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): August 28, 2024
KOHL’S CORPORATION
(Exact name of Registrant as Specified in Its Charter)
| Wisconsin | 001-11084 | 39-1630919 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<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)) |
| --- | --- |
| ☐ | 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>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 August 28, 2024, Kohl’s Corporation (the “Company”) issued a press release reporting its earnings for the quarter ended August 3, 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 August 28, 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 August 13, 2024, the Board of Directors of the Company declared a quarterly cash dividend of $0.50 per share. The dividend will be paid on September 25, 2024, to all shareholders of record at the close of business on September 11, 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 August 28, 2024 |
| 99.2 | Presentation Materials for August 28, 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: August 28, 2024 | By: | /s/ Jennifer Kent |
| Jennifer Kent <br>Senior Executive Vice President, <br>Chief Legal Officer and Corporate Secretary |
EX-99.1
Exhibit 99.1
Kohl’s Reports Second Quarter Fiscal 2024 Financial Results
MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—August 28, 2024— Kohl’s Corporation (NYSE:KSS) today reported results for the second quarter ended August 3, 2024.
| • | Net sales decreased 4.2% and comparable sales decreased 5.1% |
|---|---|
| • | Gross margin increased 59 basis points |
| --- | --- |
| • | Diluted earnings per share of $0.59 versus $0.52 in the prior year |
| --- | --- |
| • | Inventory declined 9% |
| --- | --- |
| • | Updates full year 2024 financial outlook |
| --- | --- |
| • | Committed to returning capital to shareholders through the dividend and further strengthening balance sheet |
| --- | --- |
Tom Kingsbury, Kohl’s chief executive officer, said “We have taken significant action to reposition Kohl’s for future growth. However, our efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in our core business. During the second quarter, our customers exhibited more discretion in their spending, which pressured our sales even as customers transacted more frequently. This overshadowed strong performance in our key growth areas, including Sephora, home decor, gifting, and impulse. In spite of this, we continued to execute well operationally, enabling us to deliver a 13% increase in earnings driven by gross margin expansion and strong inventory and expense management.”
“Looking ahead, we are focused on ensuring that the substantial work that we’ve done across product, value, and experience is fully recognized by both new and existing customers. We will also capitalize on new opportunities such as our partnership with Babies “R” Us and expect to continue to benefit from our key growth areas. Our conviction in our strategy remains strong and our operating discipline, solid cash flow generation, and healthy balance sheet will continue to support us as we work to return Kohl’s to growth,” Kingsbury continued.
Second Quarter 2024 Results
Comparisons referto the 13-week period ended August 3, 2024 versus the 13-week period ended July 29, 2023
| • | Net sales decreased 4.2% year-over-year, to $3.5 billion, with comparable sales down 5.1%.<br> |
|---|---|
| • | Gross margin as a percentage of net sales was 39.6%, an increase of 59 basis points.<br> |
| --- | --- |
| • | Selling, general & administrative (SG&A) expenses decreased 4.2%<br>year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 33.5%, a decrease of 1 basis point year-over-year. |
| --- | --- |
| • | Operating income was $166 million compared to $163 million in the prior year. As a percentage of<br>total revenue, operating income was 4.4%, an increase of 26 basis points year-over-year. |
| --- | --- |
| • | Net income was $66 million, or $0.59 per diluted share. This compares to net income of<br>$58 million, or $0.52 per diluted share in the prior year. |
| --- | --- |
| • | Inventory was $3.2 billion, a decrease of 9% year-over-year. |
| --- | --- |
| • | Operating cash flow was $254 million as compared to $430 million in the prior year.<br> |
| --- | --- |
| • | Long-term debt was reduced by $113 million through the redemption of the remaining 9.50% notes due<br>May 15, 2025. |
| --- | --- |
Six Months Fiscal Year 2024 Results
Comparisons refer to the 26-week period ended August 3, 2024 versus the26-week period ended July 29, 2023
| • | Net sales decreased 4.7% year-over-year, to $6.7 billion, with comparable sales down 4.8%.<br> |
|---|---|
| • | Gross margin as a percentage of net sales was 39.6%, an increase of 54 basis points.<br> |
| --- | --- |
| • | Selling, general & administrative (SG&A) expenses decreased 2.5%<br>year-over-year, to $2.5 billion. As a percentage of total revenue, SG&A expenses were 34.8%, an increase of 78 basis points year-over-year. |
| --- | --- |
| • | Operating income was $209 million compared to $261 million in the prior year. As a percentage of<br>total revenue, operating income was 2.9%, a decrease of 56 basis points year-over-year. |
| --- | --- |
| • | Net income was $39 million, or $0.35 per diluted share. This compares to net income of<br>$72 million, or $0.65 per diluted share in the prior year. |
| --- | --- |
| • | Operating cash flow was $247 million as compared to $228 million in the prior year.<br> |
| --- | --- |
| • | Long-term debt was reduced by $113 million through the redemption of the remaining 9.50% notes due<br>May 15, 2025. |
| --- | --- |
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 excludes the potential impact from credit card late fee regulatory changes. The Company currently expects the following:
| • | Net sales: A decrease of (4%) to a decrease of (6%) |
|---|---|
| • | Comparable sales: A decrease of (3%) to a decrease of (5%) |
| --- | --- |
| • | Operating margin: In the range of 3.4% to 3.8% |
| --- | --- |
| • | Diluted EPS: In the range of $1.75 to $2.25 |
| --- | --- |
| • | Capital Expenditures: Approximately $500 million, including expansion of Sephora partnership and<br>other store-related investments |
| --- | --- |
| • | Dividend: On August 13, 2024, 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 September 25, 2024 to shareholders of record at the close of business on September 11, 2024. |
| --- | --- |
Second Quarter 2024 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on August 28, 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.
