Kohl's Earnings 2019-11-02
KSS 10Q Quarterly Report
| Balance Sheet | Income Statement | Cash Flow |
|---|---|---|
| Comparables ($MM TTM) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Ticker | M Cap | Assets | Liab | Rev | G Profit | Net Inc | EBITDA | EV | G Margin | EV/EBITDA | ROA |
| BURL | 13,230 | 5,046 | 4,731 | 6,929 | 2,899 | 424 | 752 | 14,194 | 42% | 18.9 | 8% |
| KSS | 8,485 | 14,542 | 9,087 | 19,968 | 7,906 | 736 | 1,909 | 9,760 | 40% | 5.1 | 5% |
| FIVE | 7,224 | 1,659 | 1,007 | 1,698 | 612 | 157 | 246 | 7,045 | 36% | 28.7 | 9% |
| OLLI | 5,830 | 1,544 | 527 | 1,336 | 529 | 139 | 170 | 5,752 | 40% | 33.9 | 9% |
| M | 4,898 | 20,741 | 14,426 | 24,909 | 9,597 | 1,099 | 2,388 | 8,893 | 39% | 3.7 | 5% |
| BJ | 3,764 | 5,152 | 5,317 | 13,128 | 2,408 | 209 | 395 | 5,488 | 18% | 13.9 | 4% |
| DDS | 1,746 | 3,512 | 1,866 | 6,468 | 2,024 | 131 | 423 | 1,977 | 31% | 4.7 | 4% |
| PSMT | 1,576 | 1,262 | 483 | 3,200 | 0 | 72 | 165 | 1,555 | 0% | 9.4 | 6% |
| HUD | 1,558 | 1,451 | 814 | 0 | 0 | 0 | 0 | 1,558 | 0% | ||
| BIG | 877 | 3,192 | 2,548 | 5,296 | 2,136 | 123 | 275 | 823 | 40% | 3.0 | 4% |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition period from ________ to _________
Commission file number
KOHL’S CORPORATION
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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| Smaller Reporting Company |
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| Emerging Growth Company |
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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 pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: November 29, 2019 Common Stock, Par Value $0.01 per Share,
KOHL’S CORPORATION
INDEX
| PART I | FINANCIAL INFORMATION |
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| Item 1. |
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| 3 | |
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| 5 | |
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| 7 | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 3. | 21 | |
| Item 4. | 21 | |
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| PART II | OTHER INFORMATION |
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| Item 1A. | 22 | |
| Item 2. | 22 | |
| Item 6. | 23 | |
| 24 | ||
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
KOHL’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in Millions) | November 2, 2019 | February 2, 2019 | November 3, 2018 | ||||||
| Assets |
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| Current assets: |
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| Cash and cash equivalents | $ | |
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| Merchandise inventories |
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| Other |
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| Total current assets |
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| Property and equipment, net |
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| Operating leases |
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| - |
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| - |
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| Other assets |
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| Total assets | $ | |
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| $ | |
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| Liabilities and Shareholders’ Equity |
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| Current liabilities: |
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| Accounts payable | $ | |
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| Accrued liabilities |
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| Income taxes payable |
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| Current portion of: |
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| Finance lease and financing obligations |
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| Operating leases |
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| - |
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| - |
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| Total current liabilities |
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| Long-term debt |
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| Finance lease and financing obligations |
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| Operating leases |
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| - |
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| - |
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| Deferred income taxes |
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| Other long-term liabilities |
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| Shareholders’ equity: |
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| Common stock |
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| Paid-in capital |
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| Treasury stock, at cost |
| ( | ) |
| ( | ) |
| ( | ) |
| Accumulated other comprehensive loss |
| - |
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| - |
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| ( | ) |
| Retained earnings |
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| Total shareholders’ equity |
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| Total liabilities and shareholders’ equity | $ | |
| $ | |
| $ | |
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See accompanying Notes to Consolidated Financial Statements
3
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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| Three Months Ended |
| Nine Months Ended |
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| (Dollars in Millions, Except per Share Data) | November 2, 2019 | November 3, 2018 | November 2, 2019 | November 3, 2018 | ||||||||
| Net sales | $ | |
| $ | |
| $ | |
| $ | |
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| Other revenue |
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| Total revenue |
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| Cost of merchandise sold |
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| Operating expenses: |
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| Selling, general and administrative |
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| Depreciation and amortization |
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| Impairments, store closing and other costs |
