FORM 10-Q |
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Wisconsin | 39-1630919 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin | 53051 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ý | Accelerated filer | ¨ |
Non-accelerated filer | ¨¬ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Emerging growth company | ¨ |
FINANCIAL INFORMATION | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
OTHER INFORMATION | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
(Dollars in Millions) | April 29, 2017 | January 28, 2017 | April 30, 2016 | ||||||
Assets | (Unaudited) | (Audited) | (Unaudited) | ||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 625 | $ | 1,074 | $ | 423 | |||
Merchandise inventories | 3,991 | 3,795 | 4,084 | ||||||
Other | 328 | 378 | 348 | ||||||
Total current assets | 4,944 | 5,247 | 4,855 | ||||||
Property and equipment, net | 8,069 | 8,103 | 8,230 | ||||||
Other assets | 231 | 224 | 219 | ||||||
Total assets | $ | 13,244 | $ | 13,574 | $ | 13,304 | |||
Liabilities and Shareholders’ Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 1,480 | $ | 1,507 | $ | 1,346 | |||
Accrued liabilities | 1,088 | 1,224 | 1,126 | ||||||
Income taxes payable | 137 | 112 | 48 | ||||||
Current portion of capital lease and financing obligations | 134 | 131 | 127 | ||||||
Total current liabilities | 2,839 | 2,974 | 2,647 | ||||||
Long-term debt | 2,795 | 2,795 | 2,793 | ||||||
Capital lease and financing obligations | 1,657 | 1,685 | 1,770 | ||||||
Deferred income taxes | 285 | 272 | 239 | ||||||
Other long-term liabilities | 674 | 671 | 558 | ||||||
Shareholders’ equity: | |||||||||
Common stock | 4 | 4 | 4 | ||||||
Paid-in capital | 3,013 | 3,003 | 2,961 | ||||||
Treasury stock, at cost | (10,503 | ) | (10,338 | ) | (9,906 | ) | |||
Accumulated other comprehensive loss | (13 | ) | (14 | ) | (16 | ) | |||
Retained earnings | 12,493 | 12,522 | 12,254 | ||||||
Total shareholders’ equity | 4,994 | 5,177 | 5,297 | ||||||
Total liabilities and shareholders’ equity | $ | 13,244 | $ | 13,574 | $ | 13,304 |
(Dollars in Millions, Except per Share Data) | Three Months Ended | |||||
April 29, 2017 | April 30, 2016 | |||||
Net sales | $ | 3,843 | $ | 3,972 | ||
Cost of merchandise sold | 2,445 | 2,560 | ||||
Gross margin | 1,398 | 1,412 | ||||
Operating expenses: | ||||||
Selling, general and administrative | 975 | 1,008 | ||||
Depreciation and amortization | 238 | 234 | ||||
Impairments, store closing and other costs | — | 64 | ||||
Operating income | 185 | 106 | ||||
Interest expense, net | 76 | 79 | ||||
Income before income taxes | 109 | 27 | ||||
Provision for income taxes | 43 | 10 | ||||
Net income | $ | 66 | $ | 17 | ||
Net income per share: | ||||||
Basic | $ | 0.39 | $ | 0.09 | ||
Diluted | $ | 0.39 | $ | 0.09 |
(Dollars in Millions, Except per Share Data) | Common Stock | Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | |||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||
Balance at January 28, 2017 | 371 | $ | 4 | $ | 3,003 | (197 | ) | $ | (10,338 | ) | $ | (14 | ) | $ | 12,522 | $ | 5,177 | |||||
Comprehensive income | — | — | — | — | — | 1 | 66 | 67 | ||||||||||||||
Stock options and awards, net of tax | 1 | — | 10 | — | (10 | ) | — | — | — | |||||||||||||
Dividends paid ($0.55 per common share) | — | — | — | — | 1 | — | (95 | ) | (94 | ) | ||||||||||||
Treasury stock purchases | — | — | — | (4 | ) | (156 | ) | — | — | (156 | ) | |||||||||||
Balance at April 29, 2017 | 372 | $ | 4 | $ | 3,013 | (201 | ) | $ | (10,503 | ) | $ | (13 | ) | $ | 12,493 | $ | 4,994 |
(Dollars in Millions) | Three Months Ended | |||||
April 29, 2017 | April 30, 2016 | |||||
Operating activities | ||||||
Net income | $ | 66 | $ | 17 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 238 | 234 | ||||
Share-based compensation | 10 | 12 | ||||
Deferred income taxes | 13 | (18 | ) | |||
Other non-cash revenues and expenses | (12 | ) | 7 | |||
Impairments, store closing and other costs | — | 64 | ||||
Changes in operating assets and liabilities: | ||||||
Merchandise inventories | (193 | ) | (44 | ) | ||
Other current and long-term assets | 42 | (15 | ) | |||
Accounts payable | (27 | ) | 95 | |||
Accrued and other long-term liabilities | (117 | ) | (125 | ) | ||
Income taxes | 26 | (87 | ) | |||
