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Kohl’s Corp. – ‘10-Q’ for 7/30/22

On: Thursday, 9/1/22, at 4:01pm ET · For: 7/30/22 · Accession #: 950170-22-18031 · File #: 1-11084

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/01/22  Kohl’s Corp.                      10-Q        7/30/22   55:6.4M                                   Donnelley … Solutions/FA

Quarterly Report — Form 10-Q

Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML   1.52M 
 2: EX-10.1     Material Contract                                   HTML    196K 
 3: EX-10.2     Material Contract                                   HTML    198K 
 4: EX-31.1     Certification -- §302 - SOA'02                      HTML     23K 
 5: EX-31.2     Certification -- §302 - SOA'02                      HTML     23K 
 6: EX-32.1     Certification -- §906 - SOA'02                      HTML     19K 
 7: EX-32.2     Certification -- §906 - SOA'02                      HTML     19K 
13: R1          Document and Entity Information                     HTML     75K 
14: R2          Consolidated Balance Sheets                         HTML    106K 
15: R3          Consolidated Statements of Operations               HTML     77K 
16: R4          Consolidated Statements of Changes in               HTML     60K 
                Shareholders' Equity                                             
17: R5          Consolidated Statements of Cash Flows               HTML    110K 
18: R6          Basis of Presentation                               HTML     22K 
19: R7          Revenue Recognition                                 HTML     60K 
20: R8          Debt                                                HTML     97K 
21: R9          Leases                                              HTML    252K 
22: R10         Stock-Based Awards                                  HTML     58K 
23: R11         Contingencies                                       HTML     20K 
24: R12         Income Taxes                                        HTML     23K 
25: R13         Net Income Per Share                                HTML     66K 
26: R14         Subsequent Events                                   HTML     24K 
27: R15         Basis of Presentation (Policies)                    HTML     19K 
28: R16         Revenue Recognition (Tables)                        HTML     53K 
29: R17         Debt (Tables)                                       HTML     91K 
30: R18         Leases (Tables)                                     HTML    251K 
31: R19         Stock-Based Awards (Tables)                         HTML     54K 
32: R20         Net Income Per Share (Tables)                       HTML     66K 
33: R21         Revenue Recognition - Schedule of Net Sales by      HTML     38K 
                Line of Business (Details)                                       
34: R22         Revenue Recognition - Additional Information        HTML     23K 
                (Details)                                                        
35: R23         Debt - Components of Long-term Debt (Details)       HTML     59K 
36: R24         Debt - Additional Information (Details)             HTML     23K 
37: R25         Leases - Additional Information (Details)           HTML     35K 
38: R26         Leases - Summary of Operating and Finance Leases    HTML     67K 
                (Details)                                                        
39: R27         Leases - Summary of Future Lease Payments           HTML     76K 
                (Details)                                                        
40: R28         Leases - Summary of Weighted-Average Remaining      HTML     26K 
                Lease Term and Discount Rates (Details)                          
41: R29         Leases - Summary of Other Lease Information         HTML     20K 
                (Details)                                                        
42: R30         Leases - Summary of Financing Obligations           HTML     40K 
                (Details)                                                        
43: R31         Leases - Summary of Future Financing Obligation     HTML     34K 
                Payments (Details)                                               
44: R32         Leases - Summary of Weighted-Average Remaining      HTML     20K 
                Term and Discount Rate for Financing Obligations                 
                (Details)                                                        
45: R33         Stock-Based Awards - Summary of Stock-Based Awards  HTML     56K 
                Activity (Details)                                               
46: R34         Stock-Based Awards - Additional Information         HTML     26K 
                (Details)                                                        
47: R35         Income Taxes - Additional Information (Details)     HTML     19K 
48: R36         Net Income Per Share - Computation of Basic and     HTML     49K 
                Diluted Net Income Per Share (Details)                           
49: R37         Net Income Per Share - Schedule of Potential        HTML     19K 
                Shares of Common Stock Excluded From the Diluted                 
                Net Income Per Share (Details)                                   
50: R38         Subsequent Events - Additional Information          HTML     37K 
                (Details)                                                        
53: XML         IDEA XML File -- Filing Summary                      XML     90K 
51: XML         XBRL Instance -- kss-20220730_htm                    XML   1.42M 
52: EXCEL       IDEA Workbook of Financial Reports                  XLSX     69K 
11: EX-101.CAL  XBRL Calculations -- kss-20220730_cal                XML    170K 
10: EX-101.DEF  XBRL Definitions -- kss-20220730_def                 XML    282K 
 8: EX-101.LAB  XBRL Labels -- kss-20220730_lab                      XML    873K 
 9: EX-101.PRE  XBRL Presentations -- kss-20220730_pre               XML    573K 
12: EX-101.SCH  XBRL Schema -- kss-20220730                          XSD    130K 
54: JSON        XBRL Instance as JSON Data -- MetaLinks              294±   434K 
55: ZIP         XBRL Zipped Folder -- 0000950170-22-018031-xbrl      Zip    299K

