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 19, 2021
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 on<br> <br>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 19, 2021, Kohl’s Corporation issued a press release reporting its earnings for the quarter ended July 31, 2021 and updated its earnings guidance for fiscal 2021. 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 19, 2021 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 10, 2021, the Board of Directors of the Company declared a quarterly cash dividend of $0.25 per share. The dividend will be paid on September 22, 2021 to all shareholders of record at the close of business on September 8, 2021.
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 No. | Description |
| --- | --- |
| 99.1 | Press Release dated August 19, 2021 |
| 99.2 | Presentation Materials for August 19, 2021 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: August 19, 2021 | 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 Second Quarter Fiscal 2021 Financial Results
| • | Second quarter net sales and earnings exceed expectations and company raises full year 2021 financial outlook<br> |
|---|---|
| • | Second quarter net sales increase 31.4% |
| --- | --- |
| • | Record second quarter diluted earnings per share of $2.48 and company raises full year 2021 guidance to $5.80 to<br>$6.10 |
| --- | --- |
| • | Strengthened financial position during the quarter, ending with $2.6 billion in cash |
| --- | --- |
| • | Repurchased $255 million of shares in the quarter and now plans to repurchase $500 million to<br>$700 million of shares in 2021 |
| --- | --- |
MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—August 19, 2021— Kohl’s Corporation (NYSE:KSS) today reported results for the quarter ended July 31, 2021.
| Three Months | Six Months | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in millions, except per share data) | July 31,<br>2021 | August 1,<br>2020 | Change | July 31,<br>2021 | August 1,<br>2020 | Change | ||||||||||||
| Total revenue | $ | 4,447 | **** | $ | 3,407 | 30.5 | % | $ | 8,334 | **** | $ | 5,835 | 42.8 | % | ||||
| Net sales^(1)^ | **** | 31.4 | % | (22.9 | )% | **** | 46.8 | % | (32.8 | )% | ||||||||
| Gross margin | **** | 42.5 | % | 33.1 | % | 942 | bps | **** | 40.9 | % | 26.8 | % | 1,415 | bps | ||||
| Selling, general, and administrative expenses | $ | 1,241 | **** | $ | 1,050 | 18.2 | % | $ | 2,411 | **** | $ | 2,116 | 13.9 | % | ||||
| Reported | ||||||||||||||||||
| Net income (loss) | $ | 382 | **** | $ | 47 | 100 | %+ | $ | 396 | **** | $ | (494 | ) | 100 | %+ | |||
| Diluted earnings (loss) per share | $ | 2.48 | **** | $ | 0.30 | 100 | %+ | $ | 2.55 | **** | $ | (3.21 | ) | 100 | %+ | |||
| Non-GAAP^(2)^ | ||||||||||||||||||
| Adjusted net (loss) income | $ | 382 | **** | $ | (39 | ) | 100 | %+ | $ | 547 | **** | $ | (534 | ) | 100 | %+ | ||
| Adjusted diluted (loss) earnings per share | $ | 2.48 | **** | $ | (0.25 | ) | 100 | %+ | $ | 3.52 | **** | $ | (3.47 | ) | 100 | %+ | ||
| (1) | Represents change in Net sales vs. prior year period. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| (2) | Excludes Loss on extinguishment of debt, Impairments, store closing, and other costs, and Gain on sale of real<br>estate. | |||||||||||||||||
| --- | --- |
“Our performance in the second quarter marked another important step in further establishing Kohl’s as the leading destination for the active and casual lifestyle. We delivered record second quarter earnings with sales and margins materially exceeding expectations. As pleased as we are with our ongoing strategic progress, much of our opportunity is still ahead of us. We are on the eve of launching several transformational partnerships that will drive sustainable growth for years to come,” said Michelle Gass, Kohl’s chief executive officer.
“Based on our results, we are raising our full year 2021 guidance, which positions us to achieve many of our 2023 strategic goals this year, well ahead of our plan. In addition, we have accelerated our share repurchase activity, underscoring our confidence in the business and our commitment to creating shareholder value,” said Gass.
Updated 2021 Financial Outlook
The Company is raising its full year 2021 financial outlook to include the following:
| • | Net sales is now expected to increase in the low-twenties<br>percentage range compared to the previous expectation of mid-to-high teens percentage range increase |
|---|---|
| • | Operating margin is now expected to be in the range of 7.4% to 7.6% compared to the previous expectation<br>of 5.7% to 6.1% |
| --- | --- |
| • | Adjusted earnings per share is now expected to be in the range of $5.80 to $6.10, excluding any non-recurring charges, compared to the previous expectation of $3.80 to $4.20 |
| --- | --- |
Dividend
As previously announced, on August 10, 2021, Kohl’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.25 per share. The dividend is payable September 22, 2021 to shareholders of record at the close of business on September 8, 2021.
Second Quarter 2021 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on August 19, 2021. A webcast of the conference call and the related presentation materials will be available via the Company’s web site at investors.kohls.com, both live and after the call.
Cautionary Statement Regarding Forward-Looking Information andNon-GAAP Measures
This press release contains “forward-looking statements” within the meaningof 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 theforward-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 expresslyincorporated herein by reference, and other factors as may periodically be described in the Company’s filings with the SEC. Forward-looking statements relate to the date initially made, and Kohl’s undertakes no obligation to update them.
