Slide 1: Q2 2022 Results Presentation
Q2 2022 Results Presentation August 18, 2022
Slide 2: Cautionary Statement Regarding Forward-Looking Information
Cautionary Statement Regarding Forward-Looking Information This presentation contains "forward-looking statements" 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
Slide 3: Q2 2022 Results Presentation Agenda
Q2 2022 Results Presentation Q2 2022 Results 4 Updated 2022 Outlook 10 Our Strategy 12 3
Slide 4: Q2 2022 Results
Q2 2022 Results 4
Slide 5: Q2 2022 Summary
Q2 2022 Summary Key Takeaways • A weakening macro environment, high inflation and dampened consumer spending are having broad implications across much of retail, especially in discretionary categories like apparel. Given our penetration in these discretionary categories, this is disproportionately i
Slide 6: Q2 Key Metrics
Q2 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) July 30, 2022 July 31, 2021 Net Sales $ 3,863 $ 4,223 Total Revenue 4,087 4,447 Gross Margin Rate 39.6% 42.5% SG&A 1,283 1,241 Depreciation 206 210 Operating Income 266 570 Interest Expense 77 62 Provision f
Slide 7: Q2 2022 Gross Margin & SG&A Expense Performance
Q2 2022 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Decreased (290 bps) versus Q2 2021 Deleveraged (351 bps) vs Q2 2021 42.5% $1,283M $1,241M 39.6% % Total Revenue 27.9% 31.4% Q2 2021 Q2 2022 Q2 2021 Q2 2022 Q2 2022 Gross Margin Takeaways Q2 2022 SG&A Takeaways • Elevated freig
Slide 8: Q2 Inventory impacted by unique factors
Q2 Inventory impacted by unique factors +$82M $4,034M +$220M +$269M +$730M $2,733M +27% Accounted for additional +21% Q2 2021 Core In-Transit Sephora / Beauty Pack & Hold Q2 2022 Q2 2022 Inventory Increased 48% Y/Y; excluding unique factors, inventory increased 27% Y/Y and declined (8%) to Q2 2019 •
Slide 9: Sephora at Kohl's continues to drive impressive results in Q2
Sephora at Kohl’s continues to drive impressive results in Q2 • Kohl’s stores with Sephora continue to outperform the balance of chain, attracting new customers and driving traffic • The partnership is attracting new, younger, and more diverse customers. Customers that shop Sephora at Kohl's visit m
Slide 10: Updated 2022 Outlook
Updated 2022 Outlook 10
Slide 11: 2022 Updated Outlook
2022 Updated Outlook Metric Full Year Guidance (5%) to (6%) Net Sales versus 2021 Operating Margin 4.2% to 4.5% EPS $2.80 to $3.20 Capital Allocation Strategy • Capex: Approximately $825 million • Dividend: $0.50 quarterly dividend payable on September 21, 2022 • Share Repurchase Program: Repurchase
Slide 12: Our Strategy
Our Strategy 12
Slide 13: The most trusted retailer of choice for the Active and Casual lifestyle
Our Strategy Introduced Oct. 2020 The most trusted retailer of choice for the Active and Casual lifestyle Expand Disciplined Strong Drive Top Line Growth Operating Capital Organizational Margin Management Core Agile, Destination for Differentiated Operating Leading with Maintain Strong Accountable A
Slide 14: Committed to Creating Value
Committed to Creating Value Kohl’s Long-term Financial Framework SALES GROWTH OPERATING MARGIN EPS GROWTH 1 Low-Single Mid-to-High Digits % + 7% to 8% = Single Digits % Capital Allocation Principles Strong Significant Capital Invest in Growth Balance Sheet Returns (1) Mid-to-High single digits EPS g
Slide 15: Multiple initiatives to support future growth
Multiple initiatives to support future growth Destination for the Grow Sephora to a Leading with Differentiated Active & Casual Lifestyle $2 Billion Business Loyalty & Value Omnichannel Experience • Be a leading destination for casual • Kohl’s stores with Sephora continue • Kohl’s Cash: Iconic and d
Slide 16: We remain confident in our ability to expand operating margin to 7% to 8%
We remain confident in our ability to expand operating margin to 7% to 8% Gross Margin Drivers SG&A Expense Management Initiatives • Drive inventory turn of 4.0x+ Transform labor across • Scale self-service across chain • Dynamic inventory allocation stores and fulfillment Inventory Management • Dri
Slide 17: …And are committed to returning capital to shareholders
…And are committed to returning capital to shareholders Maintain strong balance sheet with long-term objective of maintaining Investment Grade rating DIVIDEND SHARE REPURCHASES LIABILITY MANAGEMENT Remain firmly committed to $500M ASR underscores our Plan to retire the 2023 bond our current dividend
Slide 18: Long-standing focus on ESG Stewardship
Long-standing focus on ESG Stewardship • Environmental, Social, and Governance stewardship is a key component of our strategy and our vision, and guides how we interact with our customers, employees, and our communities Culture Community Climate 100,000 $815M+ Net Zero by 2050 Associates donations t
Slide 19: Appendix
Appendix 19
Slide 20: Reconciliations
Reconciliations Free Cash Flow ($ in millions) July 30, 2022 Three Months Ended Six Months Ended Net cash provided by operating activities $ (86) $ (546) Acquisition of property and equipment (327) (548) Finance lease and financing obligation payments (26) (55) Proceeds from financing obligations 1
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