Net cash provided by operating activities | 46 | 140 | ||||
Investing activities | ||||||
Acquisition of property and equipment | (216 | ) | (177 | ) | ||
Proceeds from sales of property and equipment | 13 | 3 | ||||
Net cash used in investing activities | (203 | ) | (174 | ) | ||
Financing activities | ||||||
Treasury stock purchases | (156 | ) | (126 | ) | ||
Shares withheld for taxes on vested restricted shares | (10 | ) | (12 | ) | ||
Dividends paid | (94 | ) | (91 | ) | ||
Capital lease and financing obligation payments | (32 | ) | (31 | ) | ||
Proceeds from stock option exercises | — | 6 | ||||
Proceeds from financing obligations | — | 4 | ||||
Net cash used in financing activities | (292 | ) | (250 | ) | ||
Net decrease in cash and cash equivalents | (449 | ) | (284 | ) | ||
Cash and cash equivalents at beginning of period | 1,074 | 707 | ||||
Cash and cash equivalents at end of period | $ | 625 | $ | 423 | ||
Supplemental information | ||||||
Interest paid, net of capitalized interest | $ | 46 | $ | 50 | ||
Income taxes paid | 5 | 126 | ||||
Non-cash investing and financing activities | ||||||
Property and equipment acquired through additional liabilities | $ | 13 | $ | 9 |
• | Net tax detriments related to share-based compensation awards of $5 million for the quarter ended April 29, 2017 were recognized as increases to income tax expense in our Statements of Income. Prior to adoption of the new standard, this amount would have been recorded as a decrease in additional paid-in capital in our Balance Sheet. This change was accounted for prospectively and will likely create volatility in our future effective tax rate. |
• | Accounting rules require us to use the treasury stock method when calculating potential common shares used to determine diluted earnings per share. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. These changes were applied on a prospective basis and had an immaterial impact on our weighted average common shares outstanding for the quarter ended April 29, 2017. |
• | The new standard requires that excess tax benefits from share-based employee awards be reported as operating activities in the Statements of Cash Flows. Previously, these cash flows were included in financing activities. We elected to retrospectively apply the presentation requirements. The retrospective application had no impact on our net cash provided by operations and net cash used in financing activities for the three months ended April 30, 2016, but will increase our net cash provided by operations and net cash used in financing activities by $5 million for the year ended January 28, 2017. |
Standard | Description | Effect on our Financial Statements |
Revenue from Contracts with Customers (ASC Topic 606) Issued May 2014 Effective Q1 2018 | The standard eliminates the transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replaces it with a principles-based approach for revenue recognition and disclosures. | The standard will change the way we account for sales returns, our loyalty program and certain promotional programs. Based on current estimates, we do not expect these provisions of the standard will have a material impact on our financial statements. We are currently evaluating the impact other provisions of the standard may have on our financial statements, including principal vs agent considerations and presentation of net earnings of our credit card operations. Under current accounting, substantially all merchandise sales are reported gross as we are considered the principal in the transaction and net credit card earnings are reported in Selling, General and Administrative Expenses. We will elect an adoption methodology after we have evaluated the impact that all provisions of the standard will have on our financial statements. |
Leases (ASC Topic 842) Issued February 2016 Effective Q1 2019 | Among other things, the new standard requires us to recognize a right of use asset and a lease liability on our balance sheet for leases. It also changes the presentation and timing of lease-related expenses. | Approximately 5% of our store leases and all of our land leases are not currently recorded on our balance sheet. Recording right of use assets and liabilities for these and other non-store leases is expected to have a material impact on our balance sheet. We are also evaluating the impact that recording right of use assets and liabilities will have on our income statement and the financial statement impact that the standard will have on leases which are currently recorded on our balance sheet. |
