Slide 1: Kohl's Reinvention is Driving Growth for the Future
The strategic transformation is a reinvention of Kohl’s. We’re pivoting from a department store to a focused lifestyle concept. Kohl’s Reinvention is Driving Growth for the Future March 7, 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: Vice President, Investor Relations
Vice President, Investor Relations
Slide 4: Agenda
Kohl’s Strategy and Path Forward Michelle Gass, Chief Executive Officer Active & Casual Portfolio to Power the Future Doug Howe, Chief Merchandising Officer Engaging Customers in New and Impactful Ways Greg Revelle, Chief Marketing Officer Innovating through our Leading Omnichannel Platform Paul Gaf
Slide 5: Chief Executive Officer
s Chief Executive Officer
Slide 6: Key Investment Highlights
Key Investment Highlights Delivering Differentiated Compelling Expanding veraging Shareholder Position in Re Partnerships Our Reach ta Science Value • Evolving to a focu • Growing Sephora • Opening 100+ new easing everyda • Driving +LSD% sales active and casual $2 billion business stores in smaller
Slide 7: Kohl's Financial Framework
Committed to Creating Value Kohl’s Financial Framework SALES GROWTH OPERATING MARGIN EPS GROWTH 1 Low-Single 7% to 8% Mid-to-High Digits % + = Single Digits % Capital Allocation Principles Strong Invest in Growth Significant Capital Balance Sheet Returns 1 Mid-to-High single digits EPS growth € of F
Slide 8: Next generation of customers
next generation of customers
Slide 9: Kohl's is a powerful brand, innovator and employer
Kohl’s is a powerful brand, innovator and employer
Slide 10: The strategic transformation is a reinvention of Kohl's
The strategic transformation is a reinvention of Kohl’s. We’re pivoting from a department store to a focused lifestyle concept.
Slide 11: The most trusted retailer of choice for the Active & Casual lifestyle
INTRODUCED OCTOBER 2020 The most trusted retailer of choice for the Active & Casual lifestyle
Slide 12: How we live today
e live today … • 86% of consumers regularly wear Athleisure during the work week • 69% of adults describe their wardrobe as “casual” or “comfortable” • 49% of consumers plan to dress more comfortably when they return to the office *Data sourced from NPD Future of Style Event May 2021
Slide 13: And for how people will live tomorrow
… and for how people will live tomorrow
Slide 14: Kohl's delivers a differentiated position in retail
Kohl’s delivers a differentiated position in retail Convenient & Inspiring Experience Compelling Product Portfolio Industry-Leading Value Proposition
Slide 15: Our Strategy
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 16: A strong, experienced and diverse leadership team
A strong, experienced and diverse leadership team is driving Kohl’s strategy Michelle A. Banks Marc Chini Paul Gaffney Doug Howe Chief Diversity & Chief People Officer Chief Technology & Chief Merchandising Officer Inclusion Officer Supply Chain Officer Michelle Gass Chief Executive Officer Jason Ke
Slide 17: Progress on our strategy
our strategy • Successfully launched major strategic partnership with Sephora in 2021 • Grew Active business by 40% in 2021, increasing penetration to 24% • Introduced several iconic national brands, including Tommy Hilfiger, Calvin Klein and Eddie Bauer • Achieved 2023 financial targets in 2021, tw
Slide 18: Benefits are still ahead of us
benefits are still ahead of us stores by 2023 brands innovation experiences
Slide 19: Discovery and convenience
disc and convenience
Slide 20: Testing new experiences in smaller format stores
And testing new experiences in smaller format stores
Slide 21: Drive top line growth
Drive top line growth Portfolio Ways Platform Paul Gaffney Doug Howe Greg Revelle Chief Technology & Chief Merchandising Officer Chief Marketing Officer Supply Chain Officer
Slide 22: Proven ability to navigate through uncertainties
Proven ability to navigate through uncertainties Macro Environment Kohl’s Strategic Advantages • Global pandemic • Strong balance sheet • Inflation • Large and loyal customer base • Supply chain disruption • Agile & responsive operating model • Tight labor market
Slide 23: Delivering shareholder value since 2014
pr shareholder value since 2014 in 2021 in 2021 *Adjusted diluted earnings per share is a non-GAAP financial measure. Please refer to the reconciliation in the Appendix for more information.
