Published: 2022-06-02 00:00:00 ET

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2022

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	KSS	New York Stock Exchange
Preferred Stock Purchase Rights	—	New York Stock Exchange

 

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.

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: May 27, 2022 Common Stock, Par Value $0.01 per Share, 128,461,480 shares outstanding.

 

 

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KOHL’S CORPORATION

INDEX

PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Changes in Shareholders' Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II	OTHER INFORMATION	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 6.	Exhibits	22
	Signatures	23

 

 

 

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(Dollars in Millions)	April 30, 2022	January 29, 2022	May 1, 2021
Assets
Current assets:
Cash and cash equivalents	$646	$1,587	$1,609
Merchandise inventories	3,736	3,067	2,667
Other	381	369	919
Total current assets	4,763	5,023	5,195
Property and equipment, net	7,790	7,304	6,653
Operating leases	2,224	2,248	2,392
Other assets	476	479	449
Total assets	$15,253	$15,054	$14,689
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$1,679	$1,683	$1,378
Accrued liabilities	1,316	1,340	1,289
Current portion of:
Long-term debt	164	—	—
Finance lease and financing obligations	108	118	112
Operating leases	127	145	159
Total current liabilities	3,394	3,286	2,938
Long-term debt	1,746	1,910	1,909
Finance lease and financing obligations	2,584	2,133	1,473
Operating leases	2,474	2,479	2,620
Deferred income taxes	209	206	242
Other long-term liabilities	390	379	390
Shareholders’ equity:
Common stock	4	4	4
Paid-in capital	3,395	3,375	3,333
Treasury stock, at cost	(13,150)	(12,975)	(11,663)
Retained earnings	14,207	14,257	13,443
Total shareholders’ equity	$4,456	$4,661	$5,117
Total liabilities and shareholders’ equity	$15,253	$15,054	$14,689

 

See accompanying Notes to Consolidated Financial Statements

 

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KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

	Quarter Ended
(Dollars in Millions, Except per Share Data)	April 30, 2022	May 1, 2021
Net sales	$3,471	$3,662
Other revenue	244	225
Total revenue	3,715	3,887
Cost of merchandise sold	2,140	2,233
Operating expenses:
Selling, general, and administrative	1,293	1,170
Depreciation and amortization	200	211
Operating income	82	273
Interest expense, net	68	67
Loss on extinguishment of debt	—	201
Income before income taxes	14	5
(Benefit) for income taxes	—	(9)
Net income	$14	$14
Net income per share:
Basic	$0.11	$0.09
Diluted	$0.11	$0.09

 

See accompanying Notes to Consolidated Financial Statements

 

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KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

	Quarter Ended
(Dollars in Millions, Except per Share Data)	April 30, 2022	May 1, 2021
Common stock
Balance, beginning of period	$4	$4
Stock-based awards	—	—
Balance, end of period	$4	$4
Paid-in capital
Balance, beginning of period	$3,375	$3,319
Stock-based awards	20	14
Balance, end of period	$3,395	$3,333
Treasury stock
Balance, beginning of period	$(12,975)	$(11,595)
Treasury stock purchases	(158)	(46)
Stock-based awards	(18)	(22)
Dividends paid	1	—
Balance, end of period	$(13,150)	$(11,663)
Retained earnings
Balance, beginning of period	$14,257	$13,468
Net income	14	14
Dividends paid	(64)	(39)
Balance, end of period	$14,207	$13,443
Total shareholders' equity, end of period	$4,456	$5,117
Common stock
Shares, beginning of period	377	377
Stock-based awards	—	—
Shares, end of period	377	377
Treasury stock
Shares, beginning of period	(246)	(219)
Treasury stock purchases	(3)	(1)
Shares, end of period	(249)	(220)
Total shares outstanding, end of period	128	157
Dividends paid per common share	$0.50	$0.25

 

See accompanying Notes to Consolidated Financial Statements

 

