. |
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Description |
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99.1 |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: March 1, 2018 |
KOHL'S CORPORATION |
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By: |
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/s/ Jason J. Kelroy |
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Jason J. Kelroy |
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Executive Vice President, |
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General Counsel and Secretary |
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Exhibit 99.1
Kohl's Corporation Reports Financial Results
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Comparable sales increase 6.3% |
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Reports annual diluted earnings per share of $5.12 |
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Excluding tax reform benefits, diluted earnings per share were $4.31, exceeding the high end of guidance by $0.11 per share |
MENOMONEE FALLS, Wis.--(BUSINESS WIRE)—March 1, 2018-- Kohl’s Corporation (NYSE:KSS) today reported results for the quarter and year ended February 3, 2018.
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Three Months |
Twelve Months |
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($ in millions) |
2017 |
2016 |
Change |
2017 |
2016 |
Change |
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Total sales |
$ |
6,776 |
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$ |
6,205 |
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9.2 |
% |
$ |
19,095 |
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$ |
18,686 |
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2.2 |
% |
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Comparable store sales (1) |
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6.3 |
% |
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(2.2) |
% |
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1.5 |
% |
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(2.4) |
% |
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Gross margin |
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33.8 |
% |
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33.4 |
% |
43 bps |
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36.2 |
% |
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36.1 |
% |
15 bps |
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Selling, general, and administrative expenses |
$ |
1,459 |
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$ |
1,360 |
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7.3 |
% |
$ |
4,512 |
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$ |
4,435 |
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1.7 |
% |
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Diluted earnings per share |
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Reported |
$ |
2.81 |
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$ |
1.44 |
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95 |
% |
$ |
5.12 |
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$ |
3.11 |
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65 |
% |
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Excluding tax reform and store closures |
$ |
1.99 |
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$ |
1.44 |
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38 |
% |
$ |
4.31 |
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$ |
3.76 |
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15 |
% |
(1) Compares the periods ended January 27, 2018 to the periods ended January 28, 2017.
Kevin Mansell, Kohl's chairman, chief executive officer and president, said, “ I am very pleased with our fourth quarter and full year results, which exceeded the high end of our most recent guidance by $0.11 per share. Over the course of the year, we saw consistent, sustained improvement in sales trends which culminated in a 6.3% increase in our fourth quarter comp sales. We improved our merchandise margins through strong inventory management and improved promotional and permanent markdowns. All areas effectively managed their expenses. And, we ended the year with 7% less inventory. I am very proud of our team and the role they played in these results and want to thank them for their hard work, loyalty and dedication. ”
Impact of 53rd Week
The retail calendar for fiscal January 2018 included a fifth week, resulting in a 14-week fiscal fourth quarter and a 53-week year. During this 53 rd week, total sales were approximately $170 million; selling, general and administrative expenses were approximately $30 million; and interest was approximately $3 million. The 53 rd week increased the Company’s net income by approximately $15 million and its diluted earnings per share by approximately $0.10 for the year.
Dividend
On February 28, 2018, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.61 per share, an 11% increase over its prior dividend. The dividend is payable March 28, 2018 to shareholders of record at the close of business on March 14, 2018.
Store Update
Kohl's ended the fiscal year with 1,158 Kohl's stores in 49 states. During 2017, the Company opened four Kohl's stores, relocated one Kohl's store and opened one Off/Aisle location.
Initial 2018 Earnings Guidance
The Company expects earnings per diluted share of $4.95 to $5.45 for fiscal 2018. This guidance is based on the following assumptions:
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Comparable sales change of 0% to 2% |
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Total sales change of (1)% to 1% |
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Gross margin as a percentage of sales increase of 5 to 10 basis points over 2017 |
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SG&A dollars increase of 1% to 2% over 2017 |
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Depreciation expense of $960 million |
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Interest expense of $280 million |
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Effective tax rate of 24% to 25% |
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$300-$400 million in share repurchases |
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Capital expenditures of approximately $700 million |
Kohl’s plans to shift its earnings reporting cadence in fiscal 2018 and expects to report its first quarter 2018 financial results during the week of May 20, 2018.
Fourth Quarter 2017 Earnings Conference Call
Kohl's will host its quarterly earnings conference call at 8:30 am ET on March 1, 2018. The phone number for the conference call is (800) 230-1085. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID is 444352 . 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, including 2018 earnings guidance. 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 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. Throughout its history, Kohl's has given nearly $600 million to support communities nationwide. 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 .