Slide 24: Key Investment Highlights
Key Investment Highlights Delivering Differentiated Compelling Expanding veraging Shareholder Position in Re Partnerships Our Reach ta Science Value • Evolving to a focu • Growing Sephora • Opening 100+ new easing everyda • Driving +LSD% sales active and casual $2 billion business stores in smaller
Slide 25: Chief Merchandising Officer
Chief Merchandising Officer
Slide 26: Active & Casual Portfolio to Power the Future
to Power the Future brand portfolio $2 billion business growth in Active Women’s
Slide 27: Kohl's is positioned to drive growth in active and casual
Kohl’s is positioned to drive growth in the active and casual market Accelerate Build Adjacent Maintain Growth Categories Reignite Strength Home Active Outdoor Beauty Inclusive Sizing Women’s Men’s Kids’
Slide 28: Top retailer of iconic brands
We are a top retailer of some of the most iconic brands in the world
Slide 29: Track record of launching and growing national brands
Kohl’s has a strong track record of launching and growing national brands 2017-2020 New in 2021
Slide 30: Private brands drive value and relevance
Our private brands play a key role in driving value and relevance 34% on path to Private Brand $1B+ Penetration $1B+ Brand *All figures based on fiscal 2021 results
Slide 31: Private brands drive value and relevance
Our private brands play a key role in driving value and relevance 34% on path to Private Brand $1B+ Penetration $1B+ Brand *All figures based on fiscal 2021 results
Slide 32: National and private brands deliver clear differentiation
delivers clear differentiation National Brands Private Brands • Sought-after brands and products Differentiated and exclusive products • Engage new customers Provide opening price point offerings with incredible quality • Build confidence through high awarenes + and familiarity Address gaps in the p
Slide 33: Key product growth initiatives
We have established key product growth initiatives to become the active and casual lifestyle destination for every family Create a destination for perpetual Build a sizable Continued growth Reignite innovation & beauty business in Active Women’s discovery
Slide 34: Grow Sephora to a $2 billion business
Grow Sephora to a $2 billion business • Prestige assortment + elevated experience • Attracting new, younger customers • Delivering a halo effect to the entire business • Scaling to majority of chain * Sephora sales target by 2025
Slide 35: Momentum and a huge runway ahead
We have momentum and a huge runway ahead Mid-Single 25% 50% Digits % Cross-shopping Sales Lift New Customers Attaching at least one to overall store sales, Customers are younger other category across where we have and more diverse all lines of business launched DECEMBER 2020 AUGUST 2021 SPRING 2022
Slide 36: Innovating and testing to drive growth and engagement
Innovating and testing to drive growth and engagement Cross-Company Incremental Buy Online Pick impulse Amazon Returns Smaller Sephora Up in Store merchandising Incentive footprint Gift Cards
Slide 37: Drive Continued Growth in Active
Drive Continued Growth in Active GR CA +10% $4.4B $2.7B Sales 14% 24% Penetration 2016 2021 Active Sales $ in billions
Slide 38: Our mission is to be the active leader
Our mission is to be the active Leadership Elevate Athleisure Grow Outdoor More productive and faster turning than company average
Slide 39: Reignite Women's
Reignite Women’s • Large, $5B business • Top 5 market share position *Based on NPD Data (January—December 2021)
Slide 40: Return women's to growth
return women’s to growth 1 2 3 4 apparel business swim opportunity
Slide 41: A Leader in Women's Casual Apparel
A Leader in Women’s Casual Apparel
Slide 42: Significantly Grow our Dress Business
Significantly Grow our Dress Business
Slide 43: Outerwear and Swim
Jo 4 ys Exin? Outerwear and Swim A&é
Slide 44: Amplify Inclusivity Opportunity
Amplify Inclusivity Opportunity
Slide 45: Integrated approach to deliver an active and casual portfolio
