Kohl's Corporation · NYSE:KSS
Kohl's — Investor Presentation (October 2020)
36 slides from Kohl's's investor presentation, Oct 20, 2020
Slide 1: Investor Presentation October 2020
Exhibit 99.1 Investor Presentation October 2020Exhibit 99.1 Investor Presentation October 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: Table of Contents
10 Driving Top Line Growth Kohl’s: Our Vision and Strategy 4 Drive Top Line Growth 11 Expand Operating Margin 23 Table of Contents Disciplined Capital Management 27 Strong Organizational Core 31 Creating Long-term Shareholder Value 33 310 Driving Top Line Growth Kohl’s: Our Vision and Strategy 4 Dri
Slide 4: Kohl's: Our Vision and Strategy
Kohl’s: Our Vision and Strategy 4Kohl’s: Our Vision and Strategy 4
Slide 5: Our Vision
OUR VISION The most trusted retailer of choice for the active and casual lifestyle Destination for active, casual and beauty for the entire • family — from the most trusted brands, always delivering quality and discovery Leading with loyalty and value through best-in-class • rewards program Differen
Slide 6: 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 7: 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 portfolio across a breadth of
Slide 8: 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 1,163 Store visits 600M Digital sales penetration
Slide 9: 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 10: The COVID-19 crisis has further accelerated the path we're on
The COVID-19 crisis has further accelerated the path we’re on Active and Casual Digital and omni- Importance of value Shopping safely channel acceleration • We have grown Active at a 10% • Customers consistently rate • Made significant enhancements CAGR over the past 3 years Kohl’s as a leader in de
Slide 11: Drive Top Line Growth
Drive Top Line Growth 11Drive Top Line Growth 11
Slide 12: Drive Active to be at least 30% of our business
Drive Active to be at least 30% of our business Active sales have increased at a 10% CAGR over the past three years, growing to 20% of our total sales in 2019 Fuel growth with Amplify Grow Outdoor Expand inclusive Extended key national brands opportunity in sizes assortment online • Expand Columbia
Slide 13: New and bolder approach to reignite growth in Women's business
We are taking a new and bolder approach to reignite growth in our Women’s business Women’s sales declined at a 1.8% CAGR over the past three years versus rest of company increase of +1.4% CAGR Restructured Brand portfolio Partnering with Drive clarity and Enhance shopability organization reinvention
Slide 14: Build a sizable Beauty business
Build a sizable Beauty business, with the goal of tripling sales and driving incremental traffic We have momentum and Elevate and expand Invest in inspiring and our customers are ready assortment elevated store experience • Demonstrated ability to grow the • Leadership position in fragrance • 2,000+
Slide 15: Drive category productivity and inventory turn
Drive category productivity and inventory turn through strategic category and brand introductions and exits Category transformation Brand portfolio transformation Inventory management • We are leaning into growth categories such • We are exiting downtrending brands with • Drive inventory productivit
Slide 16: Capture market share from retail industry disruption
Capture market share from retail industry disruption We have benefited from competitor store closures in the past and seek to capitalize on future opportunities U.S. retail bankruptcies, As many as 25,000 U.S. Retail was changing — store closures hit record in stores may close in 2020, but COVID-19
Slide 17: Industry-leading loyalty program is a key value differentiator
Our industry-leading loyalty program is a key value differentiator Great Everyday Value Kohl’s Cash Kohl’s Rewards Kohl’s Charge Card • Deliver compelling pricing and • Iconic and differentiated loyalty • Provides customers the • Highest sales penetration in offers to 65 million customers device tha
Slide 18: Delivering personalized experiences for customers
Delivering personalized experiences for customers ensures they progress through their lifecycle with Kohl’s Best product Best content Best offer Best delivery • Personalized emails • Outfitting tailored to customer • Targeting customers with a • Reminding customers about propensities drives spend ch
Slide 19: Strong and productive store base
Kohl’s has a strong and productive store base which can evolve with customer expectations and demand Our stores are very healthy and profitable • Constantly evaluating our retail footprint to serve our customers • Taking a disciplined approach of evaluating stores with the flexibility to adjust as n
Slide 20: Modernizing the total store experience
