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): November 21, 2023
KOHL’S CORP
(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) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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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. |
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On November 21, 2023, Kohl’s Corporation (the “Company”) issued a press release reporting its earnings for the quarter ended October 28, 2023 and provided earnings guidance for fiscal 2023. 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 November 21, 2023 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. |
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As previously announced, on November 7, 2023, the Board of Directors of the Company declared a quarterly cash dividend of $0.50 per share. The dividend will be paid on December 20, 2023, to all shareholders of record at the close of business on December 6, 2023.
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 “2023 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 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 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 November 21, 2023 |
| 99.2 | Presentation Materials for November 21, 2023 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: November 21, 2023 | 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 Third Quarter Fiscal 2023 Financial Results
MENOMONEE FALLS, Wis.—(BUSINESS WIRE)—November 21, 2023— Kohl’s Corporation (NYSE:KSS) today reported results for the third quarter ended October 28, 2023.
| • | Net sales decreased 5.2% and comparable sales decreased 5.5% |
|---|---|
| • | Diluted earnings per share of $0.53 |
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| • | Inventory declined 13% |
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| • | Updates full year 2023 diluted earnings per share guidance to $2.30 to $2.70 |
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| • | Remains committed to strengthening balance sheet and to maintaining current dividend |
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Tom Kingsbury, Kohl’s chief executive officer, said “Kohl’s third quarter earnings reflect strong gross margin and expense management as well as additional progress against our strategic priorities. I am pleased with our store performance driven by strong growth in Sephora and the newness in our home and gifting initiatives. This reinforces our actions are working and resonating with our customers. In addition, we drove a 13% reduction in inventory as we benefited from our new disciplines.”
“Our strategies to reposition Kohl’s for improved sales and earnings performance remain in the early stages. The work we have done in 2023 will continue to build momentum and set us up to be successful in 2024. I continue to be impressed with the entire Kohl’s team for their hard work and agility in executing against our strategic priorities in 2023,” Kingsbury continued.
ThirdQuarter 2023 Results
Comparisons refer to the 13-week period ended October 28, 2023 versus the 13-week period ended October 29, 2022
| • | Net sales decreased 5.2% year-over-year, to $3.8 billion, with comparable sales down 5.5%.<br> |
|---|---|
| • | Gross margin as a percentage of net sales was 38.9%, an increase of 158 basis points.<br> |
| --- | --- |
| • | Selling, general & administrative (SG&A) expenses increased 1.9%<br>year-over-year, to $1.4 billion. As a percentage of total revenue, SG&A expenses were 33.5%, an increase of 235 basis points year-over-year. |
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| • | Operating income was $157 million compared to $200 million in the prior year. As a percentage of<br>total revenue, operating income was 3.9%, a decrease of 82 basis points year-over-year. |
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| • | Net income was $59 million, or $0.53 per diluted share. This compares to net income of<br>$97 million, or $0.82 per diluted share in the prior year. |
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| • | Inventory was $4.2 billion, a decrease of 13% year-over-year. |
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| • | Operating cash flow was $151 million. |
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Nine Months Fiscal Year 2023 Results
Comparisons refer to the 39-week period ended October 28, 2023 versus the39-week period ended October 29, 2022
| • | Net sales decreased 4.5% year-over-year, to $10.9 billion, with comparable sales down 5.0%.<br> |
