8-K
KOHLS Corp (KSS)
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, 2022
KOHL’S CORPORATION
(Exact name of registrant as specified in its charter)
| Wisconsin | 001-11084 | 39-1630919 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| N56 W17000 Ridgewood Drive<br> <br>Menomonee Falls, Wisconsin | 53051 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
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) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common Stock, $.01 par value | KSS | New York Stock Exchange |
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, 2022, Kohl’s Corporation issued a press release reporting its earnings for the quarter and year ended January 29, 2022 and providing earnings guidance for fiscal 2022. A copy of the press release is attached as Exhibit 99.1 and incorporated by reference herein. A copy of the presentation materials for the March 1, 2022 quarterly earnings conference call is attached as Exhibit 99.2 and incorporated by reference herein.
| Item 7.01. | Regulation FD Disclosure. |
|---|
See Item 2.02. Kohl’s Corporation will host a virtual investor day beginning at 9:00 am ET on March 7, 2022. More information will be made available on the Company’s website at:
https://investors.kohls.com/events-and-presentations/default.aspx.
The information in Items 2.02 and 7.01, including the exhibits attached hereto, is furnished solely pursuant to Items 2.02 and 7.01 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 Items 2.02 and 7.01, including the exhibits, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933.
| Item 8.01. | Other Events. |
|---|
On February 28, 2022, Kohl’s Board of Directors declared a quarterly cash dividend of $0.50 per share. The dividend will be paid on March 30, 2022 to all shareholders of record at the close of business on March 16, 2022.
On February 28, 2022, Kohl’s Board of Directors also increased the Company’s outstanding share purchase authorization under its existing share repurchase program to permit the continued repurchase of common stock in an amount up to an aggregate purchase price of $3 billion.
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, 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 the attached press release and presentation materials, the Company provides information regarding adjusted net income (loss), adjusted diluted earnings (loss) per share, and free cash flow, 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. Reconciliations of adjusted net income (loss), adjusted diluted earnings (loss) per share, and free cash flow are provided in this press release and presentation materials. 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.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| Exhibit<br>No. | Description |
| --- | --- |
| 99.1 | Press Release dated March 1, 2022 |
| 99.2 | Presentation Materials for March 1, 2022 Quarterly Earnings Conference Call |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
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.
| Dated: March 1, 2022 | KOHL’S CORPORATION | |
|---|---|---|
| By: | /s/ Jason J. Kelroy | |
| Jason J. Kelroy | ||
| Senior Executive Vice President, | ||
| General Counsel and Corporate Secretary |
EX-99.1
Exhibit 99.1
Kohl’s Reports Fourth Quarter and Full Year Fiscal 2021 Financial Results
| • | Fourth quarter diluted earnings per share of $2.20 exceeds expectations |
|---|---|
| • | Record full year 2021 adjusted diluted earnings per share of $7.33, eclipsing previous high of $5.60 in 2018<br> |
| --- | --- |
| • | Repurchased $548 million of shares in the quarter and $1.355 billion of shares in 2021<br> |
| --- | --- |
| • | Expects full year 2022 net sales to increase 2% to 3% as compared to 2021, operating margin to be in the range of<br>7.2% to 7.5% and earnings per share to be in the range of $7.00 to $7.50 |
| --- | --- |
| • | Increasing the quarterly dividend by 100%, which equates to an annual dividend of $2.00 per share, and planning<br>to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an accelerated share repurchase (ASR) program executed in Q2 2022 |
| --- | --- |
MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—March 1, 2022— Kohl’s Corporation (NYSE:KSS) today reported results for the quarter and year ended January 29, 2022.
