Slide 1: Q1 2022 Results Presentation
Q1 2022 Results Presentation May 19, 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. The Company intends forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “anti
Slide 3: Q1 2022 Results Presentation agenda
Q1 2022 Results Presentation Q1 2022 Results 4 Updated 2022 Outlook 10 Our Strategy 12 3
Slide 4: Q1 2022 Results
Q1 2022 Results 4
Slide 5: Q1 2022 Summary
Q1 2022 Summary Key Takeaways • Q1 results were below our expectations. The quarter started off strong with positive low-single digits comp growth through late March, however in April demand considerably weakened as we lapped last year’s stimulus and as consumers started to experience inflationary p
Slide 6: Q1 Key Metrics
Q1 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) April 30, 2022 May 1, 2021 Net Sales $ 3,471 $ 3,662 Total Revenue 3,715 3,887 Gross Margin Rate 38.3% 39.0% SG&A 1,293 1,170 Depreciation 200 211 Operating Income 82 273 Interest Expense 68 67 Loss on extin
Slide 7: Q1 2022 Gross Margin & SG&A Expense Performance
Q1 2022 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Decreased (69 bps) versus Q1 2021 Deleveraged (468 bps) vs Q1 2021 39.0% $1,293M 38.3% $1,170M % Total Revenue 30.1% 34.8% Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2022 Gross Margin Takeaways Q1 2022 SG&A Takeaways Higher freight co
Slide 8: Q1 Inventory driven largely by unique factors
Q1 Inventory driven largely by unique factors +$441M $3,736M +$214M +$82M +$332M $2,667M Q1 2021 Sephora / Beauty In-Transit Pack & Hold Core Q1 2022 Q1 2022 Inventory Increased 40% Y/Y Driven By: • The investment in beauty inventory to support the 200 Sephora shops opened last Fall as well as the S
Slide 9: Sephora at Kohl's continues to drive impressive results in Q1
Sephora at Kohl’s continues to drive impressive results in Q1 • Positive low-single digits comp growth in the 200 stores with Sephora • Sales strength across all categories, including Skincare, Makeup, and Fragrance • 400 Sephora stores to open in 2022 (48 stores opened during the last week of April
Slide 10: Updated 2022 Outlook
Updated 2022 Outlook 10
Slide 11: 2022 Updated Outlook
2022 Updated Outlook Metric Full Year Guidance Flat to +1% increase Net Sales versus 2021 Operating Margin 7.0% to 7.2% EPS $6.45 to $6.85 Capital Allocation Strategy • Capex: ~$850 million • Dividend: $0.50 quarterly dividend payable on June 22, 2022 • Share Repurchase Program: As part of its $3.0
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 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 growth off
Slide 15: Multiple initiatives to support sales growth
Multiple initiatives to support sales growth Destination for the Grow Sephora to a Leading with Differentiated Active & Casual Lifestyle $2 Billion Business Loyalty & Value Omnichannel Experience • Fuel growth in Active to at least 30% • Sephora at Kohl’s will become a leading • Kohl’s Cash: Iconic
Slide 16: Multiple initiatives to support sales growth in 2022 and beyond
Multiple initiatives to support sales growth in 2022 and beyond… +LSD% Growth $18,471 Net Sales (in millions) 2021 Sephora1 New Stores2 Other Initiatives3 Displacement4 20265 1. Sephora sales goal of $2 billion by 2025 from a base of less than $200 million in 2021. 2. New store sales opportunity of
Slide 17: Sephora at Kohl's is driving impressive results
Sephora at Kohl’s is driving impressive results Positive low-single $2 billion digits comps sales goal by 2025 in the 200 stores with Sephora in Q1 • Sephora becomes Kohl’s exclusive beauty partner online and in at least 850 stores • 200 Sephora shops opened in 2021 and opening an additional 400 in
Slide 18: New store expansion opportunity allows Kohl's to expand reach
New store expansion opportunity allows Kohl’s to expand reach $500M+ Smaller Format sales opportunity primarily 35k sq ft New Store Economics • 100+ new small store openings planned in the next four years allowing Kohl’s to reach smaller markets • Testing new experiences, including more localized 5
Slide 19: Fundamental business model improvements driving 7% to 8% operating margin
Fundamental business model improvements in place, driving a consistent 7% to 8% operating margin 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 Inv
Slide 20: Significant cash flow generation allows investment in high ROI growth initiatives
Significant cash flow generation allows investment in high ROI growth initiatives… Strong Expected Cash Flow … … Which Goes Towards Impactful Organic Investments 1 2 Sephora Opportunity New Store Expansion Operating Cash Flow • $2B sales opportunity • $500M+ sales opportunity ~$5.5B+ • Will be in 85
Slide 21: And commitment to returning capital to shareholders
…And commitment to returning capital to shareholders $2.3B+ of Expected Share Repurchases Doubled the Annual Dividend in 2022 in 2021 and 2022 ($ in mm) ($ per share) $1.35B $2.00 $1.0B+ $1.00 2021 2022 2021 2022 • Repurchased ~$13B in shares since 2006, reducing share count by ~60% • Distributed $3
Slide 22: Long-standing focus on ESG Stewardship
Long-standing focus on ESG Stewardship Culture Community Climate 100,000 $815M+ Net Zero by 2050 Associates donations through Kohl’s Cares committed to reducing GHG emissions 8 5.5M+ Business Resource Groups volunteer hours served by Kohl’s 165 associates solar and wind locations D&I Framework intro
Slide 23: Appendix
Appendix 23
Slide 24: Reconciliations
Reconciliations Adjusted Net Income and Diluted Earnings per Share, Non-GAAP Financial Measures (unaudited) Three Months Ended (Dollars in Millions, Except per Share Data) April 30, 2022 May 1, 2021 Net Income GAAP $ 14 $ 14 Impairments, store closing, and other — 201 Income tax impact of items note
Slide 25: Reconciliations
Reconciliations Free Cash Flow ($ in millions) Three Months Ended April 30, 2022 Net cash provided by operating activities $ (460) Acquisition of property and equipment (221) Finance lease and financing obligation payments (29) Proceeds from financing obligations 4 Free Cash Flow $ (706) 25
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