CautionaryStatement Regarding Forward-Looking Information
This press release contains “forward-looking statements” within the meaning of thePrivate 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. Forward-looking statements include the information under “Updated 2024 Financial and Capital Allocation Outlook.” Such statements are subject to certain risks anduncertainties, 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 inthe 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 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 is uniquely positioned to deliver against its long-term strategy and its purpose to take care of families’ realest moments. Kohl’s serves millions of families in its more than 1,100 stores in 49 states, online at Kohls.com, and through the Kohl’s App. With a large national footprint, Kohl’s is committed to making a positive impact in the communities it serves. 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 | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | August 3,2024 | July 29,2023 | August 3,2024 | July 29,2023 | ||||||||
| Net sales | $ | 3,525 | **** | $ | 3,678 | $ | 6,703 | **** | $ | 7,033 | ||
| Other revenue | **** | 207 | **** | 217 | **** | 411 | **** | 433 | ||||
| Total revenue | **** | 3,732 | **** | 3,895 | **** | 7,114 | **** | 7,466 | ||||
| Cost of merchandise sold | **** | 2,128 | **** | 2,242 | **** | 4,051 | **** | 4,289 | ||||
| Gross margin rate | 39.6 | % | 39.0 | % | 39.6 | % | 39.0 | % | ||||
| Operating expenses: | ||||||||||||
| Selling, general, and administrative | **** | 1,250 | **** | 1,304 | **** | 2,478 | **** | 2,542 | ||||
| As a percent of total revenue | 33.5 | % | 33.5 | % | 34.8 | % | 34.1 | % | ||||
| Depreciation and amortization | **** | 188 | **** | 186 | **** | 376 | **** | 374 | ||||
| Operating income | **** | 166 | **** | 163 | **** | 209 | **** | 261 | ||||
| Interest expense, net | **** | 86 | **** | 89 | **** | 169 | **** | 173 | ||||
| Income before income taxes | **** | 80 | **** | 74 | **** | 40 | **** | 88 | ||||
| Provision for income taxes | **** | 14 | **** | 16 | **** | 1 | **** | 16 | ||||
| Net income | $ | 66 | **** | $ | 58 | $ | 39 | **** | $ | 72 | ||
| Average number of shares: | ||||||||||||
| Basic | **** | 111 | **** | 110 | **** | 111 | **** | 110 | ||||
| Diluted | **** | 112 | **** | 111 | **** | 112 | **** | 111 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.59 | **** | $ | 0.52 | $ | 0.35 | **** | $ | 0.65 | ||
| Diluted | $ | 0.59 | **** | $ | 0.52 | $ | 0.35 | **** | $ | 0.65 |
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | August 3, 2024 | July 29, 2023 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 231 | $ | 204 |
| Merchandise inventories | **** | 3,151 | 3,474 | |
| Other | **** | 331 | 296 | |
| Total current assets | **** | 3,713 | 3,974 | |
| Property and equipment, net | **** | 7,502 | 7,945 | |
| Operating leases | **** | 2,507 | 2,493 | |
| Other assets | **** | 458 | 382 | |
| Total assets | $ | 14,180 | $ | 14,794 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,317 | $ | 1,376 |
| Accrued liabilities | **** | 1,185 | 1,246 | |
| Borrowings under revolving credit facility | **** | 410 | 560 | |
| Current portion of: | ||||
| Long-term debt | **** | 353 | 111 | |
| Finance leases and financing obligations | **** | 81 | 84 | |
| Operating leases | **** | 92 | 93 | |
| Total current liabilities | **** | 3,438 | 3,470 | |
| Long-term debt | **** | 1,173 | 1,637 | |
| Finance leases and financing obligations | **** | 2,574 | 2,730 | |
| Operating leases | **** | 2,795 | 2,777 | |
| Deferred income taxes | **** | 95 | 121 | |
| Other long-term liabilities | **** | 275 | 324 | |
| Shareholders’ equity: | **** | 3,830 | 3,735 | |
| Total liabilities and shareholders’ equity | $ | 14,180 | $ | 14,794 |
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | August 3, 2024 | July 29, 2023 | ||||
| Operating activities | ||||||
| Net income | $ | 39 | **** | $ | 72 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | **** | 376 | **** | 374 | ||
| Share-based compensation | **** | 16 | **** | 20 | ||