Home Beauty Taking an integrated approach to Women’s deliver an active Men’s and casual portfolio Act Kids’ iv e
Slide 46: Leverage our leading omnichannel platform for innovation and discovery
Leverage our leading omnichannel-platform for innovation and discovery BARK: 7S gly COLORS nanoveve } surceeitnero e@ ROAM LOUD YOUR HEADBANDS ETHICGOODS: of, ape fob lac
Slide 47: Chief Marketing Officer
Gr Chief Marketing Officer
Slide 48: Engaging Customers in New and Impactful Ways
New & Impactful Ways Customer Base Effectiveness Card Rewards to 7. Credit Card
Slide 49: The Power of our Customers
The Power of our Customers Rewards Members Active Customers *All figures based on fiscal 2021 results
Slide 50: Right message, right time, right channel
right message The right product right channel customer experience right offer right timing Consistently deliver the right message, at the right time, in the right channels for each of our customers
Slide 51: Personalization
Personalization Experience with Kohl’s Cash Experiences across channels will be tailored based on actions we want to drive and recognize 51
Slide 52: Constantly Connecting with our Existing Customer Base
Constantly Connecting with our Existing Customer Base 52
Slide 53: Reaching Younger and More Diverse Customers
Reaching Younger and More Diverse Customers 25% Sephora Customers are New to Kohl’s 53
Slide 54: Reaching Younger and More Diverse Customers
Reaching Younger and More Diverse Customers 54
Slide 55: Acquiring Millions of New Customers with Amazon
Acquiring Millions of New Customers with Amazon 55
Slide 56: Modernized, More Efficient Marketing Strategy
Modernized, More Efficient Marketing Strategy 50% More efficient Focused on personalized marketing on digital and social media social media 56
Slide 57: Modernized, More Efficient Marketing Strategy
Modernized, More Efficient Marketing Strategy Focused on personalized digital and social media 57
Slide 58: Kohl's is a leader in loyalty
Kohl’s is a leader in loyalty 58
Slide 59: Always Advancing Value and Rewards
Always Advancing Value and Rewards #1 for Cust 2021 Customer Perceptions Tracker, a proprietary study managed by Morning Consult, compares customer rankings among 12 competitive retailers based on: coupons and discounts, loyalty program, and credit card program. 59
Slide 60: Always Advancing Value and Rewards
Always Advancing Value and Rewards 30+ Million Rewards Members spend 2x more 2021 Customer Perceptions Tracker, a proprietary study managed by Morning Consult, compares customer rankings among 12 competitive retailers based on: coupons and discounts, loyalty program, and credit card program. 60
Slide 61: Deeper engagement drives growth in customer spend
12x Spend Deeper engagement 6x with Kohl’s Spend 2x loyalty assets Spend 1x drives growth Spend in customer spend Kohl’s Valuable Rewards Card Customer Status *All figures based on fiscal 2021 results 61
Slide 62: Driving Revenue and Profitability for the Future
Driving Revenue and Profitability for the Future Enhancing Kohl’s Loyalty Proposition Kohl’s Card Co-Branded Kohl’s Rewards Increasing Credit Card 5% Rewards to 7.5% 62
Slide 63: Email, Onsite, Display Banners, Social Media
Email Onsite Display Banners Social Media 63
Slide 64: Chief Technology & Supply Chain Officer
Chief Technology & Supply Chain Officer 64
Slide 65: Leading Omnichannel Platform
Leading Omnichannel Platform foundation transformation to better decisions further efficiencies 65
Slide 66: Kohl's has a strong omnichannel foundation
Kohl’s has a strong omnichannel foundation 4X 6X Omnichannel Omnichannel customer productivity customer productivity vs. store-only vs. digital-only Omnichannel Stores Digital e traffic to stor 1,165 stores 1.7B website visits per year Leverage omni capabilities 95% off-mall locations 18M active app
Slide 67: Technology plays a critical role in our transformation
Technology plays a critical role in our transformation 67