| Three Months | Twelve Months | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions, except per share data) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||
| Total revenue | $ | 6,499 | **** | $ | 6,141 | 5.8 | % | $ | 19,433 | **** | $ | 15,955 | 21.8 | % | ||||
| Net sales^(1)^ | **** | 5.8 | % | (10.1 | )% | **** | 22.9 | % | (20.4 | )% | ||||||||
| Gross margin | **** | 33.2 | % | 32.0 | % | 124 bps | **** | 38.1 | % | 31.1 | % | 700 bps | ||||||
| Selling, general, and administrative expenses | $ | 1,687 | **** | $ | 1,603 | 5.2 | % | $ | 5,478 | **** | $ | 5,021 | 9.1 | % | ||||
| Reported | ||||||||||||||||||
| Net income (loss) | $ | 299 | **** | $ | 343 | (13 | )% | $ | 938 | **** | $ | (163 | ) | 100 | %+ | |||
| Diluted earnings (loss) per share | $ | 2.20 | **** | $ | 2.20 | 0 | % | $ | 6.32 | **** | $ | (1.06 | ) | 100 | %+ | |||
| Non-GAAP^(2)^ | ||||||||||||||||||
| Adjusted net (loss) income | $ | 299 | **** | $ | 346 | (14 | )% | $ | 1,089 | **** | $ | (186 | ) | 100 | %+ | |||
| Adjusted diluted (loss) earnings per share | $ | 2.20 | **** | $ | 2.22 | (1 | )% | $ | 7.33 | **** | $ | (1.21 | ) | 100 | %+ | |||
| (1) | Represents change in Net sales vs. prior year period. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| (2) | Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non- GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing, and other<br>costs, and Gain on sale of real estate if applicable. | |||||||||||||||||
| --- | --- |
“In 2021, we delivered all-time record earnings per share, significantly ahead of our expectations. Our operating margin of 8.6% exceeded our 2023 goal two years ahead of plan, a direct result of our efforts to restructure the business to be more profitable. We remain extremely confident in the future growth and cash flow generation of our business, and in 2022 will build on our momentum as we further scale key initiatives such as Sephora,” said Michelle Gass, Kohl’s chief executive officer.
“We continue to see a lot of value in our company. We are reinforcing our commitment to driving shareholder value by doubling our dividend and planning on repurchasing at least $1.0 billion in shares in 2022. We look forward to sharing more details on our strategy and key initiatives, as well as our financial and capital allocation plans at our Investor Day event on March 7, 2022,” said Gass.
2022 Financial Outlook
For the full year 2022, the Company currently expects the following:
| • | Net sales is expected to increase 2% to 3% as compared to the prior year |
|---|---|
| • | Operating margin is expected to be in the range of 7.2% to 7.5% |
| --- | --- |
| • | Earnings per share is expected to be in the range of $7.00 to $7.50, excluding any non-recurring charges |
| --- | --- |
2022 Capital Allocation Outlook
For the full year 2022, the Company currently expects the following:
| • | Capital expenditures: approximately $850 million, including expansion of its Sephora partnership and<br>store refresh activity |
|---|---|
| • | Dividend: On February 28, 2022, Kohl’s Board of Directors declared a quarterly cash dividend on<br>the Company’s common stock of $0.50 per share. The dividend is payable March 30, 2022 to shareholders of record at the close of business on March 16, 2022. **** |
| --- | --- |
| • | Share repurchase program: Kohl’s Board of Directors approved a $3.0 billion share repurchase<br>authorization and the Company plans to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an ASR program executed in Q2 2022. |
| --- | --- |
Fourth Quarter 2021 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on March 1, 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.
2022 Investor Day
On March 7, 2022, the Company will host a virtual investor day presentation from 9:00 am ET to 12:00 pm ET. Management will provide an update on its strategy and key initiatives and an overview of its financial plan. Webcast details and related presentation material will be available on the Company’s web site at investors.kohls.com, both live and after the event.
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 Companyintends 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 notlimited 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 inthe 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 (loss) and adjusted diluted earnings (loss) per share, which are notrecognized 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 (loss) and adjusteddiluted earnings (loss) 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 withrespect 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.
