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): May 30, 2024
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 | ||
| --- | --- | |
| 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)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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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 May 30, 2024, Kohl’s Corporation (the “Company”) issued a press release reporting its earnings for the quarter ended May 4, 2024 and provided updated earnings guidance for fiscal 2024. 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 May 30, 2024 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.
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. |
|---|
As previously announced, on May 15, 2024, the Board of Directors of the Company declared a quarterly cash dividend of $0.50 per share. The dividend will be paid on June 26, 2024, to all shareholders of record at the close of business on June 12, 2024.
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,” “intends,” “anticipates,” “plans,” or similar expressions to identify forward-looking statements. Forward-looking statements include the information under “Updated 2024 Financial and Capital Allocation Outlook.” 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. Forward-looking statements relate to the date initially made, and the Company undertakes no obligation to update them.
In the attached presentation materials, the Company provides information regarding adjusted free cash flow, which is not a recognized term under U.S. generally accepted accounting principles (“GAAP”) and does not purport to be an alternative to net income as a measure of operating performance. A reconciliation of adjusted free cash flow is provided in the presentation materials attached hereto as Exhibit 99.2. The Company believes that the use of this non-GAAP financial measure provides investors with enhanced visibility into its results with respect to the impact of certain costs. Because not all companies use identical calculations, this presentation 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 May 30, 2024 |
| 99.2 | Presentation Materials for May 30, 2024 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.
| KOHL’S CORPORATION | ||
|---|---|---|
| Date: May 30, 2024 | By: | /s/ Jennifer Kent |
| Jennifer Kent<br> <br>Senior Executive Vice President,<br> <br>Chief Legal Officer and Corporate Secretary |
EX-99.1
Exhibit 99.1
Kohl’s Reports First Quarter Fiscal 2024 Financial Results
MENOMONEE FALLS, Wis.–(BUSINESS WIRE)—May 30, 2024– Kohl’s Corporation (NYSE:KSS) today reported results for the first quarter ended May 4, 2024.
| • | Net sales decreased 5.3% and comparable sales decreased 4.4% |
|---|---|
| • | Regular price sales increased 2.4% with clearance impacting overall comp by more than 600 basis points |
| --- | --- |
| • | Gross margin increased 48 basis points |
| --- | --- |
| • | Diluted loss per share of $0.24 |
| --- | --- |
| • | Inventory declined 13% |
| --- | --- |
| • | Updates full year 2024 financial outlook |
| --- | --- |
| • | Committed to returning capital to shareholders through the dividend and further strengthening balance sheetthrough long-term debt reduction in 2024 |
| --- | --- |
Tom Kingsbury, Kohl’s chief executive officer, said “Our first quarter results did not meet our expectations and are not reflective of the direction we are heading with our strategic initiatives. Regular price sales increased year-over-year, with early success in underpenetrated categories, positive trends in our Women’s business, and continued strong growth in Sephora. However, lower clearance sales versus last year represented a more than 600 basis point drag on comparable sales. Importantly, we were able to deliver gross margin expansion, manage inventory down 13% and tightly control expenses in the quarter.”
“We continue to have high conviction in our strategy and believe that our key growth initiatives, including Sephora, home decor, gifting, impulse, and our upcoming partnership with Babies “R” Us, will contribute more meaningfully going forward. That said, we recognize we have more work to do in areas of our business. We are approaching our financial outlook for the year more conservatively given the first quarter underperformance and the ongoing uncertainty in the consumer environment,” Kingsbury continued.
