EX-99.1 2 exhibit99-1.htm PRESS RELEASE DATED AUGUST 10, 2006 EXHIBIT 99.1

Exhibit 99.1



National & Retail Trades and First Call, Release: August 10, 2006 at 4:00 PM (EST)




KOHL'S CORPORATION REPORTS SECOND QUARTER EARNINGS PER SHARE OF $0.69 – AN INCREASE OF 27.8 PERCENT


MENOMONEE FALLS, WI … August 10/BUSINESS WIRE/Kohl’s Corporation (NYSE:KSS). Kohl’s Corporation today reported net sales and earnings for the second quarter ended July 29, 2006.


Kohl’s Corporation second quarter earnings per diluted share increased 27.8 percent to $0.69 per diluted share from $0.54 per diluted share in last year’s period.  Net income increased 24.1 percent to $232.4 million from $187.2 million.  Net sales for the quarter increased 14.0 percent to $3.3 billion from $2.9 billion a year ago while comparable store sales increased 5.5 percent.


For the six months ended July 29, 2006, net income increased 28.1 percent to $399.6 million or $1.17 per diluted share, compared to $311.9 million or $0.90 per diluted share for the six months ended July 30, 2005. Net sales increased 15.0 percent to $6.5 billion from $5.6 billion a year ago. Comparable store sales increased 6.2 percent for the same period.

Larry Montgomery, Kohl’s chairman and chief executive officer, said, “We are very pleased with our performance for the second quarter and in the first half of the year.  We exceeded our guidance for both sales and net income.  We continue to see consistency in all lines of business and all regions of the country.  At the same time, we achieved improvement in our gross margin rate and experienced significant expense leverage on our sales increase.  We also made great progress on our share repurchase program, buying over $1 billion of our stock during the quarter.”

Montgomery added, “Our associates are critical to our success as a company and I want to thank them for their hard work, loyalty and dedication to serving our customers.  They are the reason you can continue to ‘expect great things’ from Kohl’s.”


Share Repurchase


During the second quarter, the Company repurchased approximately 18.4 million shares of its common stock at an average price of $55.74.  Year-to-date, the Company has repurchased approximately $1.1 billion of its shares as part of its previously announced $2 billion share repurchase program.


Earnings Guidance


As a result of its second quarter performance and its outlook for the fall season, the Company is raising its full-year earnings guidance from $2.91 to $3.02 per diluted share to $3.04 to $3.13 per diluted share for fiscal 2006.  This would result in an increase in earnings per diluted share of 25 percent to 29 percent over last year.  The Company issued guidance for the third fiscal quarter of $0.53 to $0.56 per diluted share and for the fourth fiscal quarter of $1.36 to $1.42 per diluted share.


Expansion Update


The Company now operates 749 stores in 43 states, compared with 670 stores in 40 states at the same time last year.


The Company plans to open 68 stores in the fall season of fiscal 2006 with 65 opening in October and the remainder in November. This will complete the opening of 85 stores in fiscal 2006.  The Company will make its initial entry into the state of Washington with four stores in the Seattle market and will continue its expansion into Florida, entering the Tampa market with three stores.


Second Quarter Earnings Conference Call


Investors will have the opportunity to listen to the second quarter earnings conference call today at 5:00 PM (EDT) by dialing (913) 905-3179, using Pass Code 4486225, at least ten minutes prior to the call.


In addition, the call will be web cast live over the Internet through the Company’s web site located at http://www.kohls.com (see “Company News”), or through Premiere Global Services’ web site at https://cis.premconf.com/sc/scw.dll/usr?cid=vlllrzlcmszvmccz. To listen to the call, please go to either web site at least fifteen minutes early to register, download and install any necessary audio software. A replay of the call will be available for 30 days.  To access this replay, dial (719) 457-0820, and use Pass Code: 4486225.


Investor Conference

The Company will host an investor conference in Tampa, Florida on October 4, 2006, which will include a store tour and management presentation.  The presentation will be web cast and the audio replay will be available until November 3rd.  Further details will be available in the Company’s August sales release.  


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 including guidance on the Company’s targeted sales and earnings.  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.

Investor Relations Contact: Wes McDonald, Chief Financial Officer, (262) 703-1893

Media Contact:

Vicki Shamion, Vice President – Public Relations, (262) 703-1464






Kohl’s Corporation

Condensed Consolidated Statements of Income

(In Millions, except per share data)

(Unaudited)

                
 

3 Months Ended

6 Months Ended

 



July 29,

2006


% to

 Net

Sales



July 30,

2005


% to

 Net

Sales



July 29,

2006


% to

 Net

Sales



July 30,

2005


% to

 Net Sales

                

Net sales

$ 3,291.4

   

$   2,888.1

   

$ 6,476.2

   

 $ 5,630.9

  

Cost of merchandise sold

   2,053.4

 

62.4%

 

    1,819.5

 

63.0%

 

4,090.0

 

63.2%

 

     3,579.1

 

63.6%

                

Gross margin

1,238.00

 

37.6%

 

1,068.6

 

37.0%

 

2,386.2

 

36.8%

 

2,051.8

 

36.4%

                

Operating expenses

               

Selling, general and administrative

758.5

 

23.0%

 

       672.5

 

23.3%

 

1,520.2

 