Contacts
Investor Relations:
Mark Rupe, (262) 703-1266, mark.rupe@kohls.com
Media:
Jen Johnson, (262) 703-5241, jen.johnson@kohls.com
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Twelve Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | January 29,<br>2022 | January 30,<br>2021 | January 29,<br>2022 | January 30,<br>2021 | ||||||||
| Net sales | $ | 6,220 | **** | $ | 5,879 | $ | 18,471 | **** | $ | 15,031 | ||
| Other revenue | **** | 279 | **** | 262 | **** | 962 | **** | 924 | ||||
| Total revenue | **** | 6,499 | **** | 6,141 | **** | 19,433 | **** | 15,955 | ||||
| Cost of merchandise sold | **** | 4,155 | **** | 4,000 | **** | 11,437 | **** | 10,360 | ||||
| Gross margin rate | **** | 33.2 | % | 32.0 | % | **** | 38.1 | % | 31.1 | % | ||
| Operating expenses: | ||||||||||||
| Selling, general, and administrative | **** | 1,687 | **** | 1,603 | **** | 5,478 | **** | 5,021 | ||||
| As a percent of total revenue | **** | 26.0 | % | 26.1 | % | **** | 28.2 | % | 31.5 | % | ||
| Depreciation and amortization | **** | 207 | **** | 218 | **** | 838 | **** | 874 | ||||
| Impairments, store closing, and other | **** | — | **** | 4 | **** | — | **** | 89 | ||||
| (Gain) on sale of real estate | **** | — | **** | — | **** | — | **** | (127 | ) | |||
| Operating income (loss) | **** | 450 | **** | 316 | **** | 1,680 | **** | (262 | ) | |||
| Interest expense, net | **** | 65 | **** | 70 | **** | 260 | **** | 284 | ||||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 201 | **** | — | ||||
| Income (loss) before income taxes | **** | 385 | **** | 246 | **** | 1,219 | **** | (546 | ) | |||
| Provision (benefit) for income taxes | **** | 86 | **** | (97 | ) | **** | 281 | **** | (383 | ) | ||
| Net income (loss) | $ | 299 | **** | $ | 343 | $ | 938 | **** | $ | (163 | ) | |
| Average number of shares: | ||||||||||||
| Basic | **** | 134 | **** | 154 | **** | 146 | **** | 154 | ||||
| Diluted | **** | 136 | **** | 156 | **** | 148 | **** | 154 | ||||
| Earnings (loss) per share: | ||||||||||||
| Basic | $ | 2.23 | **** | $ | 2.23 | $ | 6.41 | **** | $ | (1.06 | ) | |
| Diluted | $ | 2.20 | **** | $ | 2.20 | $ | 6.32 | **** | $ | (1.06 | ) |
ADJUSTED NET INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE,NON-GAAP FINANCIAL MEASURES
(Unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | January 29,<br>2022 | January 30,<br>2021 | January 29,<br>2022 | January 30,<br>2021 | |||||||
| Net income (loss) | |||||||||||
| GAAP | $ | 299 | $ | 343 | $ | 938 | **** | $ | (163 | ) | |
| Impairments, store closing, and other | **** | — | 4 | **** | — | **** | 89 | ||||
| (Gain) on sale of real estate | **** | — | — | **** | — | **** | (127 | ) | |||
| Loss on extinguishment of debt | **** | — | — | **** | 201 | **** | — | ||||
| Income tax impact of items noted above | **** | — | (1 | ) | **** | (50 | ) | 15 | |||
| Adjusted (non-GAAP)^(1)^ | $ | 299 | $ | 346 | $ | 1,089 | **** | $ | (186 | ) | |
| Diluted earnings (loss) per share | |||||||||||
| GAAP | $ | 2.20 | $ | 2.20 | $ | 6.32 | **** | $ | (1.06 | ) | |
| Impairments, store closing, and other | **** | — | 0.03 | **** | — | **** | 0.58 | ||||
| (Gain) on sale of real estate | **** | — | — | **** | — | **** | (0.82 | ) | |||
| Loss on extinguishment of debt | **** | — | — | **** | 1.35 | **** | — | ||||
| Income tax impact of items noted above | **** | — | (0.01 | ) | **** | (0.34 | ) | 0.09 | |||
| Adjusted (non-GAAP)^(1)^ | $ | 2.20 | $ | 2.22 | $ | 7.33 | **** | $ | (1.21 | ) | |
| (1) | Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non- GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing, and other<br>costs, and Gain on sale of real estate if applicable. | ||||||||||
| --- | --- |
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | January 29,<br>2022 | January 30,<br>2021 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,587 | $ | 2,271 |