| - |
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| - |
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| - |
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| Operating income |
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| Interest expense, net |
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| (Gain) loss on extinguishment of debt |
| ( | ) |
| - |
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| ( | ) |
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| Income before income taxes |
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| Provision for income taxes |
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| Net income | $ | |
| $ | |
| $ | |
| $ | |
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| Net income per share: |
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| Basic | $ | |
| $ | |
| $ | |
| $ | |
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| Diluted | $ | |
| $ | |
| $ | |
| $ | |
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See accompanying Notes to Consolidated Financial Statements
4
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
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| Three Months Ended | Nine Months Ended | ||||||||||
| (Dollars in Millions, Except per Share Data) | November 2, 2019 | November 3, 2018 | November 2, 2019 | November 3, 2018 | ||||||||
| Common stock |
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| Balance, beginning of period | $ | |
| $ | |
| $ | |
| $ | |
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| Stock options and awards |
| - |
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| - |
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| - |
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| - |
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| Balance, end of period | $ | |
| $ | |
| $ | |
| $ | |
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| Paid-in capital |
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| Balance, beginning of period | $ | |
| $ | |
| $ | |
| $ | |
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| Stock options and awards |
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| Balance, end of period | $ | |
| $ | |
| $ | |
| $ | |
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| Treasury stock |
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| Balance, beginning of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
| Treasury stock purchases |
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| Stock options and awards |
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| Dividends paid |
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| Balance, end of period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
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| Accumulated other comprehensive loss |
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| Balance, beginning of period | $ | - |
| $ | ( | ) | $ | - |
| $ | ( | ) |
| Other comprehensive income |
| - |
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| - |
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| - |
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| Balance, end of period | $ | - |
| $ | ( | ) | $ | - |
| $ | ( | ) |
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| Retained earnings |
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| Balance, beginning of period | $ | |
| $ | |
| $ | |
| $ | |
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| Change in accounting standard (a) |
| - |
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| - |
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| ( | ) |
| Net earnings |
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| Dividends paid |
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| Balance, end of period | $ | |
| $ | |
| $ | |
| $ | |
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| Total shareholders' equity, end of period | $ | |
| $ | |
| $ | |
| $ | |
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| Common stock |
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| Shares, beginning of period |
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| Stock options and awards |
| - |
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| - |
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| Shares, end of period |
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| Treasury stock |
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| Shares, beginning of period |
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| Treasury stock purchases |
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| Shares, end of period |
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| Total shares outstanding, end of period |
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| Dividends paid per common share | $ | |
| $ | |
| $ | |
| $ | |
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| (a) | |
See accompanying Notes to Consolidated Financial Statements
5
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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| Nine Months Ended | |||||
| (Dollars in Millions) | November 2, 2019 | November 3, 2018 | ||||
| Operating activities |
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| Net income | $ | |
| $ | |
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| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
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| Share-based compensation |
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| Deferred income taxes |
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| ( | ) |
| Impairments, store closing and other costs |
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| - |
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| (Gain) loss on extinguishment of debt |
| ( | ) |
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| Non-cash lease expense |
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| - |
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| Other non-cash (income) expenses |
| ( | ) |
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| Changes in operating assets and liabilities: |
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| Merchandise inventories |
| ( | ) |
| ( | ) |
| Other current and long-term assets |
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| Accounts payable |
