Kohl's Corporation · NYSE:KSS
Kohl's — Q3 2020 Earnings Presentation
26 slides from Kohl's's earnings presentation, Nov 17, 2020
Slide 1: Q3 2020 Results Presentation
Exhibit 99.2 Q3 2020 Results Presentation November 17, 2020Exhibit 99.2 Q3 2020 Results Presentation November 17, 2020
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: Q3 2020 Driving Top Line Growth Results COVID-19 Update Presentation Q3 2020 Results 8
Q3 2020 10 Driving Top Line Growth Results COVID-19 Update 4 Presentation Q3 2020 Results 8 Q4 2020 Outlook 13 Our Strategy 15 3Q3 2020 10 Driving Top Line Growth Results COVID-19 Update 4 Presentation Q3 2020 Results 8 Q4 2020 Outlook 13 Our Strategy 15 3
Slide 4: COVID-19 Update
COVID-19 Update 4COVID-19 Update 4
Slide 5: We established two priorities in response to the COVID-19 crisis
We established two priorities in response to the COVID-19 crisis Protecting Preserving the health and our financial safety of our position + associates 5 and customers 5We established two priorities in response to the COVID-19 crisis Protecting Preserving the health and our financial safety of our p
Slide 6: Protecting Associates And Customers
Protecting Associates And Customers Continue to prioritize the health and safety of Kohl’s customers and associates • We received an “A” grade from ShopSafely, an organization that scores retailers • on the safety of their shopping experience during the COVID-19 pandemic Strong customer satisfaction
Slide 7: Preserving Financial Position
Preserving Financial Position Net Sales declined 13% in Q3 2020, yet showed significant • sequential improvement from Q2 2020 Efforts to improve gross margin showed great progress • Operating in Q3 2020 Performance SG&A expense declined 8% in Q3 2020 • Inventory reduced 26% in Q3 2020 • Strengthened
Slide 8: Q3 2020 Results
Q3 2020 Results 8 Q3 2020 Results 8
Slide 9: Q3 2020 Results Key Takeaways
Q3 2020 Results Key Takeaways • Q3 2020 sales and earnings exceed company expectations, with significant improvement from Q2 • Digital sales growth remained strong • Our actions to improve gross margin showed great progress • Disciplined management of expenses and inventory resulted in positive (1)
Slide 10: Q3 2020 Key Metrics
Q3 2020 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) October 31, 2020 November 2, 2019 Net Sales $ 3,779 $ 4,358 Total Revenue 3,979 4,625 Gross Margin Rate 35.8% 36.3% SG&A 1,302 1,419 Depreciation 210 227 Impairments, Store Closings, and Other Costs 21
Slide 11: YTD 2020 Gross Margin Performance
YTD 2020 Gross Margin Performance Actions to improve gross margin showed great progress in Q3 2020 • Cost of shipping pressure in 2020 driven by increased digital sales penetration accelerated by the pandemic • Q1 Q2 Q3 17.3% 33.1% 35.8% % Change Y/Y (48) bps Cost of Shipping Inventory Management (5
Slide 12: Enhanced Liquidity Position
Enhanced Liquidity Position Key Balance Sheet & Cash Flow Items: Q3 / YTD 2020 February 1, 2020 Beginning Cash $723M Key Takeaways Sources • Long history of disciplined and prudent capital management New Debt $600M • More than two decades of maintaining Operating Cash Flow $910M Investment Grade rat
Slide 13: Q4 2020 Outlook
Q4 2020 Outlook 13 Q4 2020 Outlook 13
Slide 14: Q4 2020 Outlook
Q4 2020 Outlook • Customers look to Kohl’s for their holiday shopping needs and we will once again deliver the great experience they expect • Well-positioned and prepared to serve our customers with more omni-channel experiences in place • Stores ready for the holiday season with additional health a
Slide 15: Our Strategy
Our Strategy 15 Our Strategy 15
Slide 16: Our Strategy
Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organizational Margin Management Core Drive Top Line Growth Destination for Differentiated Agile, Active & Casual Leading with Omni-channel Operating Margin Maintain Stron
Slide 17: Kohl's has a powerful foundation to accelerate growth
Kohl’s has a powerful foundation to accelerate growth Active Customers 65M Loyalty Members 30M Kohl’s Charge Card holders 29M Kohl’s App Users 16M Of Americans living within 15 miles of a Kohl’s store 80% Nationwide base of convenient store locations 1,162 Store visits 600M Digital sales penetration
Slide 18: We are uniquely positioned to be the retailer of choice for the active and casual lifestyle
We are uniquely positioned to be the retailer of choice for the active and casual lifestyle For the entire family Accessible and Omni-channel ease Positioned for growth aspirational brand We serve the entire family We have a best-in-class omni- We’re focusing on growth across a breadth of categories
Slide 19: We are building on areas with proven momentum
We are building on areas with proven momentum Active Beauty Digital Innovation • We’re already a major player in • Our recent focus is gaining • We’ve continued to innovate • Leveraging our store footprint Active as a top retailer of Nike, traction and our customers are and enhance the customer (e.g
Slide 20: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy Committed to returning capital to shareholders Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Invest in Share Dividend complementary the business repurchases M&A Plan to reinstate a dividend in 1H 2
Slide 21: We have a history of investing in our business and returning significant capital to shareholders
We have a history of investing in our business and returning significant capital to shareholders Significant Capital Returned (1) Capex ($ in millions) Solid Free Cash Flow ($ in millions) to Shareholders ($ in millions) Dividend Share Repurchase $893 $796 $674 $470 $396 $1,403 $855 $306 $672 $578 $
Slide 22: Strategic Progress to Date: Driving Top Line Growth
Strategic Progress to Date: Driving Top Line Growth The most trusted retailer of choice for the active and casual lifestyle Destination for Active & Leading with Loyalty & Value Differentiated Omnichannel Casual Lifestyle Experience Expand Active & Outdoor Value Omnichannel Expand Active space by ne
Slide 23: Appendix
Appendix 23Appendix 23
Slide 24: Reconciliations: Adjusted Net Income and Diluted EPS
Reconciliations Adjusted Net (Loss) Income and Diluted (Loss) Earnings per Share, Non-GAAP Financial Measures (unaudited) Three Months Ended Nine Months Ended (Dollars in Millions, Except per Share Data) October 31, 2020 November 2, 2019 October 31, 2020 November 2, 2019 Net Income (Loss) GAAP $ (12
Slide 25: Reconciliations: Adjusted EBITDA and Free Cash Flow
Reconciliations October 31, 2020 Adjusted EBITDA Free Cash Flow Three Months Ended ($ in millions) October 31, 2020 ($ in millions) Three Months Ended Nine Months Ended Net cash provided by operating activities Operating Income 606 910 $ 22 Acquisition of property and equipment Depreciation and Amor
Slide 26: Slide 26