| Merchandise inventories | **** | 3,067 | 2,590 | |
| Other | **** | 369 | 974 | |
| Total current assets | **** | 5,023 | 5,835 | |
| Property and equipment, net | **** | 7,304 | 6,689 | |
| Operating leases | **** | 2,248 | 2,398 | |
| Other assets | **** | 479 | 415 | |
| Total assets | $ | 15,054 | $ | 15,337 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,683 | $ | 1,476 |
| Accrued liabilities | **** | 1,340 | 1,270 | |
| Current portion of: | ||||
| Finance leases and financing obligations | **** | 118 | 115 | |
| Operating leases | **** | 145 | 161 | |
| Total current liabilities | **** | 3,286 | 3,022 | |
| Long-term debt | **** | 1,910 | 2,451 | |
| Finance leases and financing obligations | **** | 2,133 | 1,387 | |
| Operating leases | **** | 2,479 | 2,625 | |
| Deferred income taxes | **** | 206 | 302 | |
| Other long-term liabilities | **** | 379 | 354 | |
| Shareholders’ equity | **** | 4,661 | 5,196 | |
| Total liabilities and shareholders’ equity | $ | 15,054 | $ | 15,337 |
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Twelve Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | January 29,<br>2022 | January 30,<br>2021 | ||||
| Operating activities | ||||||
| Net income (loss) | $ | 938 | **** | $ | (163 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
| Depreciation and amortization | **** | 838 | **** | 874 | ||
| Share-based compensation | **** | 48 | **** | 40 | ||
| Deferred income taxes | **** | (92 | ) | 18 | ||
| Impairments, store closing, and other costs | **** | — | **** | 64 | ||
| (Gain) on sale of real estate | **** | — | **** | (127 | ) | |
| Loss on extinguishment of debt | **** | 201 | **** | — | ||
| Non-cash inventory costs | **** | — | **** | 187 | ||
| Non-cash lease expense | **** | 139 | **** | 149 | ||
| Other non-cash expenses | **** | 12 | **** | 22 | ||
| Changes in operating assets and liabilities: | ||||||
| Merchandise inventories | **** | (467 | ) | 768 | ||
| Other current and long-term assets | **** | 569 | **** | (813 | ) | |
| Accounts payable | **** | 206 | **** | 270 | ||
| Accrued and other long-term liabilities | **** | 21 | **** | 199 | ||
| Operating lease liabilities | **** | (142 | ) | (150 | ) | |
| Net cash provided by operating activities | **** | 2,271 | **** | 1,338 | ||
| Investing activities | ||||||
| Acquisition of property and equipment | **** | (605 | ) | (334 | ) | |
| Proceeds from sale of real estate | **** | 35 | **** | 197 | ||
| Net cash used in investing activities | **** | (570 | ) | (137 | ) | |
| Financing activities | ||||||
| Proceeds from issuance of debt | **** | 500 | **** | 2,097 | ||
| Deferred financing costs | **** | (8 | ) | (19 | ) | |
| Treasury stock purchases | **** | (1,355 | ) | (8 | ) | |
| Shares withheld for taxes on vested restricted shares | **** | (27 | ) | (22 | ) | |
| Dividends paid | **** | (147 | ) | (108 | ) | |
| Reduction of long-term borrowings | **** | (1,044 | ) | (1,497 | ) | |
| Premium paid on redemption of debt | **** | (192 | ) | — | ||
| Finance lease and financing obligation payments | **** | (125 | ) | (105 | ) | |
| Proceeds from financing obligations | **** | 15 | **** | 9 | ||
| Proceeds from stock option exercises | **** | 1 | **** | — | ||
| Other | **** | (3 | ) | — | ||
| Net cash provided by (used in) financing activities | **** | (2,385 | ) | 347 | ||
| Net increase (decrease) in cash and cash equivalents | **** | (684 | ) | 1,548 | ||
| Cash and cash equivalents at beginning of period | **** | 2,271 | **** | 723 | ||
| Cash and cash equivalents at end of period | $ | 1,587 | **** | $ | 2,271 |
EX-99.2
Exhibit 99.2 Q4 2021 Results Presentation March 1, 2022