In this press release, the Company provides information regarding adjusted net income (loss) and adjusted diluted earnings (loss) per share, whichare not recognized terms under U.S. generally accepted accounting principles (“GAAP”) and do not purport to be alternatives to net income as a measure of operating performance. A reconciliation of adjusted net income (loss) andadjusted diluted 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 resultswith respect to the impact of certain costs. Because not all companies use identical calculations, these presentations may not be comparable to other similarly titled measures of other companies.
About Kohl’s
Kohl’s (NYSE: KSS) is a leading omnichannel retailer. With more than 1,100 stores in 49 states and the online convenience of Kohls.com and the Kohl’s App, Kohl’s offers amazing national and exclusive brands at incredible savings for families nationwide. Kohl’s is uniquely positioned to deliver against its strategy and its vision to be the most trusted retailer of choice for the active and casual lifestyle. Kohl’s is committed to progress in its diversity and inclusion pledges, and the company’s environmental, social and corporate governance (ESG) stewardship. For a list of store locations or to shop online, visit Kohls.com. For more information about Kohl’s impact in the community or how to join our winning team, visit Corporate.Kohls.com or follow @KohlsNews on Twitter.
Contacts
Investor Relations:
Mark Rupe, (262) 703-1266, mark.rupe@kohls.com
Media:
Jen Johnson, (262) 703-5241, jen.johnson@kohls.com
Source: Kohl’s
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | July 31,<br>2021 | August 1,<br>2020 | July 31,<br>2021 | August 1,<br>2020 | ||||||||
| Net sales | $ | 4,223 | **** | $ | 3,213 | $ | 7,885 | **** | $ | 5,373 | ||
| Other revenue | **** | 224 | **** | 194 | **** | 449 | **** | 462 | ||||
| Total revenue | **** | 4,447 | **** | 3,407 | **** | 8,334 | **** | 5,835 | ||||
| Cost of merchandise sold | **** | 2,426 | **** | 2,149 | **** | 4,659 | **** | 3,936 | ||||
| Gross margin rate | **** | 42.5 | % | 33.1 | % | **** | 40.9 | % | 26.8 | % | ||
| Operating expenses: | ||||||||||||
| Selling, general, and administrative | **** | 1,241 | **** | 1,050 | **** | 2,411 | **** | 2,116 | ||||
| As a percent of total revenue | **** | 27.9 | % | 30.8 | % | **** | 28.9 | % | 36.3 | % | ||
| Depreciation and amortization | **** | 210 | **** | 219 | **** | 421 | **** | 446 | ||||
| Impairments, store closing, and other | **** | — | **** | (2 | ) | **** | — | **** | 64 | |||
| (Gain) on sale of real estate | **** | — | **** | (127 | ) | **** | — | **** | (127 | ) | ||
| Operating income (loss) | **** | 570 | **** | 118 | **** | 843 | **** | (600 | ) | |||
| Interest expense, net | **** | 62 | **** | 78 | **** | 129 | **** | 136 | ||||
| Loss on extinguishment of debt | **** | — | **** | — | **** | 201 | **** | — | ||||
| Income (loss) before income taxes | **** | 508 | **** | 40 | **** | 513 | **** | (736 | ) | |||
| Provision (benefit) for income taxes | **** | 126 | **** | (7 | ) | **** | 117 | **** | (242 | ) | ||
| Net income (loss) | $ | 382 | **** | $ | 47 | $ | 396 | **** | $ | (494 | ) | |
| Average number of shares: | ||||||||||||
| Basic | **** | 152 | **** | 154 | **** | 153 | **** | 154 | ||||
| Diluted | **** | 154 | **** | 155 | **** | 155 | **** | 154 | ||||
| Earnings (loss) per share: | ||||||||||||
| Basic | $ | 2.51 | **** | $ | 0.31 | $ | 2.58 | **** | $ | (3.21 | ) | |
| Diluted | $ | 2.48 | **** | $ | 0.30 | $ | 2.55 | **** | $ | (3.21 | ) |
ADJUSTED NET INCOME (LOSS) AND DILUTED EARNINGS (LOSS) PER SHARE,NON-GAAP FINANCIAL MEASURES
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | July 31,<br>2021 | August 1,<br>2020 | July 31,<br>2021 | August 1,<br>2020 | |||||||
| Net income (loss) | |||||||||||
| GAAP | $ | 382 | $ | 47 | $ | 396 | $ | (494 | ) | ||
| Impairments, store closing, and other | — | (2 | ) | — | 64 | ||||||
| (Gain) on sale of real estate | — | (127 | ) | — | (127 | ) | |||||
| Loss on extinguishment of debt | — | — | 201 | — | |||||||
| Income tax impact of items noted above | — | 43 | (50 | ) | 23 | ||||||
| Adjusted (non-GAAP) | $ | 382 | $ | (39 | ) | $ | 547 | $ | (534 | ) | |
| Diluted earnings (loss) per share | |||||||||||
| GAAP**^(1)^** | $ | 2.48 | $ | 0.30 | $ | 2.55 | **** | $ | (3.21 | ) | |
| Impairments, store closing, and other | **** | — | (0.01 | ) | **** | — | **** | 0.41 | |||
| (Gain) on sale of real estate | **** | — | (0.82 | ) | **** | — | **** | (0.82 | ) | ||
| Loss on extinguishment of debt | **** | — | **** | — | **** | **** | 1.29 | **** | **** | — | **** |
| Income tax impact of items noted above | **** | — | 0.28 | **** | (0.32 | ) | 0.15 | ||||
| Adjusted (non-GAAP)^(2)^ | $ | 2.48 | $ | (0.25 | ) | $ | 3.52 | **** | $ | (3.47 | ) |
| (1) | Weighted average diluted shares outstanding for purpose of calculating diluted earnings per share for the three<br>months ended August 1, 2020 was 155 million, which includes the dilutive effect of share-based awards as determined under the treasury stock method. | ||||||||||
| --- | --- | ||||||||||
| (2) | Weighted average diluted shares outstanding for purposes of calculating diluted adjusted (loss) earnings per<br>share for the three months ended August 1, 2020 was 154 million as the effect of including dilutive shares would be antidilutive. | ||||||||||
