Slide 1: Q3 2022 Results Presentation
Q3 2022 Results Presentation November 17, 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: Q3 2022 Results Presentation agenda
Q3 2022 Results Presentation Q3 2022 Results 4 2022 Outlook Commentary 10 Our Strategy 12 3
Slide 4: Q3 2022 Results
Q3 2022 Results 4
Slide 5: Q3 2022 Summary
Q3 2022 Summary Key Takeaways Q3 2022 • Performance during the third quarter was relatively • Comparable sales declined (6.9%) versus Q3 2021; net sales declined (7.2%) in line with our expectations, as the organization • Gross margin decreased (263 bps) compared to last year due to increased freigh
Slide 6: Sephora at Kohl's continues to drive impressive results in Q3
Sephora at Kohl’s continues to drive impressive results in Q3 • Kohl’s stores with Sephora continue to outperform the balance of chain, attracting new customers and driving traffic • The partnership is attracting new, younger, and more diverse customers. Customers that shop Sephora at Kohl's visit m
Slide 7: Q3 2022 Gross Margin & SG&A Expense Performance
Q3 2022 Gross Margin & SG&A Expense Performance Gross Margin SG&A Expense Decreased (263 bps) versus Q3 2021 Deleveraged (120 bps) vs Q3 2021 $1,380M $1,334M 39.9% 37.3% % Total Revenue 30.0% 31.2% Q3 2021 Q3 2022 Q3 2021 Q3 2022 Q3 2022 Gross Margin Takeaways Q3 2022 SG&A Takeaways • Elevated freig
Slide 8: Committed to Balance Sheet Strength Through Balanced Capital Allocation Strategy
Committed to Balance Sheet Strength Through Balanced Capital Allocation Strategy • Long-term objective of maintaining Investment Grade rating with a leverage target of 2.5x • Will continue to prioritize investments in the business, followed by our commitment to the dividend with excess cash deployed
Slide 9: Q3 Key Metrics
Q3 Key Metrics Consolidated Statement of Operations Three Months Ended (Dollars in Millions) October 29, 2022 October 30, 2021 Net Sales $ 4,052 $ 4,366 Total Revenue 4,277 4,600 Gross Margin Rate 37.3% 39.9% SG&A 1,334 1,380 Depreciation 202 210 Operating Income 200 387 Interest Expense 81 66 Provi
Slide 10: 2022 Outlook Commentary
2022 Outlook Commentary 10
Slide 11: Fourth Quarter 2022 Considerations
Fourth Quarter 2022 Considerations Strengths Challenges • 600+ Sephora at Kohl’s shops open this Holiday vs. 200 last year • Challenging macroeconomic environment with persistently • Lapping sales headwinds in Q4 2021 due to lack of inventory driven high inflation by global supply chain issues • Rec
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 Long-Term Value
Committed to Creating Long-Term Value Kohl’s Long-term 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 di
Slide 15: Multiple initiatives to support future growth
Multiple initiatives to support future growth Destination for the Grow Sephora to a Leading with Differentiated Active & Casual Lifestyle $2 Billion Business Loyalty & Value Omnichannel Experience • Be a leading destination for casual • Kohl’s stores with Sephora continue • Kohl’s Cash: Iconic and •
Slide 16: We remain confident in our ability to expand operating margin to 7% to 8%
We remain confident in our ability to expand operating margin to 7% to 8% 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 Inventory Management • Dri
Slide 17: 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 $815M+ Net Zero by 2050 Associates donations t
Slide 18: Appendix
Appendix 18
Slide 19: Reconciliations
Reconciliations Free Cash Flow ($ in millions) October 29, 2022 Three Months Ended Nine Months Ended Net cash provided by operating activities $ 121 $ (425) Acquisition of property and equipment (185) (733) Finance lease and financing obligation payments (26) (81) Proceeds from financing obligations
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