Cautionary Statement Regarding Forward-Looking Information This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as believes, anticipates, plans, may, intends, will, should, expects, and similar expressions are intended to identify forward-looking statements. Forward-looking statements include, but are not limited to, comments about Kohl's future financial plans, capital generation, management and deployment strategies, adequacy of capital resources and the competitive environment. 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. Any number of risks and uncertainties could cause actual results to differ materially from those Kohl’s expresses in its forward-looking statements, including the short and long-term impact of COVID-19 on the economy and the pace of recovery thereafter. Forward-looking statements speak as of the date they are made, and Kohl’s undertakes no obligation to update them. Non-GAAP Financial Measures In addition, this presentation contains non-GAAP financial measures, including Adjusted EPS and Adjusted Net Income. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are included in the Appendix of this presentation. 2
Q4 2021 R R Re e esults s su ul lt ts s Presentation Key Takeaways and 2022 Outlook 4 Kohl’s Investor Day 2022 10 3
Key Takeaways and 2022 Outlook 4
Key Takeaways Fundamentally restructured business to be more profitable • Delivered all-time record adjusted diluted EPS of $7.33 in 2021, eclipsing previous high of $5.60 in 2018 • Operating margin of 8.6% in 2021 exceeded our goal of 7% to 8% two years ahead of plan Our strategy is building momentum • Sephora continues to drive impressive results, which gives us confidence as we further expand the partnership in 2022 • Ongoing strength in our Active business, which grew more than 40% in 2021 Returning a significant amount of capital to shareholders • Returned $1.5 billion of capital to shareholders in 2021 • Kohl’s Board approved a 100% increase in our dividend, which equates to an annual dividend of $2.00 per share, and a $3.0 billion share repurchase authorization • Plan to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an accelerated share repurchase (ASR) program executed in Q2 2022 5 (1) - Adjusted diluted EPS is a non-GAAP financial measure. Please refer to the reconciliation included in the Appendix for more information. 5
2022 Outlook Metric Full Year Guidance 2% to 3% increase Net Sales versus 2021 Operating Margin 7.2% to 7.5% EPS $7.00 to $7.50 Capital Allocation Strategy • Capex: ~$850 million • Dividend: $0.50 quarterly dividend payable on March 30, 2022 • Share Repurchase Program: Kohl’s Board of Directors approved $3.0 billion share repurchase authorization; and the Company plans to repurchase at least $1.0 billion in shares in 2022, of which $500 million is expected to be repurchased through open market transactions or an ASR program executed in Q2 2022 6
Q4 2021 Three Months Ended Consolidated Statement of Operations Key Metrics (Dollars in Millions) January 29, 2022 January 30, 2021 Net Sales $ 6,220 5,879 Total Revenue 6,499 6,141 Gross Margin Rate 33.2% 32.0% • Net sales increased 5.8% versus Q4 SG&A 1,687 1,603 2020 driven by double-digit growth Depreciation 207 218 in store sales, with overall Active Impairments, Store Closings, and Other Costs — 4 sales increasing more than 25% Operating Income 450 316 Interest Expense 65 70 • Operating Margin of 6.9% in Q4 Provision for Income Taxes 86 (97) 2021, driven by a 124 bps gross Net Income 299 343 margin improvement and 15 bps Diluted EPS $2.20 $2.20 SG&A expense ratio improvement (1) 299 346 Adjusted Net Income (Non-GAAP) versus the prior year (1) $2.20 $2.22 Adjusted Diluted EPS (Non-GAAP) • Diluted EPS of $2.20 exceeded Key Balance Sheet Items January 29, 2022 January 30, 2021 (Dollars in Millions) expectations Cash and Cash Equivalents $ 1,587 $ 2,271 Merchandise Inventories 3,067 2,590 Accounts Payable 1,683 1,476 Long-term Debt 1,910 2,451 (1)-Adjusted Net Income and Adjusted Diluted EPS are non-GAAP financial measures. Please refer to the reconciliations included in the Appendix for more information. 7 7 Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non-GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing and other costs and Gain on sale of real estate if applicable. 7