‘10-Q’ — Quarterly Report

Document Table of Contents

Page	(sequential)	(alphabetic)	↑Top
		Alternative Formats (Word, et al.) Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Changes in Shareholders' Equity Consolidated Statements of Operations Controls and Procedures Exhibits Financial Information Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Notes to Consolidated Financial Statements Other Information Quantitative and Qualitative Disclosures About Market Risk Risk Factors Signatures Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Financial Information
"	Financial Statements
"	Consolidated Balance Sheets
"	Consolidated Statements of Operations
"	Consolidated Statements of Changes in Shareholders' Equity
"	Consolidated Statements of Cash Flows
"	Notes to Consolidated Financial Statements
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Quantitative and Qualitative Disclosures About Market Risk
"	Controls and Procedures
"	Other Information
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Exhibits
"	Signatures

This is an HTML Document rendered as filed. [ Alternative Formats ]

iX: C: C: C:

10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM i 10-Q


i ☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended i July 30, i 2022 /


i ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from ________ to _________

Commission file number i 1-11084

i KOHL’S CORPORATION

(Exact name of registrant as specified in its charter)


i Wisconsin		i 39-1630919
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

i N56 W17000 Ridgewood Drive, i Menomonee Falls, i Wisconsin		i 53051
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code ( i 262) i 703-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
i Common Stock, $.01 par value	i KSS	i New York Stock Exchange
i Preferred Stock Purchase Rights	—	i New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. i Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). i Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


i Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	i ☐
		Emerging Growth Company	i ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No i ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: August 26, 2022 Common Stock, Par Value $0.01 per Share, i 116,638,020 shares outstanding.

KOHL’S CORPORATION

INDEX


PART I	FINANCIAL INFORMATION	3
Item 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Changes in Shareholders' Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20

PART II	OTHER INFORMATION	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
	Signatures	24

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

KOHL’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(Dollars in Millions)	July 30, 2022	January 29, 2022	July 31, 2021
Assets
Current assets:
Cash and cash equivalents	$ i 222	$ i 1,587	$ i 2,569
Merchandise inventories	i 4,034	i 3,067	i 2,733
Other	i 374	i 369	i 356
Total current assets	i 4,630	i 5,023	i 5,658
Property and equipment, net	i 8,228	i 7,304	i 7,107
Operating leases	i 2,296	i 2,248	i 2,301
Other assets	i 469	i 479	i 440
Total assets	$ i 15,623	$ i 15,054	$ i 15,506

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$ i 1,497	$ i 1,683	$ i 1,495
Accrued liabilities	i 1,426	i 1,340	i 1,554
Borrowings under revolving credit facility	i 79	—	—
Current portion of:
Long-term debt	i 164	—	—
Finance leases and financing obligations	i 96	i 118	i 117
Operating leases	i 108	i 145	i 143
Total current liabilities	i 3,370	i 3,286	i 3,309
Long-term debt	i 1,747	i 1,910	i 1,909
Finance leases and financing obligations	i 2,830	i 2,133	i 1,906
Operating leases	i 2,568	i 2,479	i 2,532
Deferred income taxes	i 194	i 206	i 245
Other long-term liabilities	i 370	i 379	i 386
Shareholders’ equity:
Common stock	i 4	i 4	i 4
Paid-in capital	i 3,406	i 3,375	i 3,349
Treasury stock, at cost	( i 13,151)	( i 12,975)	( i 11,920)
Retained earnings	i 14,285	i 14,257	i 13,786
Total shareholders’ equity	$ i 4,544	$ i 4,661	$ i 5,219
Total liabilities and shareholders’ equity	$ i 15,623	$ i 15,054	$ i 15,506