Contacts
Investor Relations:
Jill Timm, (262) 703-2203, jill.timm@kohls.com
Media:
Jen Johnson, (262) 703-5241, jen.johnson@kohls.com
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months |
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Twelve Months |
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(Dollars in Millions, Except per Share Data) |
Feb 3, 2018 (14 Weeks) |
Jan 28, 2017 (13 Weeks) |
Feb 3, 2018 (53 Weeks) |
Jan 28, 2017 (52 Weeks) |
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Net sales |
$ |
6,776 |
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$ |
6,205 |
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$ |
19,095 |
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$ |
18,686 |
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Cost of merchandise sold |
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4,483 |
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4,133 |
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12,176 |
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11,944 |
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Gross margin |
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2,293 |
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2,072 |
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6,919 |
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6,742 |
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As a percent of net sales |
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33.8 |
% |
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33.4 |
% |
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36.2 |
% |
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36.1 |
% |
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Operating expenses: |
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Selling, general, and administrative |
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1,459 |
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1,360 |
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4,512 |
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4,435 |
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As a percent of net sales |
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21.5 |
% |
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21.9 |
% |
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23.6 |
% |
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23.7 |
% |
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Depreciation and amortization |
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267 |
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239 |
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991 |
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938 |
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Impairments, store closing and other costs |
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— |
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— |
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— |
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186 |
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Operating income |
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567 |
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473 |
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1,416 |
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1,183 |
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Interest expense, net |
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74 |
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75 |
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299 |
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308 |
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Income before income taxes |
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493 |
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398 |
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1,117 |
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875 |
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Provision for income taxes |
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25 |
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146 |
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258 |
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319 |
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Net income |
$ |
468 |
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$ |
252 |
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$ |
859 |
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$ |
556 |
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Average number of shares: |
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Basic |
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165 |
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174 |
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167 |
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178 |
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Diluted |
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167 |
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175 |
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168 |
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179 |
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Earnings per share: |
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Basic |
$ |
2.83 |
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$ |
1.45 |
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$ |
5.14 |
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$ |
3.12 |
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Diluted |
$ |
2.81 |
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$ |
1.44 |
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$ |
5.12 |
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$ |
3.11 |
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ADJUSTED NET INCOME AND DILUTED EARNINGS PER SHARE, NON-GAAP FINANCIAL MEASURES
(Unaudited)
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Three Months |
Twelve Months |
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(Dollars in Millions, Except per Share Data) |
Feb 3, 2018 (14 Weeks) |
Jan 28, 2017 (13 Weeks) |
Feb 3, 2018 (53 Weeks) |
Jan 28, 2017 (52 Weeks) |
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Net income |
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GAAP |
$ |
468 |
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$ |
252 |
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$ |
859 |
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$ |
556 |
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Tax reform |
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(136 |
) |
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- |
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(136 |
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- |
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Store closures |
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- |
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- |
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- |
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117 |
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Excluding tax reform and store closures (non-GAAP) |
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332 |
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252 |
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723 |
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673 |
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State tax settlement |
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(20 |
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- |
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(20 |
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- |
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Adjusted (non-GAAP) |
$ |
312 |
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$ |
252 |
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$ |
703 |
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$ |
673 |
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Diluted earnings per share |
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GAAP |
$ |
2.81 |
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$ |
1.44 |
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$ |
5.12 |
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$ |
3.11 |
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Tax reform |
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(0.82 |
) |
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- |
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(0.81 |
) |
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- |
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Store closures |
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- |
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- |
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- |
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0.65 |
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Excluding tax reform and store closures (non-GAAP) |
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1.99 |
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1.44 |
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4.31 |
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3.76 |
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State tax settlement |
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(0.12 |
) |
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- |
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(0.12 |
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- |
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Adjusted (non-GAAP) |
$ |
1.87 |
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$ |
1.44 |
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$ |
4.19 |
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$ |
3.76 |
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CONSOLIDATED BALANCE SHEETS
(Unaudited)
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(Dollars in Millions) |
February 3, 2018 |
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January 28, 2017 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
1,308 |
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$ |
1,074 |
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Merchandise inventories |
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3,542 |
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3,795 |
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Other |
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481 |
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378 |
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Total current assets |
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5,331 |
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5,247 |
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Property and equipment, net |
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7,773 |
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8,103 |
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Other assets |
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236 |
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224 |
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Total assets |
$ |
13,340 |
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$ |
13,574 |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable |
$ |
1,271 |
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$ |
1,507 |
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Accrued liabilities |
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1,155 |
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1,224 |
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Income taxes payable |
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99 |
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112 |
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Current portion of capital lease and financing obligations |
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126 |
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131 |
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Total current liabilities |
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2,651 |
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2,974 |
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Long-term debt |
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2,797 |
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2,795 |
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Capital lease and financing obligations |
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1,591 |
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1,685 |
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Deferred income taxes |
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213 |
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272 |
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Other long-term liabilities |
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662 |
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|
671 |
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Shareholders' equity |
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5,426 |
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5,177 |
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Total liabilities and shareholders' equity |
$ |
13,340 |
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$ |
13,574 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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(Dollars in Millions) |
2017 (53 Weeks) |
2016 (52 Weeks) |
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Operating activities |
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Net income |
$ |
859 |
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$ |
556 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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991 |
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938 |
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Share-based compensation |
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55 |
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41 |
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Deferred income taxes |
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(61 |
) |
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13 |
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Impairments, store closing and other costs |
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- |
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57 |
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Other non-cash revenues and expenses |
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2 |
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30 |
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Changes in operating assets and liabilities: |
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Merchandise inventories |
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264 |
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249 |
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Other current and long-term assets |
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(83 |
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(45 |
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Accounts payable |
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(236 |
) |
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256 |
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Accrued and other long-term liabilities |
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(50 |
) |
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81 |
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Income taxes |
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(50 |
) |
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(23 |
) |
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Net cash provided by operating activities |
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1,691 |
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|
2,153 |
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Investing activities |
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Acquisition of property and equipment |
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(672 |
) |
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(768 |
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Other |
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23 |
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|
12 |
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Net cash used in investing activities |
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(649 |
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(756 |
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Financing activities |
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Treasury stock purchases |
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(306 |
) |
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(557 |
) |
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Shares withheld for restricted shares |
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(14 |
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(17 |
) |
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Dividends paid |
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(368 |
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(358 |
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Proceeds from financing obligations |
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— |
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11 |
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Capital lease and financing obligation payments |
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(138 |
) |
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(127 |
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Proceeds from stock option exercises |
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18 |
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|
18 |
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Net cash used in financing activities |
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(808 |
) |
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(1,030 |
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Net increase in cash and cash equivalents |
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234 |
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|
367 |
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Cash and cash equivalents at beginning of period |
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1,074 |
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|
707 |
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Cash and cash equivalents at end of period |
$ |
1,308 |
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$ |
1,074 |
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