Q4 2021 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Increased 124 bps versus Q4 2020 SG&A leveraged 15 bps versus Q4 2020 $1,687M 33.2% $1,603M 32.0% % Total Revenue 26.1% 26.0% Q4 2020 Q4 2021 Q4 2020 Q4 2021 Q4 2021 Gross Margin Takeaways Q4 2021 SG&A Takeaways Achieved 10 year high inventory turn Improved store labor productivity Further scaled pricing and promotion optimization strategies Lower technology spend Lower product cost driven by sourcing initiatives Higher wage costs across stores and distribution centers Higher transportation costs due to global supply chain challenges 8 8 8
Enhanced Liquidity Position Key Balance Sheet & Cash Flow Items: FY 2021 January 31, 2021 Beginning Cash $2,271M Key Takeaways Sources • Strong earnings performance and cash flow generation further improved leverage profile Operating Cash Flow $2,271M • Increased share repurchases, reinforcing our New Debt $500M confidence in the business and commitment to creating shareholder value Uses • Long history of disciplined capital management Reductions in LT Debt ($1,044M) • More than two decades of maintaining Share Repurchase ($1,355M) Investment Grade rating Capex ($605M) • Well-positioned to capitalize on evolving customer behaviors and the retail industry disruption Other* ($304M) Dividend ($147M) January 29, 2022 Ending Cash $1,587M *Other includes premium paid on redemption of debt, finance lease and financing obligation payments, and other. 9
Investor Day 2022 10
Investor Day 2022 VIRTUAL EVENT Join us Monday, March 7, as CEO Michelle Gass, CFO Jill Timm, and members of our March 7, 2022 executive leadership team provide an update on our strategy and key initiatives, an 9am ET - 12pm ET overview of our financial plan, as well as address participant questions. Registration details can be found on Kohl’s Investor Relations Website: investors.kohls.com 11
Kohl’s Investor Day 2022 Agenda Company Overview Financial & Capital & Strategy Allocation Strategies 1 5 Michelle Gass Jill Timm Chief Executive Officer Chief Financial Officer Merchandising ESG 2 6 Doug Howe Michelle Gass Chief Executive Officer Chief Merchandising Officer Customer & Marketing 3 Greg Revelle Chief Marketing Officer Q&A 7 All Speakers Michelle Gass, Doug Howe, Greg Revelle, Paul Gaffney, Jill Timm Omnichannel & Technology 4 Paul Gaffney Chief Technology & Supply Chain Officer 12
Appendix 13
Reconciliations Adjusted Net Income (Loss) and Diluted Earnings (Loss) per Share, Non-GAAP Financial Measures (unaudited) Three Months Ended (Dollars in Millions, Except per Share Data) January 29, 2022 January 30, 2021 Net Income (Loss) GAAP $ 299 $ 343 Impairments, store closing, and other — 4 Income tax impact of items noted above — (1) Adjusted (non-GAAP) $ 299 $ 346 Twelve Months Ended Diluted Earnings (Loss) per Share January 29, 2022 January 30, 2021 January 29, 2022 GAAP $ 2.20 $ 2.20 6.32 Impairments, store closing, and other — 0.03 — Loss on extinguishment of debt —— 1.35 Income tax impact of items noted above — (0.01) (0.34) Adjusted (non-GAAP) $ 2.20 $ 2.22 7.33 Amounts shown for the three months ended January 29, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes. All other periods are Non-GAAP and exclude Loss on Extinguishment of debt, Impairments, store closing and other costs and Gain on sale of real estate if applicable. 14