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KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021
Operating activities
Net income	$14	$14
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	200	211
Share-based compensation	18	12
Deferred income taxes	2	(65)
Loss on extinguishment of debt	—	201
Non-cash lease expense	31	38
Other non-cash expense	3	7
Changes in operating assets and liabilities:
Merchandise inventories	(668)	(75)
Other current and long-term assets	(42)	31
Accounts payable	(4)	(99)
Accrued and other long-term liabilities	17	42
Operating lease liabilities	(31)	(39)
Net cash (used in) provided by operating activities	(460)	278
Investing activities
Acquisition of property and equipment	(221)	(59)
Proceeds from sale of real estate	4	2
Net cash used in investing activities	(217)	(57)
Financing activities
Proceeds from issuance of debt	—	500
Deferred financing costs	—	(5)
Treasury stock purchases	(158)	(46)
Shares withheld for taxes on vested restricted shares	(18)	(22)
Dividends paid	(63)	(39)
Reduction of long-term borrowings	—	(1,044)
Premium paid on redemption of debt	—	(192)
Finance lease and financing obligation payments	(29)	(33)
Proceeds from financing obligations	4	—
Proceeds from stock option exercises	—	1
Other	—	(3)
Net cash used in financing activities	(264)	(883)
Net decrease in cash and cash equivalents	(941)	(662)
Cash and cash equivalents at beginning of period	1,587	2,271
Cash and cash equivalents at end of period	$646	$1,609
Supplemental information
Interest paid, net of capitalized interest	$45	$59
Income taxes paid	5	5

 

See accompanying Notes to Consolidated Financial Statements

 

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KOHL’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following discussion, unless noted, all references to "the quarter” and “the first quarter” are for the three fiscal months (13 weeks) ended April 30, 2022 or May 1, 2021.

This Form 10-Q contains “forward-looking statements” made within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "anticipates," "plans," "may," "intends," "will," "should," "expects," and similar expressions are intended to identify forward-looking statements. Forward-looking statements include the information under “2022 Outlook,” as well as statements about our future sales or financial performance and our plans, performance, and other objectives, expectations, or intentions, such as statements regarding our liquidity, debt service requirements, planned capital expenditures, future store initiatives, adequacy of capital resources and reserves, and the outcome and timing of our strategic review process. Forward-looking statements are based on management’s then-current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Part I Item 1A of our 2021 Form 10-K and in Part II Item 1A of this Form 10-Q, or disclosed from time to time in our filings with the SEC, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made and we undertake no obligation to update them.

Executive Summary

Kohl's is a leading omnichannel retailer operating 1,165 stores and a website (www.Kohls.com) as of April 30, 2022. Our Kohl's stores and website sell moderately-priced private and national brand apparel, footwear, accessories, beauty, and home products. Our Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences, store size, and presence of Sephora shop-in-shops. Our website includes merchandise which is available in our stores, as well as merchandise that is available only online.

Key financial results for the quarter included:

COVID-19

As discussed in our 2021 Form 10-K, the COVID-19 pandemic has had significant adverse effects on our business. We are closely monitoring the effects of the ongoing COVID-19 pandemic and its continued impact on our business. We cannot estimate with certainty the length or severity of this pandemic, or the extent to which the disruption may materially impact our Consolidated Financial Statements.

Our Vision and Strategy

The Company’s vision is to be “the most trusted retailer of choice for the active and casual lifestyle” and its strategy is focused on delivering long-term shareholder value. Key strategic focus areas for the Company include: driving top line growth, delivering a 7% to 8% operating margin, maintaining disciplined capital management, and sustaining an agile, accountable, and inclusive culture.

 

 

 

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2022 Outlook

Our updated outlook for fiscal 2022 is as follows:

 

Net sales	0% to 1% vs 2021
Operating margin	7.0% - 7.2%
Diluted earnings per share	$6.45 - $6.85
Capital expenditures	$850 million
Share repurchases	At least $1 billion

 

Results of Operations

Total Revenue

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
Net sales	$3,471	$3,662	$(191)
Other revenue	244	225	19
Total revenue	$3,715	$3,887	$(172)

 

Net sales decreased 5.2% for the first quarter of 2022 compared to the first quarter of 2021.

Net sales includes revenue from the sale of merchandise, net of expected returns, and shipping revenue.

Comparable sales is a measure that highlights the performance of our stores and digital channel by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales includes all store and digital sales, except sales from stores open less than 12 months, stores that have been closed, and stores where square footage has changed by more than 10%. We measure the change in digital sales by including all sales initiated online or through mobile applications, including omnichannel transactions which are fulfilled through our stores.

We measure digital penetration as digital sales over net sales. These amounts do not take into consideration fulfillment node, digital returns processed in stores, and coupon behaviors.

Comparable sales and digital penetration measures vary across the retail industry. As a result, our comparable sales calculation and digital penetration are non-GAAP measures that may not be consistent with the similarly-titled measures reported by other companies.

Other revenue increased $19 million. The increase was driven by higher credit revenue due to higher late fees.

On March 14, 2022, we amended and restated our private label credit card program agreement with Capital One through March 31, 2030. The agreement will operate in substantially the same manner as it currently operates.

