Kohl's Corporation Reports Second Quarter Financial Results

MENOMONEE FALLS, Wis.--(BUSINESS WIRE)--August 14, 2014-- Kohl's Corporation
(NYSE:KSS). Kohl's Corporation today reported results for the quarter ended August 2, 2014.

Quarter Year to Date

($ in millions) 2014 2013 Change 2014 2013 Change Sales $4,242 $ 4,289 (1.1)% $ 8,312 $ 8,488 (2.1)% Comparable store sales (1.3)% 0.9% - (2.3)% (0.5)% -

Net income $ 232 $ 231 -% $ 357 $ 378 (6)%

Diluted earnings per share $ 1.13 $ 1.04 9% $ 1.73 $ 1.70 2%

Kevin Mansell, Kohl's chairman, president and chief executive officer, said, "We are pleased with the improvement we saw in sales as the quarter progressed. The improvement was the most dramatic in the month of July where we achieved a positive comp. As they consistently do, our teams did a great job of managing expenses throughout the quarter. We enter the back-to-school season with fresh, new inventory and encouraging momentum."

Dividend

On August 12, 2014, Kohl's Board of Directors declared a quarterly cash dividend on the Company's common stock of $0.39 per share. The dividend is payable September 24, 2014 to shareholders of record at the close of business on September 10, 2014.

Store Update

Kohl's ended the quarter with 1,160 stores in 49 states, compared with 1,155 stores at the same time last year. The Company opened four new store locations, relocated one existing store and permanently closed two stores during the first quarter of 2014. It expects to open four new stores this Fall, including one store which was temporarily closed in the first quarter for a complete re-build.

Second Quarter 2014 Earnings Conference Call

Kohl's will host its quarterly earnings conference call at 8:30 am ET on August 14, 2014. The phone number for the conference call is (800) 230-1096. Replays of the call will be available for 30 days by dialing (800) 475-6701. The conference ID for both the live call and the replay is 333513. The conference call and replays are also accessible via the Company's web site at http:// www.kohlscorporation.com/InvestorRelations/event-calendar.htm.

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. Kohl's 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 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.

About Kohl's

Kohl's (NYSE: KSS) is a leading specialty department store with 1,160 stores in 49 states. With a commitment to inspiring and empowering families to lead fulfilled lives, the company offers amazing national and exclusive brands, incredible savings and inspiring shopping experiences in-store,
online at Kohls.comand via mobile devices. Committed to our communities, Kohl's has raised more than $257 million for children's initiatives nationwide through its Kohl's Cares® cause merchandise program, which operates under Kohl's Cares, LLC, a wholly-owned subsidiary of Kohl's Department Stores, Inc. For additional information about Kohl's philanthropic and environmental initiatives,
visit www.Kohls.com/Cares. For a list of store locations and information, or for the added convenience of shopping online, visit www.Kohls.com.

Connect with Kohl's:

Facebook (http://www.facebook.com/Kohls) Twitter ( http://twitter.com/Kohls )

Google+ ( http://plus.google.com/+Kohls) Pinterest (http://pinterest.com/Kohls) Instagram ( http://instagram.com/Kohls )

Contacts

Investor Relations:

Wes McDonald, Senior Executive Vice President and Chief Financial Officer, (262) 703-1893

Media:

Bevin Bailis, SVP, PR and Communications, (262) 703-1464

KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In Millions, except per share data)

(Unaudited)

Three Months Ended Six Months Ended August 2, 2014 August 3, 2013 August 2, 2014 August 3, 2013

Net sales $ 4,242 $ 4,289 $ 8,312 $ 8,488

Cost of merchandise sold 2,588 2,613 5,162 5,284
Gross margin 1,654 1,676 3,150 3,204
Operating expenses:
Selling, general, and administrative 981 1,000 1,981 1,997

Depreciation and amortization 222 225 438 439
Operating income 451 451 731 768

Interest expense, net 85 84 170 167
Income before income taxes 366 367 561 601

Provision for income taxes 134 136 204 223

Net income $ 232 $ 231 $ 357 $ 378
Basic net income per share $ 1.14 $ 1.05 $ 1.74 $ 1.71
Average number of shares 204 220 205 221
Diluted net income per share $ 1.13 $ 1.04 $ 1.73 $ 1.70
Average number of shares 205 222 206 222

As a percent of net sales:

Gross margin 39.0% 39.1% 37.9% 37.7% Selling, general and
administrative expenses 23.1% 23.3% 23.8% 23.5% Operating income 10.6% 10.5% 8.8% 9.0% Net income 5.5% 5.4% 4.3% 4.5%

KOHL'S CORPORATION CONSOLIDATED BALANCE SHEETS (In Millions)

(Unaudited)

Assets



Current assets:

August 2, 2014 August 3, 2013

Cash and cash equivalents

$ 746

$ 592

Merchandise inventories

3,899

3,856

Deferred income taxes

132

150

Other

300

284

Total current assets

5,077

4,882

Property and equipment, net

8,686

8,891

Other assets

338

324

Total assets

$ 14,101

$ 14,097



Liabilities and Shareholders' Equity



Current liabilities:

Accounts payable

$ 1,479

$ 1,396

Accrued liabilities

1,057

1,065

Income taxes payable

43

75

Current portion of capital lease

and financing obligations

105

147

Total current liabilities

2,684

2,683

Long-term debt

2,792

2,492

Capital lease and financing obligations

1,896

1,948

Deferred income taxes

358

381

Other long-term liabilities

562

540

Shareholders' equity

5,809

6,053



Total liabilities and shareholders' equity $ 14,101 $ 14,097

KOHL'S CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions)

(Unaudited)

Six Months Ended Operating activities August 2, 2014 August 3, 2013

Net income $ 357 $ 378
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 438 439
Share-based compensation 24 27
Excess tax benefits from share-based compensation (2) (2) Deferred income taxes (17) (12) Other non-cash revenues and expenses 11 18
Changes in operating assets and liabilities:
Merchandise inventories (20) (103) Other current and long-term assets 3 22
Accounts payable 114 89

Accrued and other long-term liabilities (103) (20) Income taxes (75) (74)
Net cash provided by operating activities 730 762

Investing activities



Acquisition of property and equipment (374) (284) Other 6 14
Net cash used in investing activities (368)(270)

Financing activities

Treasury stock purchases (392) (266) Shares withheld for taxes on vested restricted shares (16) (13) Dividends paid (160) (153) Proceeds from financing obligations 3 - Capital lease and financing obligation payments (61) (52) Proceeds from stock option exercises 37 46
Excess tax benefits from share-based compensation 2 2

Deferred financing costs - (1) Net cash used in financing activities (587) (437) Net increase (decrease) in cash and cash equivalents (225) 55
Cash and cash equivalents at beginning of period 971 537

Cash and cash equivalents at end of period $ 746 $ 592

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