| --- | --- |
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | July 31,<br>2021 | August 1,<br>2020 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 2,569 | $ | 2,428 |
| Merchandise inventories | **** | 2,733 | 2,698 | |
| Other | **** | 356 | 562 | |
| Total current assets | **** | 5,658 | 5,688 | |
| Property and equipment, net | **** | 7,107 | 6,970 | |
| Operating leases | **** | 2,301 | 2,418 | |
| Other assets | **** | 440 | 159 | |
| Total assets | $ | 15,506 | $ | 15,235 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,495 | $ | 1,064 |
| Accrued liabilities | **** | 1,554 | 1,216 | |
| Current portion of: | ||||
| Finance leases and financing obligations | **** | 117 | 126 | |
| Operating leases | **** | 143 | 160 | |
| Total current liabilities | **** | 3,309 | 2,566 | |
| Long-term debt | **** | 1,909 | 3,450 | |
| Finance leases and financing obligations | **** | 1,906 | 1,356 | |
| Operating leases | **** | 2,532 | 2,637 | |
| Deferred income taxes | **** | 245 | 122 | |
| Other long-term liabilities | **** | 386 | 267 | |
| Shareholders’ equity | **** | 5,219 | 4,837 | |
| Total liabilities and shareholders’ equity | $ | 15,506 | $ | 15,235 |
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | July 31,<br>2021 | August 1,<br>2020 | ||||
| Operating activities | ||||||
| Net income (loss) | $ | 396 | **** | $ | (494 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
| Depreciation and amortization | **** | 421 | **** | 446 | ||
| Share-based compensation | **** | 25 | **** | 14 | ||
| Deferred income taxes | **** | (57 | ) | (132 | ) | |
| Impairments, store closing, and other costs | **** | — | **** | 48 | ||
| (Gain) on sale of real estate | **** | — | **** | (127 | ) | |
| Loss on extinguishment of debt | **** | 201 | **** | — | ||
| Non-cash inventory costs | **** | — | **** | 187 | ||
| Non-cash lease expense | **** | 74 | **** | 74 | ||
| Other non-cash expenses | **** | 9 | **** | 10 | ||
| Changes in operating assets and liabilities: | ||||||
| Merchandise inventories | **** | (138 | ) | 656 | ||
| Other current and long-term assets | **** | 590 | **** | (170 | ) | |
| Accounts payable | **** | 19 | **** | (142 | ) | |
| Accrued and other long-term liabilities | **** | 228 | **** | 16 | ||
| Operating lease liabilities | **** | (76 | ) | (82 | ) | |
| Net cash provided by operating activities | **** | 1,692 | **** | 304 | ||
| Investing activities | ||||||
| Acquisition of property and equipment | **** | (191 | ) | (196 | ) | |
| Proceeds from sale of real estate | **** | 4 | **** | 193 | ||
| Net cash used in investing activities | **** | (187 | ) | (3 | ) | |
| Financing activities | ||||||
| Proceeds from issuance of debt | **** | 500 | **** | 2,097 | ||
| Deferred financing costs | **** | (5 | ) | (19 | ) | |
| Treasury stock purchases | **** | (301 | ) | (8 | ) | |
| Shares withheld for taxes on vested restricted shares | **** | (25 | ) | (20 | ) | |
| Dividends paid | **** | (77 | ) | (108 | ) | |
| Reduction of long-term borrowings | **** | (1,044 | ) | (497 | ) | |
| Premium paid on redemption of debt | **** | (192 | ) | — | ||
| Finance lease and financing obligation payments | **** | (65 | ) | (44 | ) | |
| Proceeds from financing obligations | **** | 4 | **** | 3 | ||
| Proceeds from stock option exercises | **** | 1 | **** | — | ||
| Other | **** | (3 | ) | — | ||
| Net cash provided by (used in) financing activities | **** | (1,207 | ) | 1,404 | ||
| Net increase in cash and cash equivalents | **** | 298 | **** | 1,705 | ||
| Cash and cash equivalents at beginning of period | **** | 2,271 | **** | 723 | ||
| Cash and cash equivalents at end of period | $ | 2,569 | **** | $ | 2,428 |
EX-99.2
Exhibit 99.2 Q2 2021 Results Presentation August 19, 2021Exhibit 99.2 Q2 2021 Results Presentation August 19, 2021
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, Adjusted Net Income, and Free Cash Flow. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are included in the Appendix of this presentation. 2Cautionary 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, Adjusted Net Income, and Free Cash Flow. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are included in the Appendix of this presentation. 2
Q2 2021 Results 10 Driving Top Line Growth Presentation Q2 2021 Results 4 Updated 2021 Outlook 9 Our Strategy 11 3Q2 2021 Results 10 Driving Top Line Growth Presentation Q2 2021 Results 4 Updated 2021 Outlook 9 Our Strategy 11 3
Q2 2021 Results 4Q2 2021 Results 4