 

 

 

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Cost of Merchandise Sold and Gross Margin

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
Net sales	$3,471	$3,662	$(191)
Cost of merchandise sold	2,140	2,233	(93)
Gross margin	$1,331	$1,429	$(98)
Gross margin as a percent of net sales	38.3%	39.0%	(69)	bps

 

Cost of merchandise sold includes the total cost of products sold, including product development costs, net of vendor payments other than reimbursement of specific, incremental, and identifiable costs; inventory shrink; markdowns; freight expenses associated with moving merchandise from our vendors to our distribution centers; shipping expenses for digital sales; terms cash discount; and depreciation of product development facilities and equipment. Our cost of merchandise sold may not be comparable with that of other retailers because we include distribution center and buying costs in selling, general, and administrative expenses while other retailers may include these expenses in cost of merchandise sold.

Gross margin is calculated as net sales less cost of merchandise sold. For the first quarter of 2022, gross margin was 38.3%, a decrease of 69 basis points compared to the first quarter of 2021.

The decrease in gross margin was primarily driven by increased freight costs related to the constrained global supply chain, partially offset by continued benefit from our pricing and promotion optimization strategies.

Selling, General, and Administrative Expense (“SG&A”)

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
SG&A	$1,293	$1,170	$123
As a percent of total revenue	34.8%	30.1%	468	bps

SG&A includes compensation and benefit costs (including stores, corporate, buying, and distribution centers); occupancy and operating costs of our retail, distribution, and corporate facilities; freight expenses associated with moving merchandise from our distribution centers to our retail stores and among distribution and retail facilities other than expenses to fulfill digital sales; marketing expenses, offset by vendor payments for reimbursement of specific, incremental, and identifiable costs; expenses related to our credit card operations; and other administrative revenues and expenses. We do not include depreciation and amortization in SG&A. The classification of these expenses varies across the retail industry.

Many of our expenses, including store payroll and distribution costs, are variable in nature. These costs generally increase as sales increase and decrease as sales decrease. We measure both the change in these variable expenses and the expense as a percent of revenue. If the expense as a percent of revenue decreased from the prior year, the expense "leveraged". If the expense as a percent of revenue increased over the prior year, the expense "deleveraged".

The following table summarizes the changes in SG&A by expense type:

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022
Store expenses	$82
Corporate and other	25
Distribution	16
Total increase	$123

 

 

 

 

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SG&A expenses increased $123 million, or 10.5%, to $1.3 billion. As a percentage of revenue, SG&A deleveraged by 468 basis points. The increase in SG&A during the quarter was primarily driven by strategic investments made in our stores, including nearly $50 million in costs to support the Sephora openings, store refreshes, and reflows. In addition, Corporate and other costs increased primarily driven by $17 million of expenses related to the proxy contest and ongoing sale process. Last, distribution costs increased driven by additional units and transportation costs.

Other Expenses

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
Depreciation and amortization	$200	$211	$(11)
Interest expense, net	68	67	1
Loss on extinguishment of debt	—	201	(201)

 

The decrease in depreciation and amortization was primarily driven by reduced capital spending in technology.

Net interest expense increased due to more financing leases. This was partially offset by a decrease in interest expense due to the continued benefit of debt reductions as a result of our liability management strategies employed during 2021.

In the first quarter of 2021, we completed a cash tender offer and recognized a loss of $201 million from the extinguishment of debt.

Income Taxes

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
(Benefit) for income taxes	$—	$(9)	$9
Effective tax rate	(2.8%)	(184.5%)

 

The first quarter of both 2022 and 2021 resulted in a net benefit for income taxes driven by the recognition of favorable tax items. The net benefit, when compared to a low pre-tax income, results in a negative tax rate.

GAAP to Non-GAAP Reconciliation

 

(Dollars in Millions, Except per Share Data)	Operating Income	Income before Income Taxes	Net Income	Earnings Per Diluted Share
Quarter Ended April 30, 2022
GAAP	$82	$14	$14	$0.11
Loss on extinguishment of debt	—	—	—	—
Income tax impact of items noted above	—	—	—	—
Adjusted (non-GAAP) (1)	$82	$14	$14	$0.11
Quarter Ended May 1, 2021
GAAP	$273	$5	$14	$0.09
Loss on extinguishment of debt	—	201	201	1.29
Income tax impact of items noted above	—	—	(50)	(0.33)
Adjusted (non-GAAP)	$273	$206	$165	$1.05

 

We believe the adjusted results in the table above are useful because they provide enhanced visibility into our results for the periods excluding the impact of certain items such as those included in the table above. However, these non-GAAP financial measures are not intended to replace the comparable GAAP measures.

