Slide 1: Q2 2023 Results Presentation
Q2 2023 Results Presentation August 23, 2023
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. The Company intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anti
Slide 3: Agenda: 2023 Priorities, Outlook & Long-Term Strategy, Q2 Results
Our 2023 Priorities 7 2023 Outlook & Long-Term Strategy 11 Q2 2023 Results 15 3
Slide 4: Tom Kingsbury, Chief Executive Officer
“Our second quarter earnings were in line with our expectations. We maintained strong sales momentum in Sephora at Kohl’s, reduced inventory by 14%, and managed expenses tightly. Further, solid cash flow generation allowed us to reduce our borrowings in the period.” “Many of our strategic efforts ar
Slide 5: Kohl's has built a solid foundation for growth
Kohl's has built a solid foundation for growth Customers Stores 65M+ Active Customers 1,171 Stores in 49 states as of Q2 2023 30M+ Loyalty Members 800+ Stores with Sephora as of Q2 2023 Of Americans live Accessible and Aspirational Brand 80% within 15 miles of a Kohl’s store Portfolio Digital ~35% O
Slide 6: 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 $845M Net Zero by 2050 Associates donations thr
Slide 7: Our 2023 Priorities
Our 2023 Priorities 7
Slide 8: Our 2023 Priorities
Our 2023 Priorities Enhance the Accelerate and Manage Inventory Strengthen the Customer Simplify Our and Expenses Balance Sheet Experience Value Strategies with Discipline 8
Slide 9: Focused on four overarching priorities to drive improved sales and profitability
FOCUSED ON FOUR OVERARCHING PRIORITIES TO Drive Improved Sales and Profitability Enhance the Accelerate and Manage Inventory Customer Simplify Our and Expenses Strengthen the Experience Value Strategies with Discipline Balance Sheet • Sephora growth and • Simplified pricing • Heightened focus on • $
Slide 10: Driving continued growth through Sephora at Kohl's
Driving continued growth through Sephora at Kohl’s Delivering $2 billion incremental sales goal* sales and traffic and acquiring new customers • Achieved significant total beauty sales growth of nearly 90% in Q2 2023, with greater than 20% comparable beauty sales growth in the Sephora shops opened i
Slide 11: 2023 Outlook & Long-Term Strategy
2023 Outlook & Long-Term Strategy 11
Slide 12: 2023 Outlook
2023 Outlook METRIC FULL YEAR GUIDANCE Net Sales (2%) to (4%) vs. 2022, includes a 1% benefit from the 53rd week Operating Margin Approx. 4.0% Diluted EPS $2.10 to $2.70 12
Slide 13: Focused on returning balance sheet to historical strength
Focused on returning balance sheet to historical strength through balanced capital allocation strategy • Committed to rebuilding cash balance and reducing leverage to our long-term target of 2.5x • Will continue to prioritize investments in the business, followed by our commitment to the dividend wi
Slide 14: Committed to Creating Long-Term Value
Committed to Creating Long-Term Value Kohl’s Long-term Financial Framework SALES GROWTH OPERATING MARGIN EPS GROWTH Low-Single Mid-to-High Digits % + 7% to 8% = Single Digits % Capital Allocation Principles Strong Significant Capital Invest in Growth Balance Sheet Returns 14
Slide 15: Q2 2023 Results
Q2 2023 Results 15
Slide 16: Q2 2023 Summary
Q2 2023 Summary Key Takeaways Q2 2023 • Second quarter earnings were in line with • Net sales declined (4.8%) versus Q2 2022 & comparable sales declined (5.0%) our expectations despite macroeconomic • Gross margin decreased (61) bps compared to last year driven by product cost inflation and headwind
Slide 17: Q2 Key Metrics
Q2 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) July 29, 2023 July 30, 2022 Net Sales $ 3,678 $ 3,863 Total Revenue 3,895 4,087 Gross Margin Rate 39.0% 39.6% SG&A 1,304 1,283 Depreciation 186 206 Operating Income 163 266 Interest Expense 89 77 Provision f
Slide 18: Q2 2023 Gross Margin & SG&A Expense Performance
Q2 2023 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Decreased (61) bps vs. Q2 2022 Deleveraged (208) bps vs. Q2 2022 39.6% $1,283M $1,304M 39.0% % Total Revenue 31.4% 33.5% Q2 2022 Q2 2023 Q2 2022 Q2 2023 Q2 2023 Gross Margin Takeaways Q2 2023 SG&A Takeaways • Higher product co
Slide 19: Appendix
Appendix 19
Slide 20: Reconciliations
Reconciliations Free Cash Flow ($ in millions) July 29, 2023 Three Months Ended Six Months Ended Net cash provided by operating activities $ 430 $ 228 Acquisition of property and equipment (244) (338) Finance lease and financing obligation payments (22) (47) Proceeds from financing obligations 12 17
Slide 21: KOn:
KOn: SEPHORA