See accompanying Notes to Consolidated Financial Statements

Table of Contents

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended		Six Months Ended
(Dollars in Millions, Except per Share Data)	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Net sales	$ i 3,863	$ i 4,223	$ i 7,334	$ i 7,885
Other revenue	i 224	i 224	i 468	i 449
Total revenue	i 4,087	i 4,447	i 7,802	i 8,334
Cost of merchandise sold	i 2,332	i 2,426	i 4,472	i 4,659
Operating expenses:
Selling, general, and administrative	i 1,283	i 1,241	i 2,576	i 2,411
Depreciation and amortization	i 206	i 210	i 406	i 421
Operating income	i 266	i 570	i 348	i 843
Interest expense, net	i 77	i 62	i 145	i 129
Loss on extinguishment of debt	—	—	—	i 201
Income before income taxes	i 189	i 508	i 203	i 513
Provision for income taxes	i 46	i 126	i 46	i 117
Net income	$ i 143	$ i 382	$ i 157	$ i 396
Net income per share:
Basic	$ i 1.13	$ i 2.51	$ i 1.24	$ i 2.58
Diluted	$ i 1.11	$ i 2.48	$ i 1.22	$ i 2.55

See accompanying Notes to Consolidated Financial Statements

Table of Contents

KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


	Three Months Ended		Six Months Ended
(Dollars in Millions, Except per Share Data)	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Common stock
Balance, beginning of period	$ i 4	$ i 4	$ i 4	$ i 4
Stock-based awards	—	—	—	—
Balance, end of period	$ i 4	$ i 4	$ i 4	$ i 4

Paid-in capital
Balance, beginning of period	$ i 3,395	$ i 3,333	$ i 3,375	$ i 3,319
Stock-based awards	i 11	i 16	i 31	i 30
Balance, end of period	$ i 3,406	$ i 3,349	$ i 3,406	$ i 3,349

Treasury stock
Balance, beginning of period	$( i 13,150)	$( i 11,663)	$( i 12,975)	$( i 11,595)
Treasury stock purchases	—	( i 255)	( i 158)	( i 301)
Stock-based awards	( i 2)	( i 3)	( i 20)	( i 25)
Dividends paid	i 1	i 1	i 2	i 1
Balance, end of period	$( i 13,151)	$( i 11,920)	$( i 13,151)	$( i 11,920)

Retained earnings
Balance, beginning of period	$ i 14,207	$ i 13,443	$ i 14,257	$ i 13,468
Net income	i 143	i 382	i 157	i 396
Dividends paid	( i 65)	( i 39)	( i 129)	( i 78)
Balance, end of period	$ i 14,285	$ i 13,786	$ i 14,285	$ i 13,786

Total shareholders' equity, end of period	$ i 4,544	$ i 5,219	$ i 4,544	$ i 5,219

Common stock
Shares, beginning of period	i 377	i 377	i 377	i 377
Stock-based awards	—	—	—	—
Shares, end of period	i 377	i 377	i 377	i 377
Treasury stock
Shares, beginning of period	( i 249)	( i 220)	( i 246)	( i 219)
Treasury stock purchases	—	( i 5)	( i 3)	( i 6)
Shares, end of period	( i 249)	( i 225)	( i 249)	( i 225)
Total shares outstanding, end of period	i 128	i 152	i 128	i 152