| Deferred income taxes | **** | (15 | ) | (7 | ) | |
| Non-cash lease expense | **** | 44 | **** | 48 | ||
| Other non-cash items | **** | 11 | **** | (2 | ) | |
| Changes in operating assets and liabilities: | ||||||
| Merchandise inventories | **** | (269 | ) | (283 | ) | |
| Other current and long-term assets | **** | (59 | ) | 61 | ||
| Accounts payable | **** | 183 | **** | 46 | ||
| Accrued and other long-term liabilities | **** | (25 | ) | (52 | ) | |
| Operating lease liabilities | **** | (54 | ) | (49 | ) | |
| Net cash provided by operating activities | **** | 247 | **** | 228 | ||
| Investing activities | ||||||
| Acquisition of property and equipment | **** | (239 | ) | (338 | ) | |
| Proceeds from sale of real estate | **** | — | **** | 4 | ||
| Other | **** | 2 | **** | (1 | ) | |
| Net cash used in investing activities | **** | (237 | ) | (335 | ) | |
| Financing activities | ||||||
| Net borrowings under revolving credit facility | **** | 318 | **** | 475 | ||
| Shares withheld for taxes on vested restricted shares | **** | (9 | ) | (13 | ) | |
| Dividends paid | **** | (111 | ) | (110 | ) | |
| Repayment of long-term borrowings | **** | (113 | ) | (164 | ) | |
| Premium paid on redemption of debt | **** | (5 | ) | — | ||
| Finance lease and financing obligation payments | **** | (42 | ) | (47 | ) | |
| Proceeds from financing obligations | **** | — | **** | 17 | ||
| Net cash provided by financing activities | **** | 38 | **** | 158 | ||
| Net increase in cash and cash equivalents | **** | 48 | **** | 51 | ||
| Cash and cash equivalents at beginning of period | **** | 183 | **** | 153 | ||
| Cash and cash equivalents at end of period | $ | 231 | **** | $ | 204 |
EX-99.2
Exhibit 99.2
“We have taken significant action to reposition Kohl’s for future growth. And while we are making progress against our strategic priorities, our efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment. During the second quarter, our customers exhibited more discretion in their spending, which pressured our sales even as customers transacted more frequently. This overshadowed strong performance in our key growth areas, including Sephora, home decor, gifting, and impulse. In spite of this, we continued to execute well operationally, enabling us to deliver a 13% increase in earnings driven by gross margin expansion and strong inventory and expense management.” However, “We have taken significant action to reposition Kohl’s for future growth. And while we are making progress against our strategic priorities, our efforts have yet to fully yield the intended outcome due in part to a continued challenging consumer environment and softness in some of our core businesses. During the second quarter, our customers exhibited more discretion in their spending, which pressured our sales even as customers transacted more frequently. This overshadowed strong performance in our key growth areas, including Sephora, home decor, gifting, and impulse. In spite of this, we continued to execute well operationally, enabling us to deliver a 13% increase in earnings driven by gross margin expansion and strong inventory and expense management.” “Looking ahead, we are focused on ensuring that the substantial work that we’ve done across product, value, and experience is fully recognized by both new and existing customers. We will also capitalize on new opportunities such as our partnership with Babies “R” Us and continue to benefit from our key growth areas. Our conviction in our strategy remains strong and our operating discipline, solid cash flow generation, and healthy balance sheet will continue to support us as we work to return Kohl’s to growth.”
Pls add FLX logo
Building 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 Women’s ● Strengthening young men’s ● Driving infant and category through newborn apparel the introduction of sales through new brands ● Continuing to Babies “R” Us including amplify polished cross shopping Aeropostale and casual through Quiksilver private and market brands
(4%) to (6%) vs. 2023 (3%) to (5%) vs. 2023 3.4% to 3.8% $1.75 to $2.25
fewer
● 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