 

 

 

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Seasonality and Inflation

Our business, like that of other retailers, is subject to seasonal influences. Sales and income are typically higher during the back-to-school and holiday seasons. Because of 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.

In addition to COVID-19, we expect that our operations will continue to be influenced by general economic conditions, including food, fuel, and energy prices, higher unemployment, wage inflation, and costs to source our merchandise, including tariffs. There can be no assurances that such factors will not continue to impact our business in the future.

Liquidity and Capital Resources

Capital Allocation

Our capital allocation strategy is to invest to maximize our overall long-term return, maintain a strong balance sheet, and maintain our investment grade rating. We follow a disciplined approach to capital allocation based on the following priorities: first we invest in our business to drive long-term profitable growth; second we pay a quarterly dividend with a goal to increase it annually; and third we return excess cash to shareholders through our share repurchase program. In addition, when appropriate, we will complete liability management transactions.

Our period-end cash and cash equivalents balance decreased to $646 million from $1.6 billion in the first quarter of 2021. Our cash and cash equivalents balance includes short-term investments of $431 million and $1.4 billion as of April 30, 2022, and May 1, 2021, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments. We also place dollar limits on our investments in individual funds or instruments.

The following table presents our primary uses and sources of cash:

 

Cash Uses		Cash Sources
• Operational needs, including salaries, rent, taxes, and other operating costs • Inventory • Capital expenditures • Dividend payments • Share repurchases • Debt reduction		• Cash flow from operations • Line of credit under our revolving credit facility • Issuance of debt

 

	Quarter Ended
(Dollars in Millions)	April 30, 2022	May 1, 2021	Change
Net cash (used in) provided by:
Operating activities	$(460)	$278	$(738)
Investing activities	(217)	(57)	(160)
Financing activities	(264)	(883)	619

 

Operating Activities

Our operating cash outflows generally consist of payments to our employees for wages, salaries and employee benefits, payments to our merchandise vendors for inventory (net of vendor allowances), payments to our shipping carriers, and payments to our landlords for rent. Operating cash outflows also include payments for income taxes and interest payments on our debt borrowings.

 

 

 

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Operating activities used $460 million in the first quarter of 2022 compared to $278 million generated in the first quarter of 2021. The decrease in operating cash flow was primarily driven by an increase in inventory. The inventory increase was due to increased beauty inventory to support the Sephora shop-in-shop rollouts, elevated in-transit levels due to continued supply chain challenges, and a rebuild of inventory in key areas such as active and women's.

Investing Activities

Our investing cash outflows include payments for capital expenditures, including investments in new and existing stores, improvements to supply chain, and technology costs. Our investing cash inflows are generally from proceeds from sales of property and equipment.

Investing activities used $217 million in the first quarter of 2022 and $57 million in the first quarter of 2021. The increase was driven by in-store investments related to Sephora shop-in-shop build-outs, store refreshes, and other customer experience and sales driving enhancements.

During the first quarter of 2022 we opened 48 Sephora-branded retail shop-in-shops and now have a total of 248 Sephora shop-in-shops open. We are planning on opening another 352 shop-in-shops in 2022 and 250 shop-in-shops in 2023.

Financing Activities

Our financing strategy is to ensure liquidity and access to capital markets. We also strive to maintain a balanced portfolio of debt maturities, while minimizing our borrowing costs. Our ability to access the public debt market has provided us with adequate sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings.

If our credit ratings were lowered, our ability to access the public debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and there is no guarantee our current credit ratings will remain the same.

The majority of our financing activities include repurchases of common stock, proceeds and/or repayments of long-term debt, and dividend payments.

Financing activities used $264 million in the first quarter of 2022 and $883 million in the first quarter of 2021.

In March 2021, we issued $500 million in aggregate principal amount of 3.375% notes with semi-annual interest payments beginning in November 2021. The notes include coupon rate step ups if our long-term debt is downgraded to below a BBB- credit rating by S&P Global Ratings or Baa3 by Moody’s Investors Service, Inc. The notes mature in May 2031.

In April 2021, we completed a cash tender offer for $1.0 billion of senior unsecured debt. We recognized a $201 million loss on extinguishment of debt in the first quarter of 2021, which includes the $192 million tender premium paid to tendering note holders in accordance with the terms of the tender offer, a $6 million non-cash write-off of deferred financing costs and original issue discounts associated with the extinguished debt, and $3 million in other fees.

We paid cash for treasury stock purchases of $158 million in the first quarter of 2022 and $46 million in the first quarter of 2021. The 2022 purchases were made pursuant to a Rule 10b5-1 plan adopted in November 2021. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors.