Q2 2021 Results Key Takeaways • Delivered record Q2 earnings as both sales and margins materially exceeded expectations • Growth in the quarter was driven by higher store sales as customer traffic further improved • Achieved highest Q2 operating margin in a decade through an intense focus on inventory management, pricing & promotion optimization and disciplined expense management • Strengthened financial position during the quarter, ending with $2.6 billion in cash • Repurchased $255 million of shares in the quarter, underscoring our confidence in the business and commitment to creating shareholder value Q2 2021 Results • Net sales increased 31% versus Q2 2020 • Gross margin increased 942 bps compared to last year driven primarily through managing inventories tightly and further scaling our pricing and promotion optimization strategies • SG&A expense increased 18.2% in Q2 and leveraged 291 bps as a percentage of revenue compared to last year driven by improved store labor productivity and lower technology spend • Operating margin of 12.8% in Q2 2021, the highest Q2 operating margin in 10 years 1 • Diluted earnings per share of $2.48 compared to an adjusted loss of ($0.25) per share in Q2 2020 • Inventory increased 1% versus prior year and inventory turn reach at 10-year high • Strong operating cash flow of $1.4 billion in Q2 2021 5 (1) - Adjusted diluted EPS is a non-GAAP financial measure. Please refer to the reconciliation included in the Appendix for more information. 5Q2 2021 Results Key Takeaways • Delivered record Q2 earnings as both sales and margins materially exceeded expectations • Growth in the quarter was driven by higher store sales as customer traffic further improved • Achieved highest Q2 operating margin in a decade through an intense focus on inventory management, pricing & promotion optimization and disciplined expense management • Strengthened financial position during the quarter, ending with $2.6 billion in cash • Repurchased $255 million of shares in the quarter, underscoring our confidence in the business and commitment to creating shareholder value Q2 2021 Results • Net sales increased 31% versus Q2 2020 • Gross margin increased 942 bps compared to last year driven primarily through managing inventories tightly and further scaling our pricing and promotion optimization strategies • SG&A expense increased 18.2% in Q2 and leveraged 291 bps as a percentage of revenue compared to last year driven by improved store labor productivity and lower technology spend • Operating margin of 12.8% in Q2 2021, the highest Q2 operating margin in 10 years 1 • Diluted earnings per share of $2.48 compared to an adjusted loss of ($0.25) per share in Q2 2020 • Inventory increased 1% versus prior year and inventory turn reach at 10-year high • Strong operating cash flow of $1.4 billion in Q2 2021 5 (1) - Adjusted diluted EPS is a non-GAAP financial measure. Please refer to the reconciliation included in the Appendix for more information. 5
Q2 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) July 31, 2021 August 1, 2020 Net Sales $ 4,223 $ 3,213 Total Revenue 4,447 3,407 Gross Margin Rate 42.5% 33.1% SG&A 1,241 1,050 Depreciation 210 219 Impairments, Store Closings, and Other Costs — (2) (Gain) on Sale of Real Estate — (127) Operating Income 570 118 Interest Expense 62 78 Provision (benefit) for Income Taxes 126 (7) Net Income 382 47 Diluted EPS $2.48 $0.30 (1) 382 (39) Adjusted Net Income (Non-GAAP) (1) $2.48 ($0.25) Adjusted Diluted EPS (Non-GAAP) Key Balance Sheet Items July 31, 2021 August 1, 2020 (Dollars in Millions) Cash and Cash Equivalents $ 2,569 $ 2,428 Merchandise Inventories 2,733 2,698 Accounts Payable 1,495 1,064 Long-term Debt 1,909 3,450 Key Cash Flow items July 31, 2021 (Dollars in Millions) Three Months Ended Six Months Ended Operating Cash Flow $ 1,414 $ 1,692 Capital Expenditures (132) (191) Net, Finance lease and Financing obligations (28) (61) (1) $ 1,254 $ 1,440 Free Cash Flow 6 6 (1) - Free Cash Flow, Adjusted Net Income, and Adjusted EPS are non-GAAP financial measures. Please refer to the reconciliations included in the Appendix for more information. 6
Q2 2021 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Increased 942 bps versus Q2 2020 and 373 bps versus Q2 2019 SG&A leveraged 291 bps versus Q2 2020 and 74 bps versus Q2 2019 42.5% $1,269M $1,241M 38.8% 33.1% $1,050M % Total Revenue 28.6% 30.8% 27.9% Q2 2019 Q2 2020 Q2 2021 Q2 2019 Q2 2020 Q2 2021 Q2 2021 Gross Margin Takeaways Q2 2021 SG&A Takeaways Tightly managed inventories and achieved 10 year high in Marketing-to-Sales ratio below 4% in Q2 2021 inventory turn Lowered technology spend by more than 10% versus Q2 2020 Further scaled pricing and promotion optimization strategies Improved store labor productivity Cost of Shipping tailwind from lower digital penetration of 26% versus 41% in Q2 2020 Favorable industry backdrop provided for a greater percentage of full price selling 7 7 7Q2 2021 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Increased 942 bps versus Q2 2020 and 373 bps versus Q2 2019 SG&A leveraged 291 bps versus Q2 2020 and 74 bps versus Q2 2019 42.5% $1,269M $1,241M 38.8% 33.1% $1,050M % Total Revenue 28.6% 30.8% 27.9% Q2 2019 Q2 2020 Q2 2021 Q2 2019 Q2 2020 Q2 2021 Q2 2021 Gross Margin Takeaways Q2 2021 SG&A Takeaways Tightly managed inventories and achieved 10 year high in Marketing-to-Sales ratio below 4% in Q2 2021 inventory turn Lowered technology spend by more than 10% versus Q2 2020 Further scaled pricing and promotion optimization strategies Improved store labor productivity Cost of Shipping tailwind from lower digital penetration of 26% versus 41% in Q2 2020 Favorable industry backdrop provided for a greater percentage of full price selling 7 7 7
