March 6, 2006
KOHL'S CORPORATION ANNOUNCES STRATEGIC CREDIT CARD
ALLIANCE WITH JPMORGAN CHASE
KOHL'S BOARD AUTHORIZES SHARE REPURCHASE PROGRAM
MENOMONEE FALLS, Wis., March 6, 2006 Kohl's Corporation
(NYSE: KSS) announced today that it has entered into a strategic
alliance with JPMorgan Chase (NYSE: JPM) to enhance the credit operations
of the company. In addition, the company announced that the board
of directors has authorized a $2 billion share repurchase program
to be completed over the next two to three years.
Strategic Alliance with Chase
The two companies have signed a definitive agreement whereby Chase
will purchase Kohl's private label credit card accounts and the
outstanding balances associated with the accounts. The total purchase
price will be equal to the receivable balances purchased at the
closing date. It will be paid in cash at closing and is expected
to be approximately $1.5 billion.
Additionally, the companies have entered into a multi-year program
agreement 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. All of Kohl's
current credit organization associates will remain employees of
Kohl's. Further, the company expects the credit organization to
grow to support the long-term growth plans of the company. In return
for these services, Kohl's will receive on-going payments related
to the profitability of the program.
Kohl's charge card customers will continue to receive the same
great benefits with the use of their charge card. Customers should
continue to use their cards in the same manner as they do today.
Larry Montgomery, Kohl's chairman and chief executive officer,
commented, "We are excited to be partnering with Chase. Our
credit card program is an instrumental part of Kohl's success, and
our relationships with our cardholders are extremely important to
us. While our customers can continue to expect the same great service
they have always received from Kohl's, our strategic alliance with
Chase will provide us with additional operational and marketing
capabilities to support our continued growth. Like Kohl's, Chase
has many years of experience in running credit operations with a
focus on customer relationships, so we will leverage the expertise
of both companies to build a best in class credit card program to
support our continued growth."
"Chase is extremely excited about this partnership because
it offers many tremendous opportunities," said Rich Srednicki,
chief executive officer, Chase Card Services. "We are pleased
to be partnering with Kohl's, one of the nation's best retail brands
and a great growth company. We are eager to work with Kohl's to
expand their private label business and to continue working closely
with Kohl's to offer great service and value-added products to consumers."
The transaction is subject to regulatory approvals and other customary
conditions, and is expected to close within 90 days.
The company expects to use the initial proceeds from the transaction
to repurchase Kohl's stock, fund its store expansion and for general
Commenting on the financial benefits for Kohl's, Larry Montgomery
said, "This transaction strengthens our balance sheet and improves
our return on assets. It converts our receivables to cash while
allowing us to continue to service our customers and participate
in the ongoing growth and profitability of our credit business.
The transaction is expected to generate savings in interest expense
in fiscal 2006, therefore increasing both net income and earnings
Share Repurchase Program
In anticipation of the sale of the credit accounts receivable, Kohl's
board of directors has authorized a $2 billion share repurchase
program. In addition to the proceeds from the sale of the current
outstanding balances, Kohl's will have available the cash it otherwise
would have used to fund the on-going growth of the credit card receivables.
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.
As a result of this transaction and without taking into account
the effect of any shares repurchased, the Company has increased
its fiscal 2006 earnings guidance from $2.72 to $2.85 per diluted
share to $2.74 to $2.87 per diluted share.
The repurchase program will not impact the company's previously
announced growth plans. The company continues to expect to open
approximately 500 stores over the next five years, opening 80-85
new stores in 2006, and operating over 1,200 stores by the end of
Morgan Stanley advised Kohl's on this transaction.
Conference Call Information
Investors will have the opportunity to listen to the Kohl's conference
call today at 12:00 PM (EST) by dialing (847) 619-6368 ten minutes
prior to the start of 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
Broadcast Networks' Vcall web site located at http://www.vcall.com.
To listen to the call, please go to either web site at least 15
minutes early to register, download and install any necessary audio
For those who cannot listen to the live broadcast, a telephone
replay will be available beginning shortly after the call and continuing
through March 7, 2006. To access this replay, simply dial (630)
652-3018, and use Pass Code: 14079038.
Based in Menomonee Falls, Wis., Kohl's is a family-focused, value-oriented
specialty department store offering moderately priced, exclusive
and national brand apparel, shoes, accessories, beauty and home
products in an exciting shopping environment. Kohl's operates 741
stores in 41 states. For a list of store locations and information,
or for the added convenience of shopping online, visit Kohl's Web
site at Kohls.com.
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial
services firm with assets of $1.2 trillion and operations in more
than 50 countries. The company has more than 100 million credit
cards issued. Under the JP Morgan, Chase and Bank One brands, the
firm serves millions of consumers in the United States and many
of the world's most prominent corporate, institutional and government
clients. Information about the firm is available at www.jpmorganchase.com.
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 on Exhibit 99.1 to 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
Investor Relations Contact:
Wes McDonald, Chief Financial Officer, (262) 703-1893
Vicki Shamion, Vice President of Public Relations (262) 703-1464
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