(Dollars in Millions) | Store Lease Operations | Severance | Total | ||||||
Balance - January 28, 2017 | $ | 103 | $ | 3 | $ | 106 | |||
Payments | (3 | ) | (1 | ) | (4 | ) | |||
Balance - April 29, 2017 | $ | 100 | $ | 2 | $ | 102 |
Maturity (Dollars in Millions) | Effective Rate | Coupon Rate | Outstanding | ||||
2021 | 4.81 | % | 4.00 | % | $ | 650 | |
2023 | 3.25 | % | 3.25 | % | 350 | ||
2023 | 4.78 | % | 4.75 | % | 300 | ||
2025 | 4.25 | % | 4.25 | % | 650 | ||
2029 | 7.36 | % | 7.25 | % | 99 | ||
2033 | 6.05 | % | 6.00 | % | 166 | ||
2037 | 6.89 | % | 6.88 | % | 150 | ||
2045 | 5.57 | % | 5.55 | % | 450 | ||
4.88 | % | $ | 2,815 |
Stock Options | Nonvested Stock Awards | Performance Share Units | |||||||||||||
(Shares and Units in Thousands) | Shares | Weighted Average Exercise Price | Shares | Weighted Average Grant Date Fair Value | Units | Weighted Average Grant Date Fair Value | |||||||||
Balance - January 28, 2017 | 2,350 | $ | 53.29 | 2,163 | $ | 52.75 | 512 | $ | 57.82 | ||||||
Granted | — | — | 1,085 | 38.08 | 309 | 40.42 | |||||||||
Exercised/vested | — | — | (515 | ) | 53.72 | (105 | ) | 57.58 | |||||||
Forfeited/expired | (435 | ) | 60.58 | (68 | ) | 53.09 | — | — | |||||||
Balance - April 29, 2017 | 1,915 | $ | 51.64 | 2,665 | $ | 46.58 | 716 | $ | 50.35 |
Three Months Ended | ||||||
(Dollar and Shares in Millions, Except per Share Data) | April 29, 2017 | April 30, 2016 | ||||
Numerator—Net income | $ | 66 | $ | 17 | ||
Denominator—Weighted average shares: | ||||||
Basic | 170 | 183 | ||||
Impact of dilutive stock-based awards | 1 | 1 | ||||
Diluted | 171 | 184 | ||||
Antidilutive shares | 3 | 4 | ||||
Net income per share: | ||||||
Basic | $ | 0.39 | $ | 0.09 | ||
Diluted | $ | 0.39 | $ | 0.09 |
• | Inventory per store decreased 1%. |
• | Gross margin as a percentage of sales increased 83 basis points to 36.4% driven by improved inventory management and lower levels of seasonal carryover. Margin was also positively impacted by improved promotional markdown levels over last year. |
• | Selling, general and administrative expenses (“SG&A”) decreased $33 million, or 3%. We were able to leverage expenses by 2 basis points on a 3% decrease in sales primarily due to expense reduction in marketing and store expenses. |
Quarter | |||||||
(Dollars in Millions) | 2017 | 2016 | Change | ||||
Gross margin | $1,398 | $1,412 | $ | (14 | ) | ||
As a percent of net sales | 36.4 | % | 35.5 | % | 83 bp |
Quarter | |||||||
(Dollars in Millions) | 2017 | 2016 | Change | ||||
SG&A | $975 | $1,008 | $ | (33 | ) | ||
As a percent of net sales | 25.4 | % | 25.4 | % | (2) bp |
(Dollars In Millions) | Quarter | ||
Marketing costs, excluding credit card operations | $ | (24 | ) |
Store expenses | (11 | ) | |
Other SG&A | 2 | ||
Total decrease | $ | (33 | ) |
Quarter | |||||||||
(Dollars in Millions) | 2017 | 2016 | Change | ||||||
Depreciation and amortization | $ | 238 | $ | 234 | $ | 4 | |||
Interest expense, net | 76 | 79 | (3 | ) | |||||
Impairments, store closing and other costs | — | 64 | (64 | ) | |||||
Provision for income taxes | 43 | 10 | 33 | ||||||
Effective tax rate | 39.2 | % | 37.6 | % | 160 bps |
Quarter | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||
Income before Income Taxes | Net Income | Earnings Per Diluted Share | Income before Income Taxes | Net Income | Earnings Per Diluted Share | |||||||||||||
(Dollars in Millions, Except per Share Data) | ||||||||||||||||||
GAAP | $ | 109 | $ | 66 | $ | 0.39 | $ | 27 | $ | 17 | $ | 0.09 | ||||||
Impairments, store closing and other costs | — | — | — | 64 | 41 | 0.22 | ||||||||||||
Adjusted (Non-GAAP) | $ | 109 | $ | 66 | $ | 0.39 | $ | 91 | $ | 58 | $ | 0.31 |
Cash Requirements | Sources of Funds |
• Operational needs, including salaries, rent, taxes and other costs of running our business • Capital expenditures • Inventory • Share repurchases • Dividend payments | • Cash flow from operations • Short-term trade credit, in the form of extended payment terms • Line of credit under our revolving credit facility |
