May 11, 2006
KOHL'S CORPORATION REPORTS FIRST QUARTER NET INCOME INCREASE OF 34.1 PERCENT AND EARNINGS PER SHARE OF $0.48
MENOMONEE FALLS, Wis., May 11, 2006 — Kohl’s Corporation (NYSE:KSS) today reported results for the three months ended April 29, 2006.
First Quarter Results
Kohl’s Corporation reported a 34.1 percent increase in net income for the quarter ended April 29, 2006. Net income was $167.2 million, or $0.48 per diluted share, compared with $124.7 million or $0.36 per diluted share a year ago. Net sales increased to $3.2 billion from $2.7 billion a year ago, an increase of 16.1 percent for the quarter. Comparable store sales increased 6.9 percent for the same period.
Larry Montgomery, Kohl’s chairman and chief executive officer, said, “We are extremely pleased with our performance for the first quarter. We exceeded our guidance for both sales and net income. All lines of business posted strong results as did all regions of the country. At the same time, we saw continued improvement in our gross margin rate and experienced significant expense leverage on our sales increase.”
Montgomery added, “I am very proud of our associates and the role they played in delivering a great quarter and 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.”
Sale of Credit Card Receivables
During the quarter, the Company completed the sale of its private label credit card accounts and the outstanding balances associated with the accounts to JPMorgan Chase for a purchase price of approximately $1.6 billion. As previously reported, Kohl’s plans to use the net proceeds to repurchase its common stock, to fund store expansion, and for general corporate purposes. The Company has entered into a multiyear program agreement with Chase whereby Kohl’s will continue to handle all customer service functions and will continue to be responsible for all advertising and marketing related to its credit card customers. In return for these services, Kohl’s will receive ongoing payments related to the profitability of the program.
Share Repurchase
During the first quarter, Kohl’s board of directors authorized a $2 billion share repurchase program. The Company expects to execute this share repurchase program primarily in open market transactions, subject to market conditions, and expects to complete the program in approximately two to three years.
Earnings Guidance
As a result of its first quarter performance and the benefit of the investment of the proceeds from the sale of the receivables, the Company is raising its full-year earnings guidance from $2.74 to $2.87 per diluted share to $2.91 to $3.02 per diluted share for fiscal 2006. This would result in an increase in earnings per share of 20 percent to 24 percent over last year. The Company issued guidance for the second fiscal quarter of $0.61 to $0.64 per diluted share.
Expansion Update
During the first quarter, the Company successfully opened 17 new stores, including its entry into the Portland, OR market with four stores.
The Company now operates 749 stores in 43 states, compared with 669 stores in 40 states at the same time last year.
The Company will open the balance of its planned 85 stores for 2006 in the third and fourth quarters. The Company will make its initial entry into the state of Washington with stores in the Seattle market and will continue its expansion into Florida.
First Quarter Earnings Conference Call
Investors will have the opportunity to listen to the first quarter
earnings conference call today at 5:00 PM (EDT) by dialing (847)
619-6368 ten minutes prior to the start of the call. In addition,
the call will be webcast live over the Internet through the Company’s
Website located at http://www.kohls.com (see “Company News”),
or through Broadcast Networks’ Vcall Website located at http://www.vcall.com.
To listen to the call, please go to either website at least 15 minutes
early to register, download and install any necessary audio software.
For those who cannot listen to the live broadcast, a telephone replay will be available beginning shortly after the call and continuing through June 10, 2006. To access this replay, simply dial (630) 652-3018, and use Pass Code: 14332432#.
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.
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Investor Relations Contact:
Wes McDonald, Chief Financial Officer, (262) 703-1893
Public Relations Contact:
Vicki Shamion, Vice President of Public Relations, (262) 703-1464
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