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| • | Gross margin as a percentage of net sales was 39.0%, an increase of 56 basis points.<br> |
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| • | Selling, general & administrative (SG&A) expenses decreased 0.2%<br>year-over-year, to $3.9 billion. As a percentage of total revenue, SG&A expenses were 33.9%, an increase of 150 basis points year-over-year. |
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| • | Operating income was $418 million compared to $548 million in the prior year. As a percentage of<br>total revenue, operating income was 3.6%, a decrease of 91 basis points year-over-year. |
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| • | Net income was $131 million, or $1.18 per diluted share. This compares to net income of<br>$254 million, or $2.02 per diluted share in the prior year. |
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| • | Operating cash flow was $379 million. |
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2023 Financial and Capital Allocation Outlook
For the full year 2023, the Company updates its financial outlook and currently expects the following:
| • | Net sales: A decrease of (2.8%) to (4%), includes the impact of the 53rd week which is worth approximately<br>1% year-over-year. This compares to the Company’s prior guidance of a decrease of (2%) to (4%). |
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| • | Operating margin: Approximately 4.0%, which is consistent with the Company’s prior guidance.<br> |
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| • | Diluted earnings per share: In the range of $2.30 to $2.70, excluding any<br>non-recurring charges. This compares to the Company’s prior guidance range of $2.10 to $2.70. |
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| • | Capital Expenditures: Towards the lower end of $600 million to $650 million, including expansion<br>of its Sephora partnership and store refresh activity. |
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| • | Dividend: On November 7, 2023, 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 December 20, 2023 to shareholders of record at the close of business on December 6, 2023. |
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Third Quarter 2023 Earnings Conference Call
Kohl’s will host its quarterly earnings conference call at 9:00 am ET on November 21, 2023. 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 “2023 Financial and Capital Allocation Outlook.” Such statements are subject to certain risks and uncertainties, whichcould 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’sAnnual 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 statementsrelate 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 | Nine Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Millions, Except per Share Data) | October 28, 2023 | October 29, 2022 | October 28, 2023 | October 29, 2022 | ||||||||
| Net sales | $ | 3,843 | **** | $ | 4,052 | $ | 10,876 | **** | $ | 11,386 | ||
| Other revenue | **** | 211 | **** | 225 | **** | 644 | **** | 693 | ||||
| Total revenue | **** | 4,054 | **** | 4,277 | **** | 11,520 | **** | 12,079 | ||||
| Cost of merchandise sold | **** | 2,349 | **** | 2,541 | **** | 6,638 | **** | 7,013 | ||||
| Gross margin rate | **** | 38.9 | % | 37.3 | % | **** | 39.0 | % | 38.4 | % | ||
| Operating expenses: | ||||||||||||
| Selling, general, and administrative | **** | 1,360 | **** | 1,334 | **** | 3,902 | **** | 3,910 | ||||
| As a percent of total revenue | **** | 33.5 | % | 31.2 | % | **** | 33.9 | % | 32.4 | % | ||
| Depreciation and amortization | **** | 188 | **** | 202 | **** | 562 | **** | 608 | ||||
| Operating income | **** | 157 | **** | 200 | **** | 418 | **** | 548 | ||||
| Interest expense, net | **** | 89 | **** | 81 | **** | 262 | **** | 226 | ||||
| Income before income taxes | **** | 68 | **** | 119 | **** | 156 | **** | 322 | ||||
| Provision for income taxes | **** | 9 | **** | 22 | **** | 25 | **** | 68 | ||||
| Net income | $ | 59 | **** | $ | 97 | $ | 131 | **** | $ | 254 | ||
| Average number of shares: | ||||||||||||
| Basic | **** | 110 | **** | 118 | **** | 110 | **** | 124 | ||||
| Diluted | **** | 111 | **** | 119 | **** | 111 | **** | 126 | ||||
| Earnings per share: | ||||||||||||
| Basic | $ | 0.54 | **** | $ | 0.82 | $ | 1.19 | **** | $ | 2.05 | ||
| Diluted | $ | 0.53 | **** | $ | 0.82 | $ | 1.18 | **** | $ | 2.02 |