Enhanced Liquidity Position Key Balance Sheet & Cash Flow Items: Q2 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 $1,692M • Accelerated share repurchases, underscoring 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 ($301M) Investment Grade rating Other* ($281M) • Well-positioned to capitalize on evolving customer behaviors and the retail industry disruption Capex ($191M) Dividend ($77M) July 31, 2021 Ending Cash $2,569M * Other includes premium paid on redemption of debt, finance lease and financing obligation payments, and other. 8
Updated 2021 Outlook 9
Updated 2021 Outlook Metric Full Year Guidance Low twenties percent increase Net Sales versus 2020 From a mid-to-high teens percent increase 7.4% to 7.6% Operating Margin From 5.7% to 6.1% $5.80 to $6.10 * Adjusted EPS From $3.80 to $4.20 Capital Allocation Strategy • Capex: $600 million to $650 million • Dividend: $0.25 quarterly dividend payable on September 22, 2021 • Share Repurchase Program: $500 million to $700 million, up from $200 million to $300 million * Excludes any non-recurring charges. 10Updated 2021 Outlook Metric Full Year Guidance Low twenties percent increase Net Sales versus 2020 From a mid-to-high teens percent increase 7.4% to 7.6% Operating Margin From 5.7% to 6.1% $5.80 to $6.10 * Adjusted EPS From $3.80 to $4.20 Capital Allocation Strategy • Capex: $600 million to $650 million • Dividend: $0.25 quarterly dividend payable on September 22, 2021 • Share Repurchase Program: $500 million to $700 million, up from $200 million to $300 million * Excludes any non-recurring charges. 10
Our Strategy 11Our Strategy 11
Kohl’s has built a powerful foundation Customers Digital Digital sales 40% penetration in 2020 Active Customers 65M Website visits 1.6B in 2020 Loyalty Members 30M Kohl’s Charge Stores 29M Card holders $5.9B 90% 95% $4.5B $4B of stores of Kohl’s stores $3.6B generated $1M+ in are off-mall $3B $2.7B 4-wall cash flow Accessible & Aspirational Brand Portfolio 1,162 80% 2015 2016 2017 2018 2019 2020 stores in of Americans live Digital Sales Growth 49 states at within 15 miles of a year end 2020 Kohl’s store 43% 10% of digital sales higher digital sales fulfilled by stores in markets In 2020 with stores 600M store visits 12 All figures are 2019 except as noted 17% CAGRKohl’s has built a powerful foundation Customers Digital Digital sales 40% penetration in 2020 Active Customers 65M Website visits 1.6B in 2020 Loyalty Members 30M Kohl’s Charge Stores 29M Card holders $5.9B 90% 95% $4.5B $4B of stores of Kohl’s stores $3.6B generated $1M+ in are off-mall $3B $2.7B 4-wall cash flow Accessible & Aspirational Brand Portfolio 1,162 80% 2015 2016 2017 2018 2019 2020 stores in of Americans live Digital Sales Growth 49 states at within 15 miles of a year end 2020 Kohl’s store 43% 10% of digital sales higher digital sales fulfilled by stores in markets In 2020 with stores 600M store visits 12 All figures are 2019 except as noted 17% CAGR
Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organizational Margin Management Core Drive Top Line Growth Destination for Differentiated Agile, Active & Casual Leading with Omni-channel Operating Margin Maintain Strong Accountable & Lifestyle Loyalty & Value Experience Goal of 7% to 8% Balance Sheet Inclusive Culture Expand Active and Outdoor Best-in-class loyalty Healthy store base in End-to-end supply chain Sustain Investment Grade Innovative and adaptive • • • • • • evolving landscape transformation rating learning approach Reignite growth in Women’s Drive productivity • • through deeper Modernize the store SG&A efficiency through Solid cash flow Focused on diversity • • • • Build a sizable Beauty • engagement experience store labor, marketing, generation and inclusion business and technology Deliver personalized Continue digital growth Committed to returning ESG stewardship • • • • Drive category productivity • experiences Operational excellence capital to shareholders • and inventory turn Further enhance omni- • channel capabilities Capture market share from • retail industry disruption Creating Long-term Shareholder Value Expand operating margin Return to growth Solid cash flow generation Return capital to shareholders Maintain strong balance sheet 13Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organizational Margin Management Core Drive Top Line Growth Destination for Differentiated Agile, Active & Casual Leading with Omni-channel Operating Margin Maintain Strong Accountable & Lifestyle Loyalty & Value Experience Goal of 7% to 8% Balance Sheet Inclusive Culture Expand Active and Outdoor Best-in-class loyalty Healthy store base in End-to-end supply chain Sustain Investment Grade Innovative and adaptive • • • • • • evolving landscape transformation rating learning approach Reignite growth in Women’s Drive productivity • • through deeper Modernize the store SG&A efficiency through Solid cash flow Focused on diversity • • • • Build a sizable Beauty • engagement experience store labor, marketing, generation and inclusion business and technology Deliver personalized Continue digital growth Committed to returning ESG stewardship • • • • Drive category productivity • experiences Operational excellence capital to shareholders • and inventory turn Further enhance omni- • channel capabilities Capture market share from • retail industry disruption Creating Long-term Shareholder Value Expand operating margin Return to growth Solid cash flow generation Return capital to shareholders Maintain strong balance sheet 13