Quarter | Decrease in Cash | ||||||||||
(Dollars in Millions) | 2017 | 2016 | $ | % | |||||||
Net cash provided by (used in): | |||||||||||
Operating activities | $ | 46 | $ | 140 | $ | (94 | ) | (67 | )% | ||
Investing activities | (203 | ) | (174 | ) | (29 | ) | (17 | )% | |||
Financing activities | (292 | ) | (250 | ) | (42 | ) | (17 | )% |
Moody’s | Standard & Poor’s | Fitch | |
Long-term debt | Baa2 | BBB | BBB |
(Dollars in Millions) | 2017 | 2016 | Decrease in Free Cash Flow | ||||||
Net cash provided by operating activities | $ | 46 | $ | 140 | $ | (94 | ) | ||
Acquisition of property and equipment | (216 | ) | (177 | ) | (39 | ) | |||
Capital lease and financing obligation payments | (32 | ) | (31 | ) | (1 | ) | |||
Proceeds from financing obligations | — | 4 | (4 | ) | |||||
Free cash flow | $ | (202 | ) | $ | (64 | ) | $ | (138 | ) |
(Dollars in Millions) | April 29, 2017 | April 30, 2016 | ||||
Working capital | $ | 2,105 | $ | 2,208 | ||
Current ratio | 1.74 | 1.83 | ||||
Debt/capitalization | 47.9 | % | 47.0 | % |
(Dollars in Millions) | |||
Included Indebtedness | |||
Total debt | $ | 4,606 | |
Less unamortized debt discount | (5 | ) | |
Subtotal | 4,601 | ||
Rent x 8 | 2,232 | ||
Included Indebtedness | $ | 6,833 | |
Debt Compliance Adjusted EBITDAR - Rolling 12-month | |||
Net income | $ | 605 | |
Rent expense | 279 | ||
Depreciation and amortization | 942 | ||
Net interest | 305 | ||
Provision for income taxes | 352 | ||
EBITDAR | 2,483 | ||
Impairments, store closing and other costs | 122 | ||
Adjusted EBITDAR | 2,605 | ||
Stock based compensation | 39 | ||
Other non-cash revenues and expenses | (4 | ) | |
Debt Compliance Adjusted EBITDAR | $ | 2,640 | |
Debt Ratio (a) | 2.59 | ||
Maximum permitted Debt Ratio | 3.75 |
(Dollars in Millions) | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||
January 29, 2016 - February 25, 2017 | 1,979,765 | $ | 40.89 | 1,916,340 | $ | 1,828 | ||||
February 26 - April 1, 2017 | 1,252,223 | 39.28 | 1,064,600 | 1,786 | ||||||
April 2 – April 29, 2017 | 917,843 | 39.35 | 913,700 | 1,750 | ||||||
Total | 4,149,831 | $ | 40.06 | 3,894,640 | $ | 1,750 |
Exhibit Number | Description | |
31.1 | Certification of the Principal Executive Officer and Interim Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Certification of the Principal Executive Officer and Interim Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | XBRL Taxonomy Extension Label Linkbase | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
Kohl’s Corporation (Registrant) | ||
Date: | June 2, 2017 | /s/ Kevin Mansell |
Kevin Mansell Chairman, Chief Executive Officer and President (On behalf of the Registrant and as Interim Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Kohl's Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: | June 2, 2017 | /s/ Kevin Mansell |
Kevin Mansell | ||
Chairman, Chief Executive Officer and President | ||
(Principal Executive Officer and Interim Principal Financial Officer) |
1. | This Quarterly Report on Form 10-Q of the Company for the quarterly period ended April 29, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | That the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | June 2, 2017 | /s/ Kevin Mansell |
Kevin Mansell | ||
Chairman, Chief Executive Officer and President | ||
(Principal Executive Officer and Interim Principal Financial Officer) |
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Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Apr. 29, 2017 |
May 27, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | KOHLS CORP | |
Entity Central Index Key | 0000885639 | |
Current Fiscal Year End Date | --02-03 | |
Entity Filer Category | Large Accelerated Filer | |
Trading Symbol | KSS | |
Document Type | 10-Q | |
Document Period End Date | Apr. 29, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 170,481,383 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Apr. 29, 2017 |
Apr. 30, 2016 |
|
Net sales | $ 3,843 | $ 3,972 |
Cost of merchandise sold | 2,445 | 2,560 |
Gross margin | 1,398 | 1,412 |
Operating expenses: | ||
Selling, general and administrative | 975 | 1,008 |
Depreciation and amortization | 238 | 234 |
