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
- Inventory declined 13%
- Updates full year 2023 diluted earnings per share guidance
to $2.30 to $2.70
- Remains committed to strengthening balance sheet and to
maintaining current dividend
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.
Third Quarter 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%.
- Gross margin as a percentage of net sales was 38.9%, an
increase of 158 basis points.
- Selling, general & administrative (SG&A)
expenses increased 1.9% 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.
- Operating income was $157 million compared to $200
million in the prior year. As a percentage of total revenue,
operating income was 3.9%, a decrease of 82 basis points
year-over-year.
- Net income was $59 million, or $0.53 per diluted share.
This compares to net income of $97 million, or $0.82 per diluted
share in the prior year.
- Inventory was $4.2 billion, a decrease of 13%
year-over-year.
- Operating cash flow was $151 million.
Nine Months Fiscal Year 2023
Results
Comparisons refer to the 39-week period ended October 28, 2023
versus the 39-week period ended October 29, 2022
- Net sales decreased 4.5% year-over-year, to $10.9
billion, with comparable sales down 5.0%.
- Gross margin as a percentage of net sales was 39.0%, an
increase of 56 basis points.
- Selling, general & administrative (SG&A)
expenses decreased 0.2% 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.
- Operating income was $418 million compared to $548
million in the prior year. As a percentage of total revenue,
operating income was 3.6%, a decrease of 91 basis points
year-over-year.
- Net income was $131 million, or $1.18 per diluted share.
This compares to net income of $254 million, or $2.02 per diluted
share in the prior year.
- Operating cash flow was $379 million.
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 1%
year-over-year. This compares to the Company’s prior guidance of a
decrease of (2%) to (4%).
- Operating margin: Approximately 4.0%, which is
consistent with the Company’s prior guidance.
- Diluted earnings per share: In the range of $2.30 to
$2.70, excluding any non-recurring charges. This compares to the
Company’s prior guidance range of $2.10 to $2.70.
- Capital Expenditures: Towards the lower end of $600
million to $650 million, including expansion of its Sephora
partnership and store refresh activity.
- Dividend: On November 7, 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 December 20, 2023 to
shareholders of record at the close of business on December 6,
2023.
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.
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. 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 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 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.
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 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231121490316/en/
Investor Relations: Mark Rupe, (262) 703-1266,
mark.rupe@kohls.com Media: Jen Johnson, (262) 703-5241,
jen.johnson@kohls.com
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