Dividends paid per common share	$ i 0.50	$ i 0.25	$ i 1.00	$ i 0.50

See accompanying Notes to Consolidated Financial Statements

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KOHL’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021
Operating activities
Net income	$ i 157	$ i 396
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	i 406	i 421
Share-based compensation	i 26	i 25
Deferred income taxes	( i 12)	( i 57)
Loss on extinguishment of debt	—	i 201
Non-cash lease expense	i 56	i 74
Other non-cash expense	i 5	i 9
Changes in operating assets and liabilities:
Merchandise inventories	( i 964)	( i 138)
Other current and long-term assets	( i 29)	i 590
Accounts payable	( i 185)	i 19
Accrued and other long-term liabilities	i 51	i 228
Operating lease liabilities	( i 57)	( i 76)
Net cash (used in) provided by operating activities	( i 546)	i 1,692
Investing activities
Acquisition of property and equipment	( i 548)	( i 191)
Proceeds from sale of real estate	i 4	i 4
Net cash used in investing activities	( i 544)	( i 187)
Financing activities
Proceeds from issuance of debt	—	i 500
Net borrowings under revolving credit facility	i 79	—
Deferred financing costs	—	( i 5)
Treasury stock purchases	( i 158)	( i 301)
Shares withheld for taxes on vested restricted shares	( i 20)	( i 25)
Dividends paid	( i 127)	( i 77)
Reduction of long-term borrowings	—	( i 1,044)
Premium paid on redemption of debt	—	( i 192)
Finance lease and financing obligation payments	( i 55)	( i 65)
Proceeds from financing obligations	i 5	i 4
Proceeds from stock option exercises	i 1	i 1
Other	—	( i 3)
Net cash used in financing activities	( i 275)	( i 1,207)
Net (decrease) increase in cash and cash equivalents	( i 1,365)	i 298
Cash and cash equivalents at beginning of period	i 1,587	i 2,271
Cash and cash equivalents at end of period	$ i 222	$ i 2,569
Supplemental information
Interest paid, net of capitalized interest	$ i 137	$ i 128
Income taxes paid	i 49	i 43

See accompanying Notes to Consolidated Financial Statements

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KOHL’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for fiscal year end Consolidated Financial Statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the Consolidated Financial Statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission.

Due to the seasonality of the business of Kohl’s Corporation (the “Company,” “Kohl’s,” “we,” “our,” or “us”), results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

We operate as a single business unit.

Recent Accounting Pronouncements

We do not expect that any recently issued accounting pronouncements will have a material impact on our Consolidated Financial Statements.

2. Revenue Recognition

The following table summarizes net sales by line of business:


	Three Months Ended		Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Women's	$ i 1,239	$ i 1,344	$ i 2,316	$ i 2,461
Men's	i 865	i 942	i 1,575	i 1,629
Home	i 502	i 609	i 1,027	i 1,243
Accessories	i 458	i 403	i 848	i 771
Children's	i 414	i 463	i 825	i 931
Footwear	i 385	i 462	i 743	i 850
Net Sales	$ i 3,863	$ i 4,223	$ i 7,334	$ i 7,885

Unredeemed gift cards and merchandise return card liabilities totaled $ i 294 million as of July 30, 2022, $ i 353 million as of January 29, 2022, and $ i 281 million as of July 31, 2021. In the second quarter of 2022 and 2021, net sales recognized from gift cards redeemed in the current period and issued in prior years totaled $ i 39 million and $ i 38 million, respectively. Year to date 2022 and 2021, net sales of $ i 113 million and $ i 110 million, respectively, were recognized during the current period from gift cards redeemed during the current year and issued in prior years.

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3. Debt

Borrowings under the revolving credit facility, recorded as short-term debt, has $ i 79 million outstanding as of July 30, 2022. i i No / amounts were outstanding at January 29, 2022 or July 31, 2021.

Long-term debt, which excludes borrowings on the revolving credit facility, consists of the following unsecured debt:


			Outstanding
Maturity (Dollars in Millions)	Effective Rate	Coupon Rate	July 30, 2022	January 29, 2022	July 31, 2021
2023	i 3.25%	i 3.25%	$ i 164	$ i 164	$ i 164
2023	i 4.78%	i 4.75%	i 111	i 111	i 111
2025	i 9.50%	i 9.50%	i 113	i 113	i 113
2025	i 4.25%	i 4.25%	i 353	i 353	i 353
2029	i 7.36%	i 7.25%	i 42	i 42	i 42
2031	i 3.40%	i 3.38%	i 500	i 500	i 500
2033	i 6.05%	i 6.00%	i 112	i 112	i 112
2037	i 6.89%	i 6.88%	i 101	i 101	i 101
2045	i 5.57%	i 5.55%	i 427	i 427	i 427
Outstanding unsecured senior debt			i 1,923	i 1,923	i 1,923
Unamortized debt discounts and deferred financing costs			( i 12)	( i 13)	( i 14)
Current portion of unsecured senior debt			( i 164)	—	—
Long-term unsecured senior debt			$ i 1,747	$ i 1,910	$ i 1,909
Effective interest rate			i 4.89%	i 4.89%	i 4.89%

Our unsecured senior long-term debt is classified as Level 1, financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our unsecured senior debt was $ i 1.7 billion at July 30, 2022, $ i 2.0 billion at January 29, 2022, and $ i 2.2 billion at July 31, 2021.