Driving top line growth Grow Active to Beauty Growth Reignite Extend Casual 30% of Sales with Sephora Women’s Growth Lifestyle to Home • Fuel growth with key national • Highly complementary strategic • New organization structure and • Expand soft home category brands, Nike, Under Armour and partnership to establish Kohl’s as leadership to drive improved (e.g. Koolaburra by Ugg, Sonoma) Adidas a leading beauty destination performance • Expand underdeveloped • Expand Active space by at least • Comprehensive digital launch • Significant portfolio reinvention categories (e.g. decor, kid’s 20% in 2021 August 2021 with exit of 10 downtrending brands bedroom, storage) • Drive athleisure through launch of • Launch in 200 stores Fall 2021, • Refresh and differentiate a more • Lean into healthy home FLX, our new private brand, Calvin 400 stores in 2022, and reaching focused portfolio of private brands (e.g. sleep and cookware) Klein basics and loungewear, and at least 850 stores by 2023 (e.g. Sonoma, So, LC Lauren expand assortment of Champion Conrad) • Assortment will include ~125 • Grow outdoor through expansion of emerging and established brands • Distort denim opportunity Lands’ End and launch of Eddie emulating freestanding Sephora (e.g. Levi’s, key private brands) Bauer store • Improving merchandising and • Expected to drive significant traffic clarity through significant choice and acquisition of new younger count reduction and building depth customer 14
Driving top line growth Investing in Omni-channel Loyalty Members are Transforming the Role Enhance Digital Capabilities More Productive of the Store to Drive Growth • New Kohl’s Rewards loyalty program, added • Modernizing the store experience through refresh • Continue to invest in the evolution of the digital new features, enhanced personalization and program and category reflow to highlight outsized experience (e.g. Kohls.com, App) simplified rewards in Kohl’s Cash growth businesses • Expanding digital brand portfolio (e.g. Fanatics, • Simplified and edited shopping experience through • Kohl’s Cash: Iconic and differentiated loyalty Sephora, Lands’ End, Eddie Bauer) fixture de-densification (standard to small strategy) device that provides a fly-wheel effect on customer return visits • Opened our sixth e-commerce fulfillment center • Inspired solutions and product storytelling through in 2021 continued investments in merchandising (e.g. • Kohl’s Card: Provides more opportunities for expanding the learnings from the Outfit Bar concept) customers to save • Evolve existing omni experiences: BOPUS/BOSS, Store Drive Up, Amazon Returns • Continue to pursue innovation and discovery (e.g. Curated by Kohl’s, emerging brands) 30 million loyalty members spend 2x more than non-loyalty members and Omni-customer is 4x more productive than highest tier Kohl’s Card members store-only shopper and 6x more productive (“Most Valuable Customer”) spend 10x more than non-loyalty members than digital-only customer 15Driving top line growth Investing in Omni-channel Loyalty Members are Transforming the Role Enhance Digital Capabilities More Productive of the Store to Drive Growth • New Kohl’s Rewards loyalty program, added • Modernizing the store experience through refresh • Continue to invest in the evolution of the digital new features, enhanced personalization and program and category reflow to highlight outsized experience (e.g. Kohls.com, App) simplified rewards in Kohl’s Cash growth businesses • Expanding digital brand portfolio (e.g. Fanatics, • Simplified and edited shopping experience through • Kohl’s Cash: Iconic and differentiated loyalty Sephora, Lands’ End, Eddie Bauer) fixture de-densification (standard to small strategy) device that provides a fly-wheel effect on customer return visits • Opened our sixth e-commerce fulfillment center • Inspired solutions and product storytelling through in 2021 continued investments in merchandising (e.g. • Kohl’s Card: Provides more opportunities for expanding the learnings from the Outfit Bar concept) customers to save • Evolve existing omni experiences: BOPUS/BOSS, Store Drive Up, Amazon Returns • Continue to pursue innovation and discovery (e.g. Curated by Kohl’s, emerging brands) 30 million loyalty members spend 2x more than non-loyalty members and Omni-customer is 4x more productive than highest tier Kohl’s Card members store-only shopper and 6x more productive (“Most Valuable Customer”) spend 10x more than non-loyalty members than digital-only customer 15
Strong execution against our new strategy positions us to achieve our 2023 strategic goals well ahead of our plan SG&A Operating Gross Margin Expense Rate Margin ~36% Goal ~27% to ~28% Goal 2021 Guidance of +20 to +40 basis points 7.4% to 7.6% is at +70 to +150 basis points increase mid-point of 2023 goal improvement 7.0% to 8.0% 6.1% Inventory Digital Stores management penetration / Marketing cost of shipping Sourcing Technology Pricing / Promo Corporate optimization Wage inflation Supply chain transformation FY 2019 Gross Margin SG&A FY 2023 Adj. Operating Margin * 16 * Adjusted Operating Margin is a non-GAAP financial measure. For reference, the reconciliation can be found in the Appendix.Strong execution against our new strategy positions us to achieve our 2023 strategic goals well ahead of our plan SG&A Operating Gross Margin Expense Rate Margin ~36% Goal ~27% to ~28% Goal 2021 Guidance of +20 to +40 basis points 7.4% to 7.6% is at +70 to +150 basis points increase mid-point of 2023 goal improvement 7.0% to 8.0% 6.1% Inventory Digital Stores management penetration / Marketing cost of shipping Sourcing Technology Pricing / Promo Corporate optimization Wage inflation Supply chain transformation FY 2019 Gross Margin SG&A FY 2023 Adj. Operating Margin * 16 * Adjusted Operating Margin is a non-GAAP financial measure. For reference, the reconciliation can be found in the Appendix.
