UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 3, 2018
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 1-11084
KOHL’S CORPORATION
(Exact name of registrant as specified in its charter)
|
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) |
Registrant’s telephone number, including area code (262) 703-7000
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. Yes ☒ No ☐
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). Yes ☒ No ☐
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. (Check one):
|
Large accelerated filer |
|
☒ |
|
Accelerated filer |
|
☐ |
|
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
☐ |
|
|
|
|
|
Emerging growth company |
|
☐ |
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 ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: December 1, 2018 Common Stock, Par Value $0.01 per Share, 165,129,371 shares outstanding.
|
PART I |
FINANCIAL INFORMATION |
|
|
Item 1. |
|
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
7 |
|
|
|
8 |
|
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
15 |
|
Item 3. |
19 |
|
|
Item 4. |
19 |
|
|
|
|
|
|
PART II |
OTHER INFORMATION |
|
|
Item 1A. |
20 |
|
|
Item 2. |
20 |
|
|
Item 6. |
22 |
|
|
23 |
||
KOHL’S CORPORATION
(Unaudited)
|
(Dollars in Millions) |
November 3, 2018 |
February 3, 2018 |
October 28, 2017 |
||||||
|
Assets |
|
|
|
As Adjusted (a) |
As Adjusted (a) |
||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
1,047 |
|
$ |
1,308 |
|
$ |
736 |
|
|
Merchandise inventories |
|
4,844 |
|
|
3,542 |
|
|
4,632 |
|
|
Other |
|
446 |
|
|
530 |
|
|
379 |
|
|
Total current assets |
|
6,337 |
|
|
5,380 |
|
|
5,747 |
|
|
Property and equipment, net |
|
7,538 |
|
|
7,773 |
|
|
7,974 |
|
|
Other assets |
|
243 |
|
|
236 |
|
|
226 |
|
|
Total assets |
$ |
14,118 |
|
$ |
13,389 |
|
$ |
13,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
2,583 |
|
$ |
1,271 |
|
$ |
2,113 |
|
|
Accrued liabilities |
|
1,289 |
|
|
1,213 |
|
|
1,294 |
|
|
Income taxes payable |
|
14 |
|
|
99 |
|
|
24 |
|
|
Current portion of capital lease and financing obligations |
|
121 |
|
|
126 |
|
|
131 |
|
|
Total current liabilities |
|
4,007 |
|
|
2,709 |
|
|
3,562 |
|
|
Long-term debt |
|
2,272 |
|
|
2,797 |
|
|
2,796 |
|
|
Capital lease and financing obligations |
|
1,528 |
|
|
1,591 |
|
|
1,622 |
|
|
Deferred income taxes |
|
201 |
|
|
211 |
|
|
272 |
|
|
Other long-term liabilities |
|
657 |
|
|
662 |
|
|
673 |
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
4 |
|
|
4 |
|
|
4 |
|
|
Paid-in capital |
|
3,185 |
|
|
3,078 |
|
|
3,039 |
|
|
Treasury stock, at cost |
|
(10,952 |
) |
|
(10,651 |
) |
|
(10,633 |
) |
|
Accumulated other comprehensive loss |
|
(8 |
) |
|
(11 |
) |
|
(12 |
) |
|
Retained earnings |
|
13,224 |
|
|
12,999 |
|
|
12,624 |
|
|
Total shareholders’ equity |
|
5,453 |
|
|
5,419 |
|
|
5,022 |
|
|
Total liabilities and shareholders’ equity |
$ |
14,118 |
|
$ |
13,389 |
|
$ |
13,947 |
|
|
|
(a) |
Refer to Note 2 for details on the adoption of the new revenue recognition accounting standard and the impact on previously reported results. |
|
See accompanying Notes to Consolidated Financial Statements
3
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended |
Nine Months Ended |
||||||||||
|