Impairments, store closing and other costs | 0 | 64 |
Operating income | 185 | 106 |
Interest expense, net | 76 | 79 |
Income before income taxes | 109 | 27 |
Provision for income taxes | 43 | 10 |
Net income | $ 66 | $ 17 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.39 | $ 0.09 |
Diluted (in dollars per share) | 0.39 | $ 0.09 |
Dividends declared and paid per share | $ 0.55 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions |
Total |
Common Stock |
Paid-In Capital |
Treasury Stock |
Accumulated Other Comprehensive Income (Loss) |
Retained Earnings [Member] |
---|---|---|---|---|---|---|
Long-term Debt, Fair Value | $ 2,700 | |||||
Beginning Balance (in shares) at Jan. 28, 2017 | (371) | 197 | ||||
Beginning Balance at Jan. 28, 2017 | 5,177 | $ 4 | $ 3,003 | $ (10,338) | $ (14) | $ 12,522 |
Comprehensive income (loss) | 67 | 1 | ||||
Net income | 66 | 66 | ||||
Stock options and awards, (in shares) | 1 | 0 | ||||
Stock options and awards | 0 | 10 | ||||
Stock Issued During Period, Value, Stock Options Exercised | $ (10) | |||||
Dividends paid ($0.55 per common share) | (94) | 0 | $ (1) | (95) | ||
Treasury stock purchases, (in shares) | (4) | |||||
Treasury stock purchases | (156) | $ (156) | ||||
Ending Balance (in shares) at Apr. 29, 2017 | (372) | (201) | ||||
Ending Balance at Apr. 29, 2017 | 4,994 | $ 4 | $ 3,013 | $ (10,503) | $ (13) | $ 12,493 |
Long-term Debt, Fair Value | $ 2,800 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) shares in Millions |
3 Months Ended |
---|---|
Apr. 29, 2017
$ / shares
shares
| |
Dividends declared and paid per share | $ / shares | $ 0.55 |
Treasury Stock | |
Stock Issued During Period Shares Stock Options Exercised And Restricted Stock Grants | shares | 0 |
Basis of Presentation |
3 Months Ended | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 29, 2017 | ||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||
Business and Summary of Accounting Policies | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles 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 January 28, 2017 (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. During the quarter ended April 29, 2017, we adopted the new accounting standard on share-based payments as required. The guidance simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of excess tax benefits in the Statements of Cash Flows. The adoption of the new standard resulted in the following:
We elected not to change our policy on accounting for forfeitures and continue to estimate the total number of awards for which the requisite service period will not be rendered. At this time, we have not changed our policy on statutory withholding requirements and will continue to allow employees to withhold up to the minimum statutory withholding requirements. The following table provides a brief description of issued, but not yet effective, accounting standards:
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Debt |
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Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Long-term debt consists of the following unsecured senior debt as of April 29, 2017, January 28, 2017, and April 30, 2016:
Long-term debt is net of unamortized debt discounts and deferred financing costs of $20 million at April 29, 2017 and January 28, 2017, and $22 million at April 30, 2016. Our long-term debt is classified as Level 1, financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our long-term debt was $2.8 billion at April 29, 2017, $2.7 billion at January 28, 2017 and $2.8 billion at April 30, 2016. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | The following table summarizes our stock-based compensation activity for the three months ended April 29, 2017:
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Contingencies |
3 Months Ended |
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Apr. 29, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | We are subject to certain legal proceedings and claims arising out of the conduct of our business. In the opinion of management, the outcome of these proceedings and litigation will not have a material adverse impact on our consolidated financial statements. |
Net Income Per Section |