We have a history of strong cash flow generation along with a focus on maintaining a balanced capital allocation strategy Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Share Invest in Dividend complementary repurchases the business M&A Q2 2021 Takeaways History of Capital Allocation • Delivered $1.25B of free cash flow • $3.0B of cumulative free cash flow generated from 2018 to 2020 • Repurchased $255M of shares • $1.8B invested in our business from 2018 to 2020 to help drive our omnichannel strategies • Invested $132M in the business • Over $900M returned to shareholders over the past 3 years through our dividend program • Paid $38M in dividends to our shareholders • Nearly $900M of shares repurchased from 2018 to 2020 • Further improved leverage profile • History of employing liability management strategies to enhance our leverage profile and remain committed to Investment Grade Rating 17 * Free cash flow is a non-GAAP financial measure. Please refer to the reconciliations in the Appendix for more information.We have a history of strong cash flow generation along with a focus on maintaining a balanced capital allocation strategy Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Share Invest in Dividend complementary repurchases the business M&A Q2 2021 Takeaways History of Capital Allocation • Delivered $1.25B of free cash flow • $3.0B of cumulative free cash flow generated from 2018 to 2020 • Repurchased $255M of shares • $1.8B invested in our business from 2018 to 2020 to help drive our omnichannel strategies • Invested $132M in the business • Over $900M returned to shareholders over the past 3 years through our dividend program • Paid $38M in dividends to our shareholders • Nearly $900M of shares repurchased from 2018 to 2020 • Further improved leverage profile • History of employing liability management strategies to enhance our leverage profile and remain committed to Investment Grade Rating 17 * Free cash flow is a non-GAAP financial measure. Please refer to the reconciliations in the Appendix for more information.
Kohl's Continued Commitment to ESG Kohl's has a long-standing focus on Environmental, Social and Governance stewardship Excellence Award Recipient 2020 Environmental Governance Social With a large retail footprint, we are in a unique position Understanding and embracing differences for Kohl’s We hold ourselves to a high level of to make a difference through positive actions. associates, customers and community is not just the right ethical standards and maintain a thing to do; it is critical in creating an inclusive workplace Code of Ethics guide, Global Human and brand experience, as well as in driving growth for the Rights Policy, Business Partner Code • Sustainability measures are tied to CEO performance and organization. of Conduct, and Corporate management team incentives. Governance Guidelines to ensure that • Kohl's has published 2025 goals to reduce energy costs, we run our business with integrity. • In 2020, we shared our commitment to a renewed Diversity & decrease emissions, increase solar and wind energy, and reduce Inclusion (D&I) strategy focused on Our People, Our Customers and waste and increase recycling. Our Community and our mission to empower more families through • We have been recognized as one of the equity, D&I. World’s Most Ethical Companies by the • Climate change: In our efforts to reduce greenhouse emissions, Ethisphere Institute, a global leader in we have reduced energy consumption by 39% since 2008 - • We've appointed a Chief Diversity & Inclusion Officer, reporting to defining and advancing the standards of exceeding our 2025 goal, expanded to 164 wind and solar the CEO. ethical business practices. locations, and built 101 EV charging locations. • People: We’ve expanded our associate Business Resource Groups • We have published standards for Supply • Waste and Recycling: In our efforts to reduce waste, we have at Kohl's, provided unconscious bias training across the Chain Management, Facility Sustainability, diverted 85% of waste from landfills - meeting our 2025 goal and organization, created a cross-functional D&I Task Force and Product Safety, Workforce Practices, reduced the amount of packaging we use for Kohl's-owned published our D&I Pledge for Progress. Cybersecurity and Crisis Management that branded packaging. you can view in our ESG Report. • Customers: We've created a D&I product strategy, launched a • Sustainable Sourcing: To focus on efficient use of natural Diversity Design Council, created new product and categories, and • We have a strong, independent and diverse resources, we have 80% of production facilities completed the have invested in targeted D&I marketing. Board of Directors that has an ongoing Higg Index Environmental Module, on our way to our 2025 goal commitment to active Board refreshment, and we are using the Higg Index to drive substantial water • Community: We've committed to doubling our diverse supplier demonstrated by the addition of eight new reduction. spend by 2025 and are well on our way. We have also committed to directors in the past 5 years. significantly increasing our philanthropic support. • See more detail in our annual ESG Report. 