23.5%

 

     1,345.4

 

23.9%

Depreciation and amortization

96.1

 

2.9%

 

         82.6

 

2.9%

 

189.4

 

2.9%

 

       162.6

 

2.9%

Preopening expenses

8.0

 

0.3%

 

4.1

 

0.1%

 

19.0

 

0.2%

 

         16.7

 

0.2%

                

Operating income

375.4

 

11.4%

 

       309.4

 

10.7%

 

657.6

 

10.2%

 

527.1

 

9.4%

                

Interest expense, net

6.0

 

0.2%

 

 16.3

 

0.6%

 

20.2

 

0.4%

 

         33.5

 

0.6%

                

Income before income taxes

369.4

 

11.2%

 

       293.1

 

10.1%

 

637.4

 

9.8%

 

       493.6

 

8.8%

Provision for income taxes

137.0

 

4.1%

 

        105.9

 

3.6%

 

237.8

 

3.6%

 

181.7

 

3.3%

                

Net income

$  232.4

 

7.1%

 

 $    187.2

 

6.5%

 

$   399.6

 

6.2%

 

 $    311.9

 

5.5%

                
                
                

Basic net income per share

    $   0.70

   

 $      0.54

   

 $      1.18

   

 $      0.91

  

Avg. number of shares

333.4

   

344.1

   

339.3

   

343.8

  
                

Diluted net income per share

    $   0.69

   

 $      0.54

   

 $      1.17

   

 $      0.90

  

Avg. number of shares

 

335.7

   

346.8

   

341.6

   

346.6

  




Kohl's Corporation

Condensed Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

Subject to Reclassification

         
      

26 Weeks Ended

      


July 29,

 2006

 


July 30,

2005

Operating activities

      

Net income

    

$     399,602

 

 $     311,920

Adjustments to reconcile net income to net cash

  provided by operating activities:

    
 

Depreciation and amortization

  

189,645

 

162,995

 

Amortization of debt discount

  

108

 

108

 

Deferred income taxes

  

9,279

 

41,911

 

Share-based compensation

 

21,086

 

21,040

 

Excess tax benefits from share-based compensation

 

(13,548)

 

(9,606)

 

Changes in operating assets and liabilities:

    
 

  Accounts receivable, net

  

1,652,065

 

93,226

 

  Merchandise inventories

  

(170,581)

 

(250,354)

 

  Other current and long-term assets

  

(75,906)

 

(35,025)

 

  Accounts payable

  

182,203

 

261,917

 

  Accrued and other long-term liabilities

 

123,807

 

(72,684)

 

  Income taxes payable

   

(49,131)

 

(85,474)

         

Net cash provided by operating activities

  

2,268,629

 

439,974

Investing activities

       

Acquisition of property and equipment

  and favorable lease rights

  

(706,489)

 


(416,777)

Net purchases of short-term investments

  

(359,199)

 

(51,247)

Other

  

(2,522)

 

(3,770)


Net cash used in investing activities

 


(1,068,210)

 


(471,794)

Financing activities

      

Repayments of other long-term debt, net

  

(104,596)

 

(2,435)

Excess tax benefits from share-based compensation

  

13,548

 

9,606

Treasury stock purchases

  

(1,100,809)

 

0

Proceeds from issuances of common shares

  

27,406

 

18,251

         

Net cash (used in) provided by financing activities

 

(1,164,451)

 

25,422

Net increase (decrease) in cash and cash equivalents

 

35,968

 

(6,398)

Cash and cash equivalents at beginning of period

 

126,839

 

116,717

         

Cash and cash equivalents at end of period

  

$     162,807

 

 $     110,319





Kohl's Corporation

Condensed Consolidated Balance Sheets

(In Thousands)

(Unaudited)

Subject to Reclassification

      
   


July 29,

2006

 


July 30,

2005

Assets

     

Current assets:

     

Cash and cash equivalents

 

 $      162,807

 

 $         110,319

Short-term investments

 

519,276

 

140,014

Accounts receivable trade, net

 

0

 

1,296,406

Merchandise inventories

  

2,408,149

 

2,197,331

Deferred income taxes

  

10,591

 

7,013

Other current assets

  

156,947

 

           82,319

Total current assets

  

3,257,770

 

       3,833,402

      

Property and equipment, net

 

   5,104,521

 

            4,360,637

Favorable lease rights, net

 

226,108

 

          218,577

Goodwill

  

9,338

 

             9,338

Other assets

  

51,504

 

           42,082

Total assets

  

$  8,649,241

 

$     8,464,036

      

Liabilities and Shareholders' Equity

    
      

Current liabilities:

     

Accounts payable

  

$     1,012,174

 

   $        966,572

Accrued liabilities

  

731,583

 

          487,100

Income taxes payable

  

104,229

 

82,102

Current portion of long-term debt and capital leases

 

8,243

 

105,539

Total current liabilities

  

1,856,229

 

      1,641,313

      

Long-term debt and capital leases

  

1,041,314

 

      1,036,172

Deferred income taxes

  

213,994

 

224,255

Other long-term liabilities

 

219,199

 

167,494

Shareholders’ equity

  

5,318,505

 

       5,394,802

Total liabilities and shareholders’ equity

$ 8,649,241

 

 $    8,464,036