(Dollars in Millions, Except per Share Data) |
November 3, 2018 |
October 28, 2017 |
November 3, 2018 |
October 28, 2017 |
||||||||
|
|
|
|
|
As Adjusted (a) |
|
|
|
As Adjusted (a) |
||||
|
Net sales |
$ |
4,369 |
|
$ |
4,312 |
|
$ |
12,632 |
|
$ |
12,274 |
|
|
Other revenue |
|
259 |
|
|
255 |
|
|
774 |
|
|
753 |
|
|
Total revenue |
|
4,628 |
|
|
4,567 |
|
|
13,406 |
|
|
13,027 |
|
|
Cost of merchandise sold |
|
2,752 |
|
|
2,727 |
|
|
7,854 |
|
|
7,680 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative |
|
1,375 |
|
|
1,340 |
|
|
3,907 |
|
|
3,774 |
|
|
Depreciation and amortization |
|
243 |
|
|
243 |
|
|
725 |
|
|
724 |
|
|
Operating income |
|
258 |
|
|
257 |
|
|
920 |
|
|
849 |
|
|
Interest expense, net |
|
63 |
|
|
74 |
|
|
197 |
|
|
225 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
— |
|
|
42 |
|
|
— |
|
|
Income before income taxes |
|
195 |
|
|
183 |
|
|
681 |
|
|
624 |
|
|
Provision for income taxes |
|
34 |
|
|
66 |
|
|
152 |
|
|
233 |
|
|
Net income |
$ |
161 |
|
$ |
117 |
|
$ |
529 |
|
$ |
391 |
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.98 |
|
$ |
0.70 |
|
$ |
3.21 |
|
$ |
2.33 |
|
|
Diluted |
$ |
0.98 |
|
$ |
0.70 |
|
$ |
3.19 |
|
$ |
2.32 |
|
|
|
(a) |
Refer to Note 2 for details on the adoption of the new revenue recognition accounting standard and the impact on previously reported results. |
|
See accompanying Notes to Consolidated Financial Statements
4
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
|
|
Three Months Ended November 3, 2018 |
|
||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
Treasury Stock |
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
||||||||||
|
(Dollars in Millions, Except per Share Data) |
Shares |
|
Amount |
|
Paid-In Capital |
|
Shares |
|
Amount |
|
Retained Earnings |
|
Total |
|
||||||||||
|
Balance at August 4, 2018 |
|
374 |
|
$ |
4 |
|
$ |
3,163 |
|
|
(207 |
) |
$ |
(10,835 |
) |
$ |
(8 |
) |
$ |
13,163 |
|
$ |
5,487 |
|
|
Comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
161 |
|
|
161 |
|
|
Stock options and awards, net of tax |
|
— |
|
|
— |
|
|
22 |
|
|
— |
|
|
(8 |
) |
|
— |
|
|
— |
|
|
14 |
|
|
Dividends paid ($0.61 per common share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
(100 |
) |
|
(99 |
) |
|
Treasury stock purchases |
|
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
(110 |
) |
|
— |
|
|
— |
|
|
(110 |
) |
|
Balance at November 3, 2018 |
|
374 |
|
$ |
4 |
|
$ |
3,185 |
|
|
(209 |
) |
$ |
(10,952 |
) |
$ |
(8 |
) |
$ |
13,224 |
|
$ |
5,453 |
|
|
|
Three Months Ended October 28, 2017 |
|
||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
Treasury Stock |
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
||||||||||
|
(Dollars in Millions, Except per Share Data) |
Shares |
|
Amount |
|
Paid-In Capital |
|
Shares |
|
Amount |
|
Retained Earnings |
|
Total |
|
||||||||||
|
Balance at July 29, 2017 (previously reported) |
|
372 |
|
$ |
4 |
|
$ |
3,026 |
|
|
(203 |
) |
$ |
(10,596 |
) |
$ |
(12 |
) |
$ |
12,606 |
|
$ |
5,028 |
|
|
Change in accounting standard (a) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7 |
) |
|
(7 |
) |
|
Balance at July 29, 2017 (as adjusted) |
|
372 |
|
$ |
4 |
|
$ |
3,026 |
|
|
(203 |
) |
$ |
(10,596 |
) |
$ |
(12 |
) |
$ |
12,599 |