First Quarter 2024 Results
Comparisons referto the 13-week period ended May 4, 2024 versus the 13-week period ended April 29, 2023
| • | Net sales decreased 5.3% year-over-year, to $3.2 billion, with comparable sales down 4.4%<br> |
|---|---|
| • | Gross margin as a percentage of net sales was 39.5%, an increase of 48 basis points.<br> |
| --- | --- |
| • | Selling, general & administrative (SG&A) expenses decreased 0.8%<br>year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 36.3%, an increase of 166 basis points year-over-year. |
| --- | --- |
| • | Operating income was $43 million compared to $98 million in the prior year. As a percentage of<br>total revenue, operating income was 1.3%, a decrease of 148 basis points year-over-year. |
| --- | --- |
| • | Net loss was $27 million, or ($0.24) per diluted share. This compares to net income of<br>$14 million, or $0.13 per diluted share in the prior year. |
| --- | --- |
| • | Inventory was $3.1 billion, a decrease of 13% year-over-year. |
| --- | --- |
| • | Operating cash flow was a use of $7 million as compared to a use of $202 million in the<br>prior year. |
| --- | --- |
Updated 2024 Financial and Capital Allocation Outlook
For the full year 2024, which has 52 weeks compared to 53 weeks in full year 2023, the Company’s guidance includes the potential impact from credit card late fee regulatory changes in the second half of 2024. The Company currently expects the following:
| • | Net sales: A decrease of (2%) to a decrease of (4%) |
|---|---|
| • | Comparable sales: A decrease of (1%) to a decrease of (3%) |
| --- | --- |
| • | Operating margin: In the range of 3.0% to 3.5% |
| --- | --- |
| • | Diluted EPS: In the range of $1.25 to $1.85 |
| --- | --- |
| • | Capital Expenditures: Approximately $500 million, including expansion of Sephora partnership and<br>other store-related investments |
| --- | --- |
| • | Dividend: On May 15, 2024, Kohl’s Board of Directors declared a quarterly cash dividend on the<br>Company’s common stock of $0.50 per share. The dividend is payable June 26, 2024 to shareholders of record at the close of business on June 12, 2024. |
| --- | --- |
| • | Debt Reduction: Earlier this month we exercised our right to redeem the remaining $113 million of our<br>9.500% notes due May 15, 2025. The redemption will be completed on June 13, 2024. |
| --- | --- |
First Quarter 2024 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on May 30, 2024. 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 StatementRegarding Forward-Looking Information
This press release contains “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995. The Company intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” “plans,” orsimilar expressions to identify forward-looking statements. Forward-looking statements include the information under “Updated 2024 Financial and Capital Allocation Outlook.” 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 theCompany’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-lookingstatements relate to the date initially made, and the Company undertakes no obligation to update them.
About Kohl’s
Kohl’s (NYSE: KSS) is a leading omnichannel retailer built on a foundation that combines great brands, incredible value and convenience for our customers. Kohl’s serves millions of families in our more than 1,100 stores in 49 states, online at Kohls.com, and through our Kohl’s App. 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.
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 | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | May 4, 2024 | April 29, 2023 | ||||
| Net sales | $ | 3,178 | **** | $ | 3,355 | |
| Other revenue | **** | 204 | **** | 216 | ||
| Total revenue | **** | 3,382 | **** | 3,571 | ||
| Cost of merchandise sold | **** | 1,923 | **** | 2,047 | ||
| Gross margin rate | **** | 39.5 | % | 39.0 | % | |
| Operating expenses: | ||||||
| Selling, general, and administrative | **** | 1,228 | **** | 1,238 | ||
| As a percent of total revenue | **** | 36.3 | % | 34.7 | % | |
| Depreciation and amortization | **** | 188 | **** | 188 | ||
| Operating income | **** | 43 | **** | 98 | ||
| Interest expense, net | **** | 83 | **** | 84 | ||
| (Loss) income before income taxes | **** | (40 | ) | 14 | ||