 

 

 

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Cash dividend payments were $63 million ($0.50 per share) in the first quarter of 2022 and $39 million ($0.25 per share) in the first quarter of 2021. On May 10, 2022, our Board of Directors declared a quarterly cash dividend on our common stock of $0.50 per share. The dividend is payable June 22, 2022 to shareholders of record at the close of business on June 8, 2022.

As of April 30, 2022, our credit ratings and outlook were as follows:

 

	Moody’s	Standard & Poor’s	Fitch
Long-term debt	Baa2	BBB-	BBB-
Outlook	Stable	Stable	Stable

Key Financial Ratios

Key financial ratios that provide certain measures of our liquidity are as follows:

 

(Dollars in Millions)	April 30, 2022	May 1, 2021
Working capital	$1,369	$2,257
Current ratio	1.40	1.77

 

Our working capital and inventory levels typically build throughout the fall, peaking during the November and December holiday selling season.

The decrease in our working capital and current ratio is primarily due to lower cash balances as a result of higher share repurchases, higher capital expenditures, and an increase in inventory.

Debt Covenant Compliance

As of April 30, 2022, we were in compliance with all covenants in our debt instruments and expect to remain in compliance during the remainder of fiscal 2022.

Contractual Obligations

There have been no significant changes in the contractual obligations disclosed in our 2021 Form 10-K other than leases which have been disclosed in Note 4 of the Consolidated Financial Statements.

Off-Balance Sheet Arrangements

We have not provided any financial guarantees arising from arrangements with unconsolidated entities or persons as of April 30, 2022.

We have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt, or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our financial condition, liquidity, results of operations, or capital resources.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts. Management has discussed the development, selection, and disclosure of its estimates and assumptions with the Audit Committee of our Board of Directors. There have been no significant changes in the critical accounting policies and estimates discussed in our 2021 Form 10-K.

 

 

 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in the market risks described in our 2021 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (the “Evaluation”) at a reasonable assurance level as of the last day of the period covered by this report.

Based upon the Evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. Disclosure controls and procedures are defined by Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act") as controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended April 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no significant changes in the Risk Factors described in our 2021 Form 10-K, other than what is noted below.

We are engaged in a strategic review process, and there can be no assurance as to its outcome.

Our board of directors previously announced that it is engaged in a process to review strategic alternatives, including a potential sale of the company. While we have engaged with multiple parties, and have received preliminary, non-binding proposals to acquire our company, there can be no assurance that we will receive fully financed bids to acquire our company or when those bids may be received, that those proposals will result in an agreement to sell the company or that any such agreement will be consummated. If our board decides to proceed with a strategic transaction, it may not be at a price that our investors view as attractive relative to the value of our standalone strategic plan. Additionally, the closing of any such transaction would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, regulatory factors, industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable terms. If our board decides not to proceed with a strategic transaction, this could have a negative effect on the market price and volatility of our common stock. In either case, we may incur substantial expenses associated with identifying and evaluating potential strategic transactions, the process may be time consuming and disruptive to our business, and we may be subject to costly and time-consuming litigation regarding our board of directors’ decision to proceed or not to proceed with a strategic transaction. Speculation and uncertainty regarding this process may also have a negative effect on the market price and volatility of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In February 2022, our Board of Directors increased the remaining share repurchase authorization under our existing share repurchase program to $3.0 billion. Purchases under the repurchase program may be made in the open market, through block trades, and other negotiated transactions. We expect to execute the share repurchase program primarily in open market transactions, subject to market conditions. There is no fixed termination date for the repurchase program, and the program may be suspended, discontinued, or accelerated at any time.

The following table contains information for shares of common stock repurchased and shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ stock-based compensation during the three fiscal months ended April 30, 2022:

 

(Dollars in Millions, Except per Share Data)	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 30 - February 26, 2022	2,176,268	$58.60	2,172,300	$548
February 27 - April 2, 2022	817,871	58.79	541,090	2,976
April 3 - April 30, 2022	6,464	60.97	—	2,976
Total	3,000,603	$58.66	2,713,390

 

 

 

 

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Item 6. Exhibits

 

Exhibit		Description
10.1		Amended and Restated Credit Card Program Agreement dated as of March 14, 2022, by and between Kohl’s, Inc. and Capital One, National Association.
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief 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		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)

 

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Kohl’s Corporation (Registrant)
Date: June 2, 2022	/s/ Jill Timm
	Jill Timm On behalf of the Registrant and as Chief Financial Officer (Principal Financial Officer)

 

 

 

 

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