|
$ |
5,021 |
|
|
Comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
117 |
|
|
117 |
|
|
Stock options and awards, net of tax |
|
1 |
|
|
— |
|
|
13 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13 |
|
|
Dividends paid ($0.55 per common share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
(92 |
) |
|
(91 |
) |
|
Treasury stock purchases |
|
— |
|
|
— |
|
|
— |
|
|
(2 |
) |
|
(38 |
) |
|
— |
|
|
— |
|
|
(38 |
) |
|
Balance at October 28, 2017 |
|
373 |
|
$ |
4 |
|
$ |
3,039 |
|
|
(205 |
) |
$ |
(10,633 |
) |
$ |
(12 |
) |
$ |
12,624 |
|
$ |
5,022 |
|
|
|
(a) |
Refer to Note 2 for details on the adoption of the new revenue recognition accounting standard and the impact on previously reported results. |
|
See accompanying Notes to Consolidated Financial Statements
5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - (Continued)
(Unaudited)
|
|
Nine Months Ended November 3, 2018 |
|
||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
Treasury Stock |
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
||||||||||
|
(Dollars in Millions, Except per Share Data) |
Shares |
|
Amount |
|
Paid-In Capital |
|
Shares |
|
Amount |
|
Retained Earnings |
|
Total |
|
||||||||||
|
Balance at February 3, 2018 (previously reported) |
|
373 |
|
$ |
4 |
|
$ |
3,078 |
|
|
(205 |
) |
$ |
(10,651 |
) |
$ |
(11 |
) |
$ |
13,006 |
|
$ |
5,426 |
|
|
Change in accounting standard (a) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7 |
) |
|
(7 |
) |
|
Balance at February 3, 2018 (as adjusted) |
|
373 |
|
$ |
4 |
|
$ |
3,078 |
|
|
(205 |
) |
$ |
(10,651 |
) |
$ |
(11 |
) |
$ |
12,999 |
|
$ |
5,419 |
|
|
Comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
529 |
|
|
532 |
|
|
Stock options and awards, net of tax |
|
1 |
|
|
— |
|
|
107 |
|
|
— |
|
|
(29 |
) |
|
— |
|
|
— |
|
|
78 |
|
|
Dividends paid ($1.83 per common share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
— |
|
|
(304 |
) |
|
(301 |
) |
|
Treasury stock purchases |
|
— |
|
|
— |
|
|
— |
|
|
(4 |
) |
|
(275 |
) |
|
— |
|
|
— |
|
|
(275 |
) |
|
Balance at November 3, 2018 |
|
374 |
|
$ |
4 |
|
$ |
3,185 |
|
|
(209 |
) |
$ |
(10,952 |
) |
$ |
(8 |
) |
$ |
13,224 |
|
$ |
5,453 |
|
|
|
Nine Months Ended October 28, 2017 |
|
||||||||||||||||||||||
|
|
Common Stock |
|
|
|
|
Treasury Stock |
|
Accumulated Other Comprehensive Loss |
|
|
|
|
|
|
||||||||||
|
(Dollars in Millions, Except per Share Data) |
Shares |
|
Amount |
|
Paid-In Capital |
|
Shares |
|
Amount |
|
Retained Earnings |
|
Total |
|
||||||||||
|
Balance at January 28, 2017 (previously reported) |
371 |
|
$ |
4 |
|
$ |
3,003 |
|
|
(197 |
) |
$ |
(10,338 |
) |
$ |
(14 |
) |
$ |
12,522 |
|
$ |
5,177 |
|
|
|
Change in accounting standard (a) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7 |
) |
|
(7 |
) |
|
Balance at January 28, 2017 (as adjusted) |
371 |
|
$ |
4 |
|
$ |
3,003 |
|
|
(197 |
) |
$ |
(10,338 |
) |
$ |
(14 |
) |
$ |
12,515 |
|
$ |
5,170 |
|
|
|
Comprehensive income |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2 |
|
|
391 |
|
|
393 |
|
|
Stock options and awards, net of tax |
|
2 |
|
|
— |
|
|
36 |
|
|
— |
|
|
(12 |
) |
|
— |
|
|
— |
|
|
24 |
|
|
Dividends paid ($1.65 per common share) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5 |
