Kohl's Corporation · NYSE:KSS
Kohl's — Q1 2020 Earnings Presentation
27 slides from Kohl's's earnings presentation, May 19, 2020
Slide 1: Q1 2020 Results Presentation
Exhibit 99.2 Q1 2020 Results Presentation May 19, 2020 1Exhibit 99.2 Q1 2020 Results Presentation May 19, 2020 1
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 expressions are in
Slide 3: Key Historical Highlights
Key Historical Highlights Leading omnichannel retailer with 65 million customers in 2019 • Accelerating, high growth digital business with sales penetration of 24% in 2019 • History of strong free cash flow generation and prudent capital management • Demonstrated commitment to Investment Grade: $940
Slide 4: Q1 2020 Results Presentation Agenda
Q1 2020 Results Presentation COVID-19 Update 1 Q1 2020 Results 2 Strategic Highlights 3 4Q1 2020 Results Presentation COVID-19 Update 1 Q1 2020 Results 2 Strategic Highlights 3 4
Slide 5: COVID-19 Update
COVID-19 Update 5COVID-19 Update 5
Slide 6: Our Top Priorities
Our Top Priorities Protecting the health and safety of our associates and customers Preserving our financial position 6 6Our Top Priorities Protecting the health and safety of our associates and customers Preserving our financial position 6 6
Slide 7: Protecting Associates And Customers
Protecting Associates And Customers Store Closures to Help Slow the Spread of the Virus th Closed all of our stores on March 20 • Temporarily furloughed 85,000 associates on March 30th and supported them • with two calendar weeks of pay and continuation of existing health benefits Enhanced Safety Me
Slide 8: Preserving Financial Position
Preserving Financial Position Leaned into Digital business and quickly updated digital site • Drive content to reflect customer interest Digital Sales Launched Store Drive Up on April 2nd in most stores • Inventory: Managed receipts lower and extended payment terms • SG&A: Significantly reduced expe
Slide 9: Q1 2020 Results
Q1 2020 Results 9Q1 2020 Results 9
Slide 10: Q1 2020 Results Key Takeaways
Q1 2020 Results Key Takeaways Entered 2020 in a strong financial position with business tracking to expectations prior to the crisis • Immediately responded with aggressive actions to significantly enhance financial flexibility • Positive operating cash flow in Q1 achieved through collective actions
Slide 11: Q1 2020 Key Metrics
Q1 2020 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions, Except EPS data) May 2, 2020 May 4, 2019 Net Sales $ 2,160 $ 3,821 Total Revenue 2,428 4,087 Gross Margin Rate 17.3% 36.8% SG&A Expenses 1,066 1,275 Depreciation and Amortization 227 230 Impairments, St
Slide 12: Q1 Gross Margin
Q1 Gross Margin Q1 2019 Gross Margin 36.8% Usual clearance permanent markdowns in February spread • across significantly lower sales due to COVID-19 Inventory Actions (~1,500) bps Established a reserve for excess seasonal inventory given • the lower sales demand due to COVID-19 Cost of shipping pres
Slide 13: Enhanced Liquidity Position
Enhanced Liquidity Position Key Q1 2020 Balance Sheet & Cash Flow Items February 1, 2020 Key Takeaways Beginning Cash $723M Long history of disciplined and prudent • Sources capital management Revolver $1,000M More than two decades of maintaining • New Debt $600M Investment Grade rating Operating Ca
Slide 14: Strategic Highlights
Strategic Highlights 14Strategic Highlights 14
Slide 15: Kohl's is a leading omnichannel retailer with a strong foundation
Kohl's is a leading omnichannel retailer with a strong foundation, and a large and loyal customer base of 65 million An unmatched Easy and inspiring Leading brand portfolio at experiences loyalty program the best value 15 15 Based on 2019 FiguresKohl's is a leading omnichannel retailer with a strong
Slide 16: Strategic Focus Areas
Strategic Focus Areas Strengthening Elevating Leading Operating product the the next with leadership experience generation excellence of loyalty 16 16Strategic Focus Areas Strengthening Elevating Leading Operating product the the next with leadership experience generation excellence of loyalty 16 16
Slide 17: Brands: Strong collection of private brands
Brands Strong collection of private brands Two $7B 4 of top 5 $1B private brands are brand sales private brands 17 Based on 2019 FiguresBrands Strong collection of private brands Two $7B 4 of top 5 $1B private brands are brand sales private brands 17 Based on 2019 Figures
Slide 18: Brands: Strong collection of national brands
Brands Strong collection of national brands 18Brands Strong collection of national brands 18
Slide 19: The power of our store base
The power of our store base 80% 1,159 of Americans live within stores in 49 states 15 miles of a Kohl's Store 95% 99% of stores 4-wall cash-flow of Kohl's stores positive in 2019 are off mall Digital sales are 35%+ higher of digital orders with proximity to stores fulfilled by stores 19 Based on 201
Slide 20: Customer behaviors are influencing their expectations of the retail experience
Customer behaviors are influencing their expectations of the retail experience Shift to Mobile use Social media digital increase influence 50% 70%+ 16M of Kohl's digital of Kohl's traffic active Kohl’s sales are on mobile occurs through App users smartphones 20 Based on 2019 FiguresCustomer behavior
Slide 21: Digital has been key growth driver
Digital has been key growth driver Digital sales $4.5B $4.0B $3.6B $3.0B $2.7B $2.1B Sales 11% 24% penetration 2014 2015 2016 2017 2018 2019 21 17% CAGRDigital has been key growth driver Digital sales $4.5B $4.0B $3.6B $3.0B $2.7B $2.1B Sales 11% 24% penetration 2014 2015 2016 2017 2018 2019 21 17%
Slide 22: Kohl's has a leading loyalty program
Kohl’s has a leading loyalty program #1 30M 56% Loyalty program Loyalty Kohl’s Charge card 4 years running members penetration Based on 2019 Figures 22 Source: Bond Loyalty ReportKohl’s has a leading loyalty program #1 30M 56% Loyalty program Loyalty Kohl’s Charge card 4 years running members penetr
Slide 23: Recent investments are paying off
Recent investments are paying off Active Beauty Digital Amazon Sales nearly Sales increased Achieved 17% Innovation to drive doubled nearly 40% in past 5-year sales CAGR traffic into stores since 2013 5 years 23 Based on 2019 FiguresRecent investments are paying off Active Beauty Digital Amazon Sale
Slide 24: Our Capital Allocation Priorities
Our Capital Allocation Priorities Opportunistic, Invest in Share Dividend complementary 1 2 3 4 the business repurchases M&A Maintain strong balance sheet Long-term objective of maintaining investment grade 24 Due to COVID-19, the Company has reduced its investment in the business and has suspended
Slide 25: Appendix
Appendix 25Appendix 25
Slide 26: Reconciliations: Adjusted Net (Loss) Income and Diluted EPS
Reconciliations Adjusted Net (Loss) Income and Diluted (Loss) Earnings per Share, Non-GAAP Financial Measures (Unaudited) Three Months Ended (Dollars in Millions, Except per Share Data) May 2, 2020 May 4, 2019 Net (Loss) Income • GAAP $ (541) $ 62 • Impairments, store closing, and other costs 46 36
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