We are modernizing the total store experience to better serve today’s family Simplified Shopping Inspired Solutions Product Storytelling Omni Experiences Experience • Evolve existing omni • Construct product stories that • Continue to refresh the look and • Leverage cross merchandising experiences:
Slide 21: Enhanced digital capabilities drive growth
Enhanced digital capabilities serve customers’ preferences, complement omni-channel strategy and drive growth Digital sales have increased at a 17% CAGR since 2014, growing to 24% of sales in 2019 Driving value to our Constantly evolving and Expanding digital exclusive customers enhancing the experi
Slide 22: Differentiated omni-channel experience drives customer productivity
Compelling and differentiated omni-channel experience drives increased customer productivity 4X 6X Omni-channel Omni-channel customer customer Omni-channel Stores Digital productivity vs. productivity vs. store-only digital-only 1.5B website visits 1,163 stores per year conveniently Drive traffic to
Slide 23: Expand Operating Margin
Expand Operating Margin 23Expand Operating Margin 23
Slide 24: We are focused on returning to growth
We are focused on returning to growth Total Active & Outdoor $20.2 Revenue $20.1 $20.0 ($ in billions) Women’s Beauty Retail disruption Loyalty Digital Comparable +1.5% +1.7% (1.3%) Sales Growth Stores 2017* 2018 2019 Future * Includes $170M related to 53rd week 24We are focused on returning to grow
Slide 25: Confident in ability to expand operating margin to 7% to 8%
We are confident in our ability to expand operating margin to 7% to 8% We expect to achieve this as the environment normalizes Operating Margin 7% to 8% Supply chain transformation Sourcing 7.2% 7.1% Inventory management Operational excellence 6.1% Store automation Marketing efficiency Cost of shippin
Slide 26: Driving greater cost efficiency through Operational Excellence
Continuously driving greater cost efficiency through Operational Excellence discipline Recent cost Gross margin efficiency SG&A efficiency reduction efforts Sourcing optimization Store labor Leverage supplier relationships to drive Streamline and automate task-based work 2017-2019 more efficiency in
Slide 27: Disciplined Capital Management
Disciplined Capital Management 27Disciplined Capital Management 27
Slide 28: Balanced Capital Allocation Strategy
Balanced Capital Allocation Strategy Committed to returning capital to shareholders Maintain strong balance sheet Long-term objective of maintaining Investment Grade rating 1 2 3 4 Opportunistic, Invest in Share Dividend complementary the business repurchases M&A 28Balanced Capital Allocation Strate
Slide 29: History of investing in business and returning capital to shareholders
We have a history of investing in our business and returning significant capital to shareholders Significant Capital Returned Capex ($ in millions) Solid Free Cash Flow ($ in millions) to Shareholders ($ in millions) Dividend Share Repurchase $893 $796 $674 $470 $396 $855 $1,403 $306 $672 $578 $881
Slide 30: Prudent balance sheet management with Investment Grade rating objective
We are committed to prudent balance sheet management with a long-term objective of sustaining Investment Grade rating Long History of Disciplined Financial Management More than two decades of maintaining Investment Grade rating • Modest pre-COVID-19 debt structure (2.5x leverage at year-end 2019) in
Slide 31: Strong Organizational Core
Strong Organizational Core 31Strong Organizational Core 31
Slide 32: Evolving how we work to accelerate our path forward
We are evolving how we work to accelerate our path forward Innovative and Adaptive Focus on ESG Learning Approach Diversity & Inclusion Stewardship Culture of experimentation and testing Committed to fostering a diverse & inclusive Our ESG journey began more than a decade • • • environment for our a
Slide 33: Creating Long-term Shareholder Value
Creating Long-term Shareholder Value 33Creating Long-term Shareholder Value 33
Slide 34: Creating Long-term Shareholder Value
Creating Long-term Shareholder Value Expand operating margin Return to growth Solid cash flow generation Return capital to shareholders Maintain strong balance sheet Our Strategy The most trusted retailer of choice for the active and casual lifestyle Expand Disciplined Strong Operating Capital Organ
Slide 35: Appendix
Appendix 35Appendix 35
Slide 36: Reconciliations
Reconciliations Adjusted Operating Income Free Cash Flow Leverage Ratio ($ in millions) 2017 2018 2019 ($ in millions) 2017 2018 2019 ($ in millions) 2017 2018 2019 Finance lease and financing Operating Income 1,416 1,361 1,099 1,717 1,638 1,491 Net cash provided by operating obligations 1,691 2,107