|
|
— |
|
|
(282 |
) |
|
(277 |
) |
|
Treasury stock purchases |
|
— |
|
|
— |
|
|
— |
|
|
(8 |
) |
|
(288 |
) |
|
— |
|
|
— |
|
|
(288 |
) |
|
Balance at October 28, 2017 |
|
373 |
|
$ |
4 |
|
$ |
3,039 |
|
|
(205 |
) |
$ |
(10,633 |
) |
$ |
(12 |
) |
$ |
12,624 |
|
$ |
5,022 |
|
|
|
(a) |
Refer to Note 2 for details on the adoption of the new revenue recognition accounting standard and the impact on previously reported results. |
|
See accompanying Notes to Consolidated Financial Statements
6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months Ended |
|||||
|
(Dollars in Millions) |
November 3, 2018 |
October 28, 2017 |
||||
|
Operating activities |
|
|
|
As Adjusted (a) |
||
|
Net income |
$ |
529 |
|
$ |
391 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
725 |
|
|
724 |
|
|
Share-based compensation |
|
71 |
|
|
34 |
|
|
Deferred income taxes |
|
(13 |
) |
|
2 |
|
|
Loss on extinguishment of debt |
|
42 |
|
|
— |
|
|
Other non-cash revenues and expenses |
|
15 |
|
|
(4 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Merchandise inventories |
|
(1,293 |
) |
|
(829 |
) |
|
Accrued and other long-term liabilities |
|
38 |
|
|
(14 |
) |
|
Accounts payable |
|
1,312 |
|
|
606 |
|
|
Other current and long-term assets |
|
70 |
|
|
50 |
|
|
Income taxes |
|
(73 |
) |
|
(91 |
) |
|
Net cash provided by operating activities |
|
1,423 |
|
|
869 |
|
|
Investing activities |
|
|
|
|
|
|
|
Acquisition of property and equipment |
|
(458 |
) |
|
(547 |
) |
|
Other |
|
6 |
|
|
18 |
|
|
Net cash used in investing activities |
|
(452 |
) |
|
(529 |
) |
|
Financing activities |
|
|
|
|
|
|
|
Treasury stock purchases |
|
(275 |
) |
|
(288 |
) |
|
Shares withheld for taxes on vested restricted shares |
|
(29 |
) |
|
(12 |
) |
|
Dividends paid |
|
(301 |
) |
|
(277 |
) |
|
Reduction of long-term borrowings |
|
(530 |
) |
|
— |
|
|
Premium paid on redemption of debt |
|
(35 |
) |
|
— |
|
|
Capital lease and financing obligation activity |
|
(95 |
) |
|
(101 |
) |
|
Proceeds from stock option exercises |
|
33 |
|
|
— |
|
|
Net cash used in financing activities |
|
(1,232 |
) |
|
(678 |
) |
|
Net decrease in cash and cash equivalents |
|
(261 |
) |
|
(338 |
) |
|
Cash at beginning of period |
|
1,308 |
|
|
1,074 |
|
|
Cash at end of period |
$ |
1,047 |
|
$ |
736 |
|
|
Supplemental information |
|
|
|
|
|
|
|
Interest paid, net of capitalized interest |
$ |
192 |
|
$ |
192 |
|
|
Income taxes paid |
|
266 |
|
|
322 |
|
|
Non-cash investing and financing activities |
|
|
|
|
|
|
|
Property and equipment acquired through additional liabilities |
$ |
20 |
|
$ |
42 |
|
|
|
(a) |
Refer to Note 2 for details on the adoption of the new revenue recognition accounting standard and the impact on previously reported results. |
|
See accompanying Notes to Consolidated Financial Statements
7
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 3, 2018 (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 |
|
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 each lease. 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 lease 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 lease 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. |
|
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.