Slide 68: Healthy and productive store base
Kohl’s has a healthy and productive store base that can evolve with customer expectations and demand 68
Slide 69: Future of Self Service
Future of Self Service Launching self-serve BOPUS in all stores in 2022 Piloting self-serve returns in over 100 stores Testing self-serve check-out 69
Slide 70: Digital continues to grow
Digital continues to grow, and we’re investing in an even easier and more Active Users productive experience R G A C % 13 $5.9 + $3.6 60% App/Mobile 35% Penetration Desktop Penetration 65% 40% 2017 2021 70
Slide 71: Continue to drive growth with Digital
Continue to drive growth with Digital Optimize Digital Enhance Convert More Acquire New Assortment Discovery and Omnichannel Customers Shopability Customers 71
Slide 72: Better data and better science leads to better decisions
Better data and better science leads to better decisions 72
Slide 73: Better data and science enable more relevancy
Better data and better science come together to enable us to deliver more relevancy Product Marketing Placement Value 73
Slide 74: Product Hyperlocalization
Product Hyperlocalization Less-Cross-Shop, Cross-Shop, Less-Cross-Shop, Young Men’s Apparel Blue-Collar North Rural North Purchasing North 74
Slide 75: Personalized Messaging
Personalized Messaging Jess Rachel Trips: shops at Kohl’s 4 times per year Trips: shops at Kohl’s 4 times per year Spend: $350 Spend: $350 Programs: Kohl’s Rewards Programs: Kohl’s Rewards Categories: Active, Home, Kid’s Apparel Categories: Active, Home, Kid’s Apparel Additional data to enhance pers
Slide 76: Personalized Messaging
Personalized Messaging Product Email Kohls.com Social Media Recommendations Jess VS VS VS VS Rachel 76
Slide 77: Strong and agile supply chain
We have a strong and agile supply chain and have initiatives underway to drive further efficiencies 77
Slide 78: Chief Financial Officer
Chief Financial Officer 78
Slide 79: Capital Allocation Strategy
Capital Allocation Strategy shareholder value smaller markets gr 1 rating 1 Mid-to-High single digits EPS growth off of FY22 base 79
Slide 80: 2021 Revenue, Adj EBITDA and Free Cash Flow
stor and technology capabilities $19.4B $2.5B $1.6B Total Revenue Adj EBITDA* Free cash flow* 2021 2021 2021 *Adjusted EBITDA and Free cash flow are non-GAAP financial measures. Please refer to the reconciliations in the Appendix for more information. 80
Slide 81: Strong Progress Against Strategy in 2021
Strong Progress Against Strategy in 2021 Path to Future Success • Drive top line growth 2021 Results • Committed to delivering strong margins • Launched game changing partnerships and iconic national brands • Sustain Investment Grade rating • Achieved our key 2023 financial targets in 2021 • Return
Slide 82: Kohl's Financial Framework
Committed to Creating Value Kohl’s Financial Framework SALES GROWTH OPERATING MARGIN EPS GROWTH 1 Low-Single 7% to 8% Mid-to-High Digits % + = Single Digits % Capital Allocation Principles Strong Invest in Growth Significant Capital Balance Sheet Returns 1 Mid-to-High single digits EPS growth off o
Slide 83: Key Initiatives to Drive Low-Single Digits Sales Growth
Key Initiatives to Drive Low-Single Digits Sales Growth +LSD% Annual Growth Rate Digital Growth Loyalty & Personalization Enhanced Brand New Stores Portfolio Sephora 2021 Sales Future *This chart is an illustration and not an accurate depiction of the scale of each initiative’s sales growth opportun
Slide 84: Sephora to be a $2 Billion Business
Grow 850+ Stores and New Customer Sephora to be Digital Experience Acquisition a $2 Billion Business Cross-selling Favorable Opportunity Economics * Sephora sales target by 2025 84
Slide 85: Enhanced Brand Portfolio
Enhanced Brand Portfolio Active & Outdoor New Brands Women’s Partnerships Driving relevance and productivity both in stores and digitally 85
Slide 86: Healthy and profitable off-mall store base