| (Benefit) provision for income taxes | **** | (13 | ) | **** | — | **** |
| Net (loss) income | $ | (27 | ) | $ | 14 | |
| Average number of shares: | ||||||
| Basic | **** | 111 | **** | 110 | ||
| Diluted | **** | 111 | **** | 111 | ||
| (Loss) earnings per share: | ||||||
| Basic | $ | (0.24 | ) | $ | 0.13 | |
| Diluted | $ | (0.24 | ) | $ | 0.13 |
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | May 4, 2024 | April 29, 2023 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 228 | $ | 286 |
| Merchandise inventories | **** | 3,083 | 3,526 | |
| Other | **** | 345 | 347 | |
| Total current assets | **** | 3,656 | 4,159 | |
| Property and equipment, net | **** | 7,664 | 7,803 | |
| Operating leases | **** | 2,498 | 2,368 | |
| Other assets | **** | 460 | 380 | |
| Total assets | $ | 14,278 | $ | 14,710 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,220 | $ | 1,310 |
| Accrued liabilities | **** | 1,265 | 1,164 | |
| Borrowings under revolving credit facility | **** | 355 | 765 | |
| Current portion of: | ||||
| Long-term debt | **** | — | 111 | |
| Finance leases and financing obligations | **** | 81 | 93 | |
| Operating leases | **** | 92 | 111 | |
| Total current liabilities | **** | 3,013 | 3,554 | |
| Long-term debt | **** | 1,638 | 1,637 | |
| Finance leases and financing obligations | **** | 2,651 | 2,710 | |
| Operating leases | **** | 2,783 | 2,634 | |
| Deferred income taxes | **** | 94 | 129 | |
| Other long-term liabilities | **** | 286 | 326 | |
| Shareholders’ equity: | **** | 3,813 | 3,720 | |
| Total liabilities and shareholders’ equity | $ | 14,278 | $ | 14,710 |
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | May 4, 2024 | April 29, 2023 | ||||
| Operating activities | ||||||
| Net (loss) income | $ | (27 | ) | $ | 14 | |
| Adjustments to reconcile net (loss) income to net cash (used in) provided by operating<br>activities: | ||||||
| Depreciation and amortization | **** | 188 | **** | 188 | ||
| Share-based compensation | **** | 10 | **** | 9 | ||
| Deferred income taxes | **** | (13 | ) | 1 | ||
| Non-cash lease expense | **** | 22 | **** | 25 | ||
| Other non-cash items | **** | 3 | **** | (4 | ) | |
| Changes in operating assets and liabilities: | ||||||
| Merchandise inventories | **** | (202 | ) | (336 | ) | |
| Other current and long-term assets | **** | (81 | ) | 49 | ||
| Accounts payable | **** | 86 | **** | (20 | ) | |
| Accrued and other long-term liabilities | **** | 34 | **** | (101 | ) | |
| Operating lease liabilities | **** | (27 | ) | (27 | ) | |
| Net cash used in operating activities | **** | (7 | ) | (202 | ) | |
| Investing activities | ||||||
| Acquisition of property and equipment | **** | (126 | ) | (94 | ) | |
| Proceeds from sale of real estate | **** | — | **** | 1 | ||
| Other | **** | — | **** | (1 | ) | |
| Net cash used in investing activities | **** | (126 | ) | (94 | ) | |
| Financing activities | ||||||
| Net borrowings under revolving credit facility | **** | 263 | **** | 680 | ||
| Shares withheld for taxes on vested restricted shares | **** | (9 | ) | (12 | ) | |
| Dividends paid | **** | (55 | ) | (55 | ) | |
| Repayment of long-term borrowings | **** | — | **** | (164 | ) | |
| Finance lease and financing obligation payments | **** | (21 | ) | (25 | ) | |
| Proceeds from financing obligations | **** | — | **** | 5 | ||
| Net cash provided by financing activities | **** | 178 | **** | 429 | ||
| Net increase in cash and cash equivalents | **** | 45 | **** | 133 | ||
| Cash and cash equivalents at beginning of period | **** | 183 | **** | 153 | ||
| Cash and cash equivalents at end of period | $ | 228 | **** | $ | 286 |
EX-99.2
Exhibit 99.2
financial and capital allocation outlook,
Increasing relevancy of apparel & footwear offerings in 2024 Repositioning Juniors offering next to Sephora in stores to better capitalize on cross shopping opportunities in 2024 Q1 2024 with positive sales growth
(2%) to (4%) (1%) to (3%) 3.0% to 3.5% $1.25 to $1.85
(Billions) notes notes
declined (0.8%)
Adjusted measure.
notes ● Executing a make-whole-call on May 2025 bonds in Q2 2024 to reduce long-term debt by $113M (1) Coupon reflects incremental 125 bp step ups on May 2025 and May 2031 bonds notes.
in Net Cash Used by Operating Activities See earnings presentation support file Q4 example ($126)