18Kohl's Continued Commitment to ESG Kohl's has a long-standing focus on Environmental, Social and Governance stewardship Excellence Award Recipient 2020 Environmental Governance Social With a large retail footprint, we are in a unique position Understanding and embracing differences for Kohl’s We hold ourselves to a high level of to make a difference through positive actions. associates, customers and community is not just the right ethical standards and maintain a thing to do; it is critical in creating an inclusive workplace Code of Ethics guide, Global Human and brand experience, as well as in driving growth for the Rights Policy, Business Partner Code • Sustainability measures are tied to CEO performance and organization. of Conduct, and Corporate management team incentives. Governance Guidelines to ensure that • Kohl's has published 2025 goals to reduce energy costs, we run our business with integrity. • In 2020, we shared our commitment to a renewed Diversity & decrease emissions, increase solar and wind energy, and reduce Inclusion (D&I) strategy focused on Our People, Our Customers and waste and increase recycling. Our Community and our mission to empower more families through • We have been recognized as one of the equity, D&I. World’s Most Ethical Companies by the • Climate change: In our efforts to reduce greenhouse emissions, Ethisphere Institute, a global leader in we have reduced energy consumption by 39% since 2008 - • We've appointed a Chief Diversity & Inclusion Officer, reporting to defining and advancing the standards of exceeding our 2025 goal, expanded to 164 wind and solar the CEO. ethical business practices. locations, and built 101 EV charging locations. • People: We’ve expanded our associate Business Resource Groups • We have published standards for Supply • Waste and Recycling: In our efforts to reduce waste, we have at Kohl's, provided unconscious bias training across the Chain Management, Facility Sustainability, diverted 85% of waste from landfills - meeting our 2025 goal and organization, created a cross-functional D&I Task Force and Product Safety, Workforce Practices, reduced the amount of packaging we use for Kohl's-owned published our D&I Pledge for Progress. Cybersecurity and Crisis Management that branded packaging. you can view in our ESG Report. • Customers: We've created a D&I product strategy, launched a • Sustainable Sourcing: To focus on efficient use of natural Diversity Design Council, created new product and categories, and • We have a strong, independent and diverse resources, we have 80% of production facilities completed the have invested in targeted D&I marketing. Board of Directors that has an ongoing Higg Index Environmental Module, on our way to our 2025 goal commitment to active Board refreshment, and we are using the Higg Index to drive substantial water • Community: We've committed to doubling our diverse supplier demonstrated by the addition of eight new reduction. spend by 2025 and are well on our way. We have also committed to directors in the past 5 years. significantly increasing our philanthropic support. • See more detail in our annual ESG Report. 18
Appendix 19Appendix 19
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) July 31, 2021 August 1, 2020 Net Income (Loss) GAAP $ 382 $ 47 Impairments, store closing, and other — (2) (Gain) on Sale of Real Estate — (127) Income tax impact of items noted above — 43 Adjusted (non-GAAP) $ 382 $ (39) Diluted Earnings (Loss) per Share GAAP $ 2.48 $ 0.30 Impairments, store closing, and other — (0.01) — (0.82) (Gain) on Sale of Real Estate Income tax impact of items noted above 0.28 — Adjusted (non-GAAP) $ 2.48 $ (0.25) 20
Reconciliations Adjusted Operating Income Free Cash Flow ($ in millions) ($ in millions) July 31, 2021 2019 Three Months Ended Six Months Ended Net cash provided by operating activities $ 1,414 $ 1,692 Operating Income $ 1,099 Impairments, store 113 Acquisition of property and equipment (132) (191) closing, and other Adjusted Operating 1,212 Finance lease and financing obligation payments (32) (65) Income Total Revenue $ 19,974 Proceeds from financing obligations 4 4 Adjusted Operating Free Cash Flow $ 1,254 $ 1,440 Income as a % of 6.1% Total Revenue 21Reconciliations Adjusted Operating Income Free Cash Flow ($ in millions) ($ in millions) July 31, 2021 2019 Three Months Ended Six Months Ended Net cash provided by operating activities $ 1,414 $ 1,692 Operating Income $ 1,099 Impairments, store 113 Acquisition of property and equipment (132) (191) closing, and other Adjusted Operating 1,212 Finance lease and financing obligation payments (32) (65) Income Total Revenue $ 19,974 Proceeds from financing obligations 4 4 Adjusted Operating Free Cash Flow $ 1,254 $ 1,440 Income as a % of 6.1% Total Revenue 21