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | October 28, 2023 | October 29, 2022 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 190 | $ | 194 |
| Merchandise inventories | **** | 4,239 | 4,874 | |
| Other | **** | 291 | 366 | |
| Total current assets | **** | 4,720 | 5,434 | |
| Property and equipment, net | **** | 7,861 | 8,117 | |
| Operating leases | **** | 2,492 | 2,318 | |
| Other assets | **** | 394 | 365 | |
| Total assets | $ | 15,467 | $ | 16,234 |
| Liabilities and Shareholders’ Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 1,918 | $ | 2,014 |
| Accrued liabilities | **** | 1,324 | 1,436 | |
| Borrowings under revolving credit facility | **** | 625 | 668 | |
| Current portion of: | ||||
| Long-term debt | **** | 111 | 164 | |
| Finance leases and financing obligations | **** | 84 | 95 | |
| Operating leases | **** | 94 | 109 | |
| Total current liabilities | **** | 4,156 | 4,486 | |
| Long-term debt | **** | 1,638 | 1,747 | |
| Finance leases and financing obligations | **** | 2,714 | 2,791 | |
| Operating leases | **** | 2,780 | 2,595 | |
| Deferred income taxes | **** | 107 | 165 | |
| Other long-term liabilities | **** | 321 | 354 | |
| Shareholders’ equity: | **** | 3,751 | 4,096 | |
| Total liabilities and shareholders’ equity | $ | 15,467 | $ | 16,234 |
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | October 28, 2023 | October 29, 2022 | ||||
| Operating activities | ||||||
| Net income | $ | 131 | **** | $ | 254 | |
| Adjustments to reconcile net income to net cash provided by (used in) operating<br>activities: | ||||||
| Depreciation and amortization | **** | 562 | **** | 608 | ||
| Share-based compensation | **** | 31 | **** | 37 | ||
| Deferred income taxes | **** | (25 | ) | (41 | ) | |
| Non-cash lease expense | **** | 70 | **** | 81 | ||
| Other non-cash items | **** | 13 | **** | 12 | ||
| Changes in operating assets and liabilities: | ||||||
| Merchandise inventories | **** | (1,046 | ) | (1,802 | ) | |
| Other current and long-term assets | **** | 66 | **** | 102 | ||
| Accounts payable | **** | 588 | **** | 331 | ||
| Accrued and other long-term liabilities | **** | 58 | **** | 76 | ||
| Operating lease liabilities | **** | (69 | ) | (83 | ) | |
| Net cash provided by (used in) operating activities | **** | 379 | **** | (425 | ) | |
| Investing activities | ||||||
| Acquisition of property and equipment | **** | (495 | ) | (733 | ) | |
| Proceeds from sale of real estate | **** | 15 | **** | 31 | ||
| Other | **** | (11 | ) | — | ||
| Net cash used in investing activities | **** | (491 | ) | (702 | ) | |
| Financing activities | ||||||
| Net borrowings under revolving credit facility | **** | 540 | **** | 668 | ||
| Treasury stock purchases | **** | — | **** | (658 | ) | |
| Shares withheld for taxes on vested restricted shares | **** | (13 | ) | (21 | ) | |
| Dividends paid | **** | (165 | ) | (184 | ) | |
| Repayment of long-term borrowings | **** | (164 | ) | — | ||
| Finance lease and financing obligation payments | **** | (68 | ) | (81 | ) | |
| Proceeds from financing obligations | **** | 19 | **** | 9 | ||
| Proceeds from stock option exercises | **** | — | **** | 1 | ||
| Net cash provided by (used in) financing activities | **** | 149 | **** | (266 | ) | |
| Net increase (decrease) in cash and cash equivalents | **** | 37 | **** | (1,393 | ) | |
| Cash and cash equivalents at beginning of period | **** | 153 | **** | 1,587 | ||
| Cash and cash equivalents at end of period | $ | 190 | **** | $ | 194 |
EX-99.2
Exhibit 99.2 Kids uniform Men’s Nike image footwear image
11 16
tightly. strong growth and the newness in our home decor and gifting initiatives and set us up to be successful in 2024
New image
Focus on stores driving improved performance ● Re-established stores as a key focal point of our strategy ● New leadership focused on driving increased store productivity ● Investments in improved merchandising and enhanced customer experience ● Favorable customer response to date from our efforts Q3 2023 YTD 2023 Store comparable Store comparable sales ~(1%) vs. last sales slightly positive year vs. last year
900 Sephora shops by year end 2023
(2.8%) (3%) to (4%) vs. 2022, includes a 1% benefit from the 53rd week A few of these 4 Approx. 4.0% images are summer apparel - probably makes sense to update for seasonal $2.30 $2.70 $2.20 to $2.60 Replace with fall apparel image Diluted
Pleased with store performance driven by strong growth in Sephora and the newness in our home decor and gifting initiatives
$0.82 January 28, 2023 Twelve Months Ended
Update images - Holiday theme