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Kohl's Reports First Quarter Fiscal 2023 Financial Results

Kohl’s Corporation (NYSE:KSS) today reported results for the first quarter ended April 29, 2023.

  • Net sales decreased 3.3% and comparable sales decreased 4.3%
  • Gross margin increased 67 basis points
  • Diluted earnings per share of $0.13
  • Inventory declined 6%
  • Affirms full year 2023 financial outlook
  • Remains committed to strengthening balance sheet and to maintaining current dividend

Tom Kingsbury, Kohl’s chief executive officer, said “Our first quarter results were in line with our expectations and represented a first step as we work to drive sales and earnings performance over the long-term. We delivered margin expansion, as well as a 6% reduction in inventory. In addition, our stores business achieved productivity gains and Sephora at Kohl’s continued its sales momentum.”

“We are making progress against each of our key 2023 priorities, enhancing our customer experience, simplifying our value strategies, managing inventory and expenses with discipline, and strengthening our balance sheet. I would like to thank the entire Kohl’s team for driving against these priorities with a clear focus and strong determination. While there is still work to be done and the macroeconomic environment remains challenging, we are affirming our 2023 guidance and continue to have conviction in Kohl’s longer term opportunity,” Kingsbury continued.

First Quarter 2023 Results

Comparisons refer to the 13-week period ended April 29, 2023 versus the 13-week period ended April 30, 2022

  • Net sales decreased 3.3% year-over-year, to $3.4 billion, with comparable sales down 4.3%.
  • Gross margin as a percentage of net sales was 39.0%, an increase of 67 basis points.
  • Selling, general & administrative (SG&A) expenses decreased 4.2% year-over-year, to $1.2 billion. As a percentage of total revenue, SG&A expenses were 34.7%, a decrease of 13 basis points year-over-year.
  • Operating income was $98 million compared to $82 million in the prior year. As a percentage of total revenue, operating income was 2.8%, an increase of 55 basis points year-over-year.
  • Net income was $14 million, or $0.13 per share. This compares to net income of $14 million, or $0.11 per share in the prior year.
  • Inventory was $3.5 billion, a decrease of 6% year-over-year.
  • Operating cash flow was a use of ($202) million.

2023 Financial and Capital Allocation Outlook

For the full year 2023, the Company affirms its financial outlook and currently expects the following:

  • Net sales: A decrease of (2%) to (4%), includes the impact of the 53rd week which is worth approximately 1% year-over-year.
  • Operating margin: Approximately 4.0%.
  • Diluted earnings per share: In the range of $2.10 to $2.70, excluding any non-recurring charges.
  • Capital Expenditures: $600 million to $650 million, including expansion of its Sephora partnership and store refresh activity.
  • Dividend: On May 10, 2023, Kohl’s Board of Directors declared a quarterly cash dividend on the Company’s common stock of $0.50 per share. The dividend is payable June 21, 2023 to shareholders of record at the close of business on June 7, 2023.
  • Debt Reduction: The Company retired $164 million of bonds that matured in February 2023, and expects to retire $111 million of bonds maturing in December 2023.

First Quarter 2023 Earnings Conference Call

Kohl’s will host its quarterly earnings conference call at 9:00 am ET on May 24, 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.

Cautionary Statement Regarding Forward-Looking Information

This press release 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.

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 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.

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

Three Months Ended

(Dollars in Millions, Except per Share Data)

April 29, 2023

April 30, 2022

Net sales

$

3,355

 

$

3,471

 

Other revenue

 

216

 

 

244

 

Total revenue

 

3,571

 

 

3,715

 

Cost of merchandise sold

 

2,047

 

 

2,140

 

Gross margin rate

 

39.0

%

 

38.3

%

Operating expenses:

 

 

 

 

 

 

Selling, general, and administrative

 

1,238

 

 

1,293

 

As a percent of total revenue

 

34.7

%

 

34.8

%

Depreciation and amortization

 

188

 

 

200

 

Operating income

 

98

 

 

82

 

Interest expense, net

 

84

 

 

68

 

Income before income taxes

 

14

 

 

14

 

Provision (benefit) for income taxes

 

 

 

 

Net income

$

14

 

$

14

 

Average number of shares:

 

 

 

 

 

 

Basic

 

110

 

 

127

 

Diluted

 

111

 

 

129

 

Earnings per share:

 

 

 

 

 

 

Basic

$

0.13

 

$

0.11

 

Diluted

$

0.13

 

$

0.11

 

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in Millions)

April 29,

2023

April 30,

2022

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

286

 

$

646

 

Merchandise inventories

 

3,526

 

 

3,736

 

Other

 

347

 

 

381

 

Total current assets

 

4,159

 

 

4,763

 

Property and equipment, net

 

7,803

 

 

7,790

 

Operating leases

 

2,368

 

 

2,224

 

Other assets

 

380

 

 

476

 

Total assets

$

14,710

 

$

15,253

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

1,310

 

$

1,679

 

Accrued liabilities

 

1,164

 

 

1,316

 

Borrowings under revolving credit facility

 

765

 

 

 

Current portion of:

 

 

 

 

 

 

Long-term debt

 

111

 

 

164

 

Finance leases and financing obligations

 

93

 

 

108

 

Operating leases

 

111

 

 

127

 

Total current liabilities

 

3,554

 

 

3,394

 

Long-term debt

 

1,637

 

 

1,746

 

Finance leases and financing obligations

 

2,710

 

 

2,584

 

Operating leases

 

2,634

 

 

2,474

 

Deferred income taxes

 

129

 

 

209

 

Other long-term liabilities

 

326

 

 

390

 

Shareholders' equity

 

3,720

 

 

4,456

 

Total liabilities and shareholders' equity

$

14,710

 

$

15,253

 

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Three Months Ended

(Dollars in Millions)

April 29,

2023

April 30,

2022

Operating activities

 

 

 

 

 

 

Net income

$

14

 

$

14

 

Adjustments to reconcile net income to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

188

 

 

200

 

Share-based compensation

 

9

 

 

18

 

Deferred income taxes

 

1

 

 

2

 

Non-cash lease expense

 

25

 

 

31

 

Other non-cash items

 

(4)

 

 

3

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Merchandise inventories

 

(336)

 

 

(668)

 

Other current and long-term assets

 

49

 

 

(42)

 

Accounts payable

 

(20)

 

 

(4)

 

Accrued and other long-term liabilities

 

(101)

 

 

17

 

Operating lease liabilities

 

(27)

 

 

(31)

 

Net cash used in operating activities

 

(202)

 

 

(460)

 

Investing activities

 

 

 

 

 

 

Acquisition of property and equipment

 

(94)

 

 

(221)

 

Proceeds from sale of real estate

 

1

 

 

4

 

Other

 

(1)

 

 

 

Net cash used in investing activities

 

(94)

 

 

(217)

 

Financing activities

 

 

 

 

 

 

Net borrowings under revolving credit facility

 

680

 

 

 

Treasury stock purchases

 

 

 

(158)

 

Shares withheld for taxes on vested restricted shares

 

(12)

 

 

(18)

 

Dividends paid

 

(55)

 

 

(63)

 

Repayment of long-term borrowings

 

(164)

 

 

 

Finance lease and financing obligation payments

 

(25)

 

 

(29)

 

Proceeds from financing obligations

 

5

 

 

4

 

Net cash provided by (used in) financing activities

 

429

 

 

(264)

 

Net increase (decrease) in cash and cash equivalents

 

133

 

 

(941)

 

Cash and cash equivalents at beginning of period

 

153

 

 

1,587

 

Cash and cash equivalents at end of period

$

286

 

$

646

 

 

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