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| Accrued and other long-term liabilities |
| ( | ) |
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| Income taxes |
| ( | ) |
| ( | ) |
| Operating lease liabilities |
| ( | ) |
| - |
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| Net cash provided by operating activities |
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| Investing activities |
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| Acquisition of property and equipment |
| ( | ) |
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| Other |
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| Net cash used in investing activities |
| ( | ) |
| ( | ) |
| Financing activities |
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| Treasury stock purchases |
| ( | ) |
| ( | ) |
| Shares withheld for taxes on vested restricted shares |
| ( | ) |
| ( | ) |
| Dividends paid |
| ( | ) |
| ( | ) |
| Reduction of long-term borrowings |
| ( | ) |
| ( | ) |
| Premium paid on redemption of debt |
| - |
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| ( | ) |
| Finance lease and financing obligation payments |
| ( | ) |
| ( | ) |
| Proceeds from financing obligations |
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| - |
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| Proceeds from stock option exercises |
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| Net cash used in financing activities |
| ( | ) |
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| Net decrease in cash and cash equivalents |
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| Cash at beginning of period |
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| Cash at end of period | $ | |
| $ | |
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| Supplemental information |
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| Interest paid, net of capitalized interest | $ | |
| $ | |
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| Income taxes paid |
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| Property and equipment acquired through: |
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| Finance lease liabilities |
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| - |
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| Operating lease liabilities |
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| - |
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| Financing obligations |
| - |
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See accompanying Notes to Consolidated Financial Statements
6
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for fiscal year end consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission.
Due to the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.
We operate as a single business unit.
The following table provides a brief description of issued, but not yet effective, accounting standards:
| Standard | Description | Effect on our Financial Statements |
| Cloud Computing (ASU 2018-15)
Issued August 2018
Effective Q1 2020 | Under the new standard, implementation costs related to a cloud computing arrangement will be deferred or expensed as incurred, in accordance with the existing internal-use software guidance for similar costs.
The new standard also prescribes the balance sheet, income statement and cash flow classification of the capitalized implementation costs and related amortization expense. | We are evaluating the impact of the new standard, but believe it is generally consistent with our current accounting for cloud computing arrangements and will not have a material impact on our financials.
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| Current Expected Credit Losses (ASU 2016-13)
Issued June 2016
Effective Q1 2020
| Under the new standard, credit losses for financial assets measured at amortized cost should be determined based on the total current expected credit losses over the life of the financial asset or group of financial assets.
The amendments are effective on February 2, 2020 and must be applied using a modified retrospective approach with a cumulative-effect adjustment through retained earnings as of the beginning of the fiscal year upon adoption as required. | We are evaluating the impact of the new standard, but believe it will not have a material impact on our financial statements. |
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7
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2. Revenue Recognition
The following table summarizes net sales by line of business:
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| Three Months Ended | Nine Months Ended | ||||||||||
| (Dollars in Millions) | November 2, 2019 | November 3, 2018 (1) | November 2, 2019 | November 3, 2018 (1) | ||||||||
| Women's | $ | |
| $ | |
| $ | |
| $ | |
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| Men's |
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| Home |
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| Children's |
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| Footwear |
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| Accessories |
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| Net Sales | $ | |
| $ | |
| $ | |
| $ | |
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| (1) | |
Liabilities for performance obligations resulting from our rewards programs, return reserves and unredeemed gift cards and merchandise return cards totaled $
3. Debt
Long-term debt consists of the following unsecured senior debt:
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Coupon Rate | Outstanding | ||||||||||||
| Maturity by fiscal year (Dollars in Millions) | Effective Rate | November 2, 2019 | February 2, 2019 | November 3, 2018 | |||||||||||
| 2021 |
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| | % | $ | - |
| $ | - |
| $ | |
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| 2023 |
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| 2023 |
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| 2025 |
| | % |
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| 2029 |
| | % |
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| 2033 |
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| 2037 |
| | % |
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| 2045 |
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| Outstanding long-term debt |
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| Unamortized debt discounts and deferred financing costs | |||||||||||||||