Kohl’s healthy and profitable off-mall store base serves as the foundation of our omnichannel platform 1,165 stores in 49 states ~95% 80% of stores generated of Americans live $1M+ in 4-wall cash within 15 miles of flow in 2021 a Kohl’s store ~40% 99% of digital sales of stores were fulfilled by sto
Slide 87: New Store Growth Represents Solid Revenue Opportunity
New Store Growth Represents Solid Revenue Opportunity • Plan to open 100+ new smaller format stores over next four years • Reaching more customers in new smaller markets • $500M+ sales opportunity • Expansion follows successful pilot • 15%+ targeted return on investment 87
Slide 88: Best-in-Class Loyalty
Engage Best in Greater 65M+ Best-in-Class Loy • Rewards Program ran • 30+ Million members 88
Slide 89: Continue to Drive Growth with Digital
Continue to Drive Growth with Digital Key Initiatives ~$6B Digital Sales 2021 New Customer Acquisition Converting More Omnichannel Customers % 32% +13 Enhancing Discovery and Shopability Digital Sales 5-Year CAGR Penetration 2021 Optimizing Digital Assortment Kohl’s Media Network Future Goal Enablin
Slide 90: 7% to 8% Operating Margin
7% to 8% Operating Margin +—Drivers Pressures • Inventory management • Cost inflation / freight • Sourcing cost savings • Wage investments • Optimizing price / promotion • Digital penetration strategies • Store automation • Marketing & distribution efficiency • Kohl’s Media Network 90
Slide 91: Gross Margin Drivers
Gross Margin Drivers Inventory Sourcing Cost Optimizing Price / Management Savings Promotion Strategies • Drive inventory turn of 4.0x+ • Continue to leverage out Simplified pricing with • centralized sourcing and reduced stackable offers • Dynamic inventory allocation direct factory negotiations •
Slide 92: Management Initiatives
Management Initiatives Long history of disciplined expense management Transform labor across stores and fulfillment centers to mitigate wage inflation • Scale self-service across chain • Drive productivity across fulfillment centers Build on initial success in improving marketing efficiency • Reduce
Slide 93: Drive EPS Growth
Mid-to-High Single Digits % $7.00 to $7.50 Drive EPS Growth $4.86 Combination of sales growth and solid margins, coupled with commitment to share repurchases leads to mid-to-high single digits EPS growth 2019 Actuals* 2022 Guidance Future *Adjusted diluted earnings per share is a non-GAAP financial
Slide 94: Balance sheet and capital management
and capital management 2021 2.3x $2.3B $1.5B Leverage More than two Operating Capital Returned to decades rated Cash Flow Shareholders Investment Grade *Leverage Ratio is a non-GAAP financial measure. Please refer to the reconciliation in the Appendix for more information. 94
Slide 95: Capital Allocation Strategy
Capital Allocation Strategy Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 Invest in Share Dividend the business Repurchases 95
Slide 96: Long-term Debt Outstanding
Long-term Debt Outstanding $ in millions Committed to $2,797 Balance Sheet $2,451 $1,910 $1,861 $1,856 Strength • More than two decades of maintaining Investment Grade rating • Plan to further strengthen balance 2017 2018 2019 2020 2021 sheet by addressing 2023 maturities Leverage 2.5x 2.2x 2.5x 7.7
Slide 97: History of Strong Cash Flow Generation
History of Strong Cash Flow Generation $ in billions FUTURE OUTLOOK Operating Cash Flow Free Cash Flow Operating Cash Flow $2.3 $5.5B+ $2.1 OCF $1.8B 5-year Avg. 2022-2024E $1.7 $1.7 $1.6 $1.4 $1.3 FCF $1.1B 5-year Avg. Free Cash Flow $0.9 $0.9 $0.7 ~$2.5B 2017 2018 2019 2020 2021 2022-2024E *Free c
Slide 98: Investing in High ROI Growth Driving Initiatives
Investing in High ROI Growth Driving Initiatives COMMITTED TO INVESTING IN THE BUSINESS ~$2.5B TOTAL INVESTMENT (3-Year 2022-2024) ~$2.5B $2.1B Store Strategies Omnichannel Technology ~65% ~15% 15-20% Sephora & New DC/EFC Kohl’s Media Network, 2017-2019 2022-2024E Pre-Pandemic Post-Pandemic Store Gr
Slide 99: Strong Track Record of Capital Returns