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Net Income Per Section [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Basic net income per share is net income divided by the average number of common shares outstanding during the period. Diluted net income per share includes incremental shares assumed for share-based awards. The information required to compute basic and diluted net income per share is as follows:
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Store Closures (Notes) |
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Restructuring, Impairment, and Other Activities Disclosure [Text Block] | During 2016, we closed 18 underperforming stores. The following table summarizes changes in the store closure and restructure reserve during the quarter:
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of long-term debt | Long-term debt consists of the following unsecured senior debt as of April 29, 2017, January 28, 2017, and April 30, 2016:
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Stock-Based Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block] | The following table summarizes our stock-based compensation activity for the three months ended April 29, 2017:
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Net Income Per Section Net Income Per Section (Tables) |
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Net Income Per Section [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and diluted net income per share calculation | The information required to compute basic and diluted net income per share is as follows:
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Store Closures (Tables) |
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Apr. 29, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost [Table Text Block] | The following table summarizes changes in the store closure and restructure reserve during the quarter:
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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions |
Apr. 29, 2017 |
Jan. 28, 2017 |
Apr. 30, 2016 |
Jan. 30, 2016 |
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Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and Cash Equivalents, at Carrying Value | $ 625 | $ 1,074 | $ 423 | $ 707 |
Long-term Debt, Excluding Current Maturities | 2,795 | 2,795 | 2,793 | |
Long Term Investments Fair Value | $ 2,800 | $ 2,700 | $ 2,800 |
Stock-Based Compensation Performance Share Unit Activity (Details) - $ / shares shares in Thousands |
3 Months Ended | |
---|---|---|
Apr. 29, 2017 |
Jan. 30, 2016 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Performance Restricted Shares, Fair Value Beginning | $ 57.82 | |
Granted performance restricted share units | 309 | |
Performance Restricted Shares Fair Value, Granted | $ 40.42 | |
Forfeited performance restricted share units | 0 | |
Performance Restricted Shares Fair Value, Forfeited | $ 0.00 | |
Performance restricted shares units, ending | 716 | |
Performance Restricted Shares, Fair Value Ending | $ 50.35 |
Net Income Per Section Net Income Per Section (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
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Apr. 29, 2017 |
Apr. 30, 2016 |
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Basic (in dollars per share) | $ 0.39 | $ 0.09 |
Diluted (in dollars per share) | $ 0.39 | $ 0.09 |
Net income | $ 66 | $ 17 |
Basic | 170 | 183 |
Impact of dilutive stock-based awards | 1 | 1 |
Diluted | 171 | 184 |
Antidilutive shares | 3 | 4 |
Retained Earnings [Member] | ||
Net income | $ 66 | $ 17 |
Store Closures (Details) - USD ($) $ in Millions |
3 Months Ended | ||
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Apr. 29, 2017 |
Apr. 30, 2016 |
Jan. 28, 2017 |
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Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | $ 102 | $ 106 | |
Impairments, store closing and other costs | 0 | $ 64 | |
Payments for Restructuring | (4) | ||
Contract Termination [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 100 | 103 | |
Payments for Restructuring | (3) | ||
Employee Severance [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 2 | $ 3 | |
Payments for Restructuring | $ (1) |
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