|
|
|
|
|
In 2017, we recorded provisional amounts for certain income tax effects of the Tax Cuts & Jobs Act (the “Act"), as addressed in Staff Accounting Bulletin No. 118 (“SAB 118”). During the nine months ended November 3, 2018, we made immaterial adjustments to the previously recorded provisional amounts related to the Act. Any additional adjustments related to the Act, while not expected to be material, will be recorded as income tax expense during the period in which the adjustment is finalized.
8
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Effective February 4, 2018, we adopted Revenue from Contracts with Customers (ASC Topic 606) as required. We adopted the new standard using the full retrospective method. The standard eliminated the transaction and industry specific revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for revenue recognition and disclosures. Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.
Net Sales
Net sales includes revenue from the sale of merchandise and shipping revenues. Net sales are recognized when merchandise is received by the customer and we have fulfilled all performance obligations. We do not have any sales that are recorded as commissions.
The following table summarizes net sales by line of business for the periods ended November 3, 2018 and October 28, 2017:
|
|
Three Months Ended |
Nine Months Ended |
||||||||||
|
(Dollars in Millions) |
November 3, 2018 |
October 28, 2017 |
November 3, 2018 |
October 28, 2017 |
||||||||
|
Women's |
$ |
1,287 |
|
$ |
1,276 |
|
$ |
3,982 |
|
$ |
3,883 |
|
|
Men's |
|
925 |
|
|
890 |
|
|
2,668 |
|
|
2,550 |
|
|
Home |
|
719 |
|
|
713 |
|
|
2,090 |
|
|
2,035 |
|
|
Children's |
|
650 |
|
|
640 |
|
|
1,569 |
|
|
1,534 |
|
|
Footwear |
|
465 |
|
|
473 |
|
|
1,334 |
|
|
1,288 |
|
|
Accessories |
|
323 |
|
|
320 |
|
|
989 |
|
|
984 |
|
|
Net Sales |
$ |
4,369 |
|
$ |
4,312 |
|
$ |
12,632 |
|
$ |
12,274 |
|
We maintain various rewards programs whereby customers earn rewards based on their spending and other promotional activities. The rewards are typically in the form of dollar off discounts which can be used on future purchases. These programs create performance obligations which require us to defer a portion of the original sale until the rewards are redeemed. Sales are recorded net of returns. At the end of each reporting period, we record a reserve based on historical return rates and patterns which reverses sales that we expect to be returned in the following period. Revenue from the sale of Kohl's gift cards is recognized when the gift card is redeemed. Liabilities for performance obligations resulting from our rewards programs, return reserves, and unredeemed gift cards and merchandise return cards totaled $337 million as of November 3, 2018, $422 million as of February 3, 2018 and $335 million as of October 28, 2017.
Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales taxes.
Other Revenue
Other revenue consists primarily of revenue from our credit card operations, unredeemed gift and merchandise return cards (breakage), and other non-merchandise revenues.
Revenue from credit card operations includes our share of the finance charges and interest fees, less charge-offs of the Kohl’s credit card pursuant to the Private Label Credit Card Program Agreement. Expenses related to our credit card operations are reported in SG&A.
Income from unredeemed gift cards and merchandise return cards (breakage) is recorded in proportion and over the time period the cards are actually redeemed.