STRONG TRACK RECORD OF CAPITAL RETURNS $1,584M $1,502M $1,350M $1,101M $994M $915M $893M $796M $674M Committed $116M to returning 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Capital to Dividends Paid Share Repurchases shareholders DELIVERING SHAREHOLDER VALUE • Increased dividend by 100% in 20
Slide 100: Committed to Driving Performance and Delivering Shareholder Value
Committed to Driving Performance and Delivering Shareholder Value SALES GROWTH EBIT MARGIN EPS GROWTH 1 Low-Single Mid-to-High + 7% to 8% = Digits % Single Digits % 3-Year Cash Flow 5.5B+ Investing in & Strengthening Returning Capital to the Business Shareholders CAPEX $2.00 $3B $1B ~$2.5B Annual Di
Slide 101: Michelle Gass, Chief Executive Officer
Michelle Gass Chief Executive Officer 101 101
Slide 102: Focus on ESG stewardship
Excellence Award Recipient Member of Dow Jones Long-standing Sustainability Indices Powered by the S&P Global CSA focus on ESG stewardship • Strong environmental platform, recognized by leading third parties • Committed to Diversity & Inclusion and long history of giving back to our communities thro
Slide 103: Environmental commitments
Help fight More recycling + Accelerate climate change less waste sustainable sourcing Net Zero by 2050 Divert 85% of Kohl’s Reduce water and U.S. operational waste chemical usage and Committed to expanding from landfills increase recycled materials renewable energy in Kohl’s private brands platforms
Slide 104: Kohl's Cares community giving
• Donated over $800 million and volunteered more than 5.5 million hours since program inception • Committed to health and wellness 104 104
Slide 105: Diversity across the business
across the business Our People Our Customers Our Community our associate population Hispanic customers diverse communities 105
Slide 106: Board governance and risk oversight
Creating and maintaining stakeholder value through Board governance and risk oversight Key Statistics Independence 93% Average Age 61 years Christine Joinied 20 Gender Diversity 43% Balanced Board Tenure 8 new independent directors added in the last 5 years garet Thomas King Joined 20 Joined 20 3 Av
Slide 107: Spas — Aat e e
Spas — Aat e e
Slide 108: Key Investment Highlights
Key Investment Highlights Delivering Differentiated Compelling Expanding veraging Shareholder Position in Re Partnerships Our Reach ta Science Value • Evolving to a focu • Growing Sephora • Opening 100+ new easing everyda • Driving +LSD% sales active and casual $2 billion business stores in smaller
Slide 109: Q&A
Q&A
Slide 110: Appendix
Appendix 110 110
Slide 111: Reconciliations: EBITDA and Free Cash Flow
Reconciliations 2021 EBITDA Free Cash Flow ($ in millions) ($ in millions) January 29, 2022 2017 2018 2019 2020 2021 Operating Income 1,680 Net cash provided by operating activities 1,691 2,107 1,657 1,338 2,271 Depreciation and Amortization 38 Acquisition of property and equipment (672) (578) (855)
Slide 112: Reconciliations: Adjusted EPS
Reconciliations Adjusted EPS (2021 and 2019) Twelve Months Ended Diluted Earnings (Loss) per Share January 29, 2022 February 1, 2020 GAAP $ 6.32 $ 4.37 Impairments, store closing, and other — 0.71 (Gain) on sale of real estate — —Loss on extinguishment of debt 1.35 (0.06) Income tax impact of items
Slide 113: Reconciliations: Leverage Ratio
Reconciliations Leverage Ratio (Dollars in Millions) 2017 2018 2019 2020* 2021* Finance lease and financing obligations 1,717 1,638 1,491 1,502 2,251 Long-term debt 2,797 1,861 1,856 2,451 1,910 Total Debt 4,514 3,499 3,347 3,953 4,161 Operating leases 0 0 2,777 2,786 2,624 Rent x 8 2,344 2,408 0 0
Slide 114: Important Shareholder Information and Where You Can Find It
Important Shareholder Information and Where You Can Find It Kohl’s intends to file a proxy statement and BLUE proxy card with the SEC in connection with the solicitation of proxies for Kohl’s 2022 Annual Meeting of Shareholders (the “Proxy Statement” and such meeting the “2022 Annual Meeting”). Kohl