9
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following tables summarize the impact of adoption of the new standard by financial statement line item:
|
Three Months Ended October 28, 2017 (Dollars in Millions, Except per Share Data) |
As Previously Reported |
New Standard Adjustment |
Adjusted |
||||||
|
Net sales |
$ |
4,332 |
|
$ |
(20 |
) |
$ |
4,312 |
|
|
Other revenue |
|
|
|
|
255 |
|
|
255 |
|
|
Total revenue |
|
|
|
|
235 |
|
|
4,567 |
|
|
Cost of merchandise sold |
|
2,737 |
|
|
(10 |
) |
|
2,727 |
|
|
Gross margin |
|
1,595 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
1,095 |
|
|
245 |
|
|
1,340 |
|
|
Depreciation and amortization |
|
243 |
|
|
- |
|
|
243 |
|
|
Operating income |
|
257 |
|
|
- |
|
|
257 |
|
|
Interest expense, net |
|
74 |
|
|
- |
|
|
74 |
|
|
Income before income taxes |
|
183 |
|
|
- |
|
|
183 |
|
|
Provision for income taxes |
|
66 |
|
|
- |
|
|
66 |
|
|
Net income |
$ |
117 |
|
$ |
- |
|
$ |
117 |
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.70 |
|
$ |
- |
|
$ |
0.70 |
|
|
Diluted |
$ |
0.70 |
|
$ |
- |
|
$ |
0.70 |
|
|
Nine Months Ended October 28, 2017 (Dollars in Millions, Except per Share Data) |
As Previously Reported |
New Standard Adjustment |
Adjusted |
||||||
|
Net sales |
$ |
12,319 |
|
$ |
(45 |
) |
$ |
12,274 |
|
|
Other revenue |
|
|
|
|
753 |
|
|
753 |
|
|
Total revenue |
|
|
|
|
708 |
|
|
13,027 |
|
|
Cost of merchandise sold |
|
7,693 |
|
|
(13 |
) |
|
7,680 |
|
|
Gross margin |
|
4,626 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
3,053 |
|
|
721 |
|
|
3,774 |
|
|
Depreciation and amortization |
|
724 |
|
|
- |
|
|
724 |
|
|
Operating income |
|
849 |
|
|
- |
|
|
849 |
|
|
Interest expense, net |
|
225 |
|
|
- |
|
|
225 |
|
|
Income before income taxes |
|
624 |
|
|
- |
|
|
624 |
|
|
Provision for income taxes |
|
233 |
|
|
- |
|
|
233 |
|
|
Net income |
$ |
391 |
|
$ |
- |
|
$ |
391 |
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
2.33 |
|
$ |
- |
|
$ |
2.33 |
|
|
Diluted |
$ |
2.32 |
|
$ |
- |
|
$ |
2.32 |
|
10
KOHL’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
|
(Dollars in Millions) |
As Previously Reported |
New Standard Adjustment |
Adjusted |
||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
736 |
|
$ |
- |
|
$ |
736 |
|
|
Merchandise inventories |
|
4,632 |
|
|
- |
|
|
4,632 |
|
|
Other |
|
332 |
|
|
47 |
|
|
379 |
|
|
Total current assets |
|
5,700 |
|
|
47 |
|
|
5,747 |
|
|
Property and equipment, net |
|
7,974 |
|
|
- |
|
|
7,974 |
|
|
Other assets |
|
226 |
|
|
- |
|
|
226 |
|
|
Total assets |
$ |
13,900 |
|
$ |
47 |
|
$ |
13,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
$ |
2,113 |
|
$ |
- |
|
$ |
2,113 |
|
|
Accrued liabilities |
|
1,237 |
|
|
57 |
|
|
1,294 |
|
|
Income taxes payable |
|
24 |
|
|
- |
|
|
24 |
|
|
Current portion of capital lease and financing obligations |
|
131 |
|
|
- |
|
|
131 |
|
|
Total current liabilities |
|
3,505 |
|
|
57 |
|
|
3,562 |
|
|
Long-term debt |
|
2,796 |
|
|
- |
|
|
2,796 |
|