Our various debt agreements contain covenants including limitations on additional indebtedness and certain financial tests. As of July 30, 2022, we were in compliance with all covenants of the various debt agreements.

4. Leases

We lease certain property and equipment used in our operations. Some of our store leases include additional rental payments based on a percentage of sales over contractual levels or which are adjusted periodically for inflation. Our typical store lease has an initial term of i 20 to i 25 years and four to eight i five-year renewal options.

Lease assets represent our right to use an underlying asset for the lease term. Lease assets are recognized at commencement date based on the value of the lease liability and are adjusted for any lease payments made to the lessor at or before commencement date, minus any lease incentives received and any initial direct costs incurred by the lessee.

Lease liabilities represent our contractual obligation to make lease payments. At the commencement date, the lease liabilities equal the present value of minimum lease payments over the lease term. As the implicit interest rate is not readily identifiable in our leases, we estimate our collateralized borrowing rate to calculate the present value of lease payments.

Leases with a term of 12 months or less are excluded from the balance; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and non-lease components for new and modified leases.

During the first half of 2022, we opened i 340 Sephora shop-in-shops within our Kohl's stores and now have a total of i 540 open as of the end of the second quarter. We plan to open an additional i 60 shop-in-shops during the remainder

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of 2022, as well as at least i 250 more shops in 2023. We are also working with Sephora to have a Sephora presence in the remaining approximately i 300 stores. Due to the investments we are making in the shop-in-shops, we reassessed our lease term when construction began as these assets will have significant economic value to us when the lease term becomes exercisable. The impact of these assessments resulted in additional lease term, additional lease assets and liabilities, and, in some cases, changes to the classification.

The following tables summarize our operating and finance leases and where they are presented in our Consolidated Financial Statements:


Consolidated Balance Sheets
(Dollars in Millions)	Classification	July 30, 2022	January 29, 2022	July 31, 2021
Assets
Operating leases	Operating leases	$ i 2,296	$ i 2,248	$ i 2,301
Finance leases	Property and equipment, net	i 2,114	i 1,442	i 1,226
Total operating and finance leases		i 4,410	i 3,690	i 3,527
Liabilities
Current
Operating leases	Current portion of operating leases	i 108	i 145	i 143
Finance leases	Current portion of finance leases and financing obligations	i 78	i 87	i 83
Noncurrent
Operating leases	Operating leases	i 2,568	i 2,479	i 2,532
Finance leases	Finance leases and financing obligations	i 2,381	i 1,688	i 1,457
Total operating and finance leases		$ i 5,135	$ i 4,399	$ i 4,215


Consolidated Statement of Operations		Three Months Ended		Six Months Ended
(Dollars in Millions)	Classification	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Operating leases	Selling, general, and administrative	$ i 64	$ i 79	$ i 133	$ i 156
Finance leases
Amortization of leased assets	Depreciation and amortization	i 32	i 23	i 61	i 43
Interest on leased assets	Interest expense, net	i 36	i 27	i 68	i 52
Total operating and finance leases		$ i 132	$ i 129	$ i 262	$ i 251


Consolidated Statement of Cash Flows	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021
Cash paid for amounts included in the measurement of leased liabilities
Operating cash flows from operating leases	$ i 135	$ i 165
Operating cash flows from finance leases	i 65	i 52
Financing cash flows from finance leases	i 44	i 47

The following table summarizes future lease payments by fiscal year:


	July 30, 2022
(Dollars in millions)	Operating Leases	Finance Leases	Total
2022	$ i 124	$ i 94	$ i 218
2023	i 251	i 218	i 469
2024	i 233	i 210	i 443
2025	i 227	i 205	i 432
2026	i 223	i 205	i 428
After 2026	i 3,617	i 3,722	i 7,339
Total lease payments	$ i 4,675	$ i 4,654	$ i 9,329
Amount representing interest	( i 1,999)	( i 2,195)	( i 4,194)
Lease liabilities	$ i 2,676	$ i 2,459	$ i 5,135

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The following table summarizes weighted-average remaining lease term and discount rate:


	July 30, 2022	January 29, 2022
Weighted-average remaining term (years)
Operating leases	i 20	i 20
Finance leases	i 21	i 20
Weighted-average discount rate
Operating leases	i 6%	i 6%
Finance leases	i 6%	i 7%

Other lease information is as follows:


	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021
Property and equipment acquired (disposed) through exchange of:
Finance lease liabilities	$ i 730	$ i 569
Operating lease liabilities	i 114	( i 29)

Financing Obligations

The following tables summarize our financing obligations and where they are presented in our Consolidated Financial Statements:


Consolidated Balance Sheets
(Dollars in millions)	Classification	July 30, 2022	January 29, 2022	July 31, 2021
Assets
Financing obligations	Property and equipment, net	$ i 52	$ i 55	$ i 60
Liabilities
Current	Current portion of finance leases and financing obligations	i 18	i 31	i 34
Noncurrent	Finance leases and financing obligations	i 449	i 445	i 449
Total financing obligations		$ i 467	$ i 476	$ i 483


Consolidated Statement of Operations		Three Months Ended		Six Months Ended
(Dollars in Millions)	Classification	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Amortization of financing obligation assets	Depreciation and amortization	i 2	i 3	i 4	i 5
Interest on financing obligations	Interest expense, net	i 15	i 10	i 27	i 19
Total financing obligations		$ i 17	$ i 13	$ i 31	$ i 24


Consolidated Statement of Cash Flows	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021
Cash paid for amounts included in the measurement of financing obligations
Operating cash flows from financing obligations	$ i 26	$ i 19
Financing cash flows from financing obligations	i 11	i 18
Proceeds from financing obligations	i 5	i 4

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The following table summarizes future financing obligation payments by fiscal year:


	July 30, 2022
(Dollars in millions)	Financing Obligations
2022	$ i 37
2023	i 78
2024	i 77
2025	i 75
2026	i 74
After 2026	i 957
Total lease payments	$ i 1,298
Non-cash gain on future sale of property	i 167
Amount representing interest	( i 998)
Financing obligation liability	$ i 467

The following table summarizes the weighted-average remaining term and discount rate for financing obligations:


	July 30, 2022	January 29, 2022
Weighted-average remaining term (years)	i 14	i 10
Weighted-average discount rate	i 13%	i 9%

5. Stock-Based Awards

The following table summarizes our stock-based awards activity for the six months ended July 30, 2022:


	Stock Options		Nonvested Stock Awards		Performance Share Units
(Shares and Units in Thousands)	Shares	Weighted Average Exercise Price	Shares	Weighted Average Grant Date Fair Value	Units	Weighted Average Grant Date Fair Value
Balance - January 29, 2022	i 12	$ i 48.66	i 2,769	$ i 36.17	i 856	$ i 42.74
Granted	—	—	i 678	i 57.47	i 236	i 67.18
Exercised/vested	( i 12)	i 48.66	( i 987)	i 38.89	—	—
Forfeited/expired	—	—	( i 105)	i 43.99	( i 218)	i 36.89
Balance - July 30, 2022	—	$—	i 2,355	$ i 40.81	i 874	$ i 50.79

In 2019, we issued i 1,747,441 stock warrants. The total vested and unvested warrants as of July 30, 2022 were i 1,048,465 and i 698,976, respectively.

6. Contingencies

We are subject to certain legal proceedings and claims arising out of the conduct of our business. In the opinion of management, the outcome of these proceedings and litigation will not have a material adverse impact on our Consolidated Financial Statements.

7. Income Taxes

The effective income tax rate for the second quarter of 2022 was i 24.6% compared to i 24.8% for the second quarter of 2021. Year to date, the rate is i i 22.8 / % for both the current and prior year periods. The year to date rates reflect the recognition of favorable tax items in the first quarter of both 2022 and 2021.

8. Net Income Per Share

Basic net income per share is net income divided by the average number of common shares outstanding during the period. Diluted net income per share includes incremental shares assumed for share-based awards and stock warrants. Potentially dilutive shares include stock options, unvested restricted stock units and awards, and warrants

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outstanding during the period, using the treasury stock method. Potentially dilutive shares are excluded from the computations of diluted earnings per share (“EPS”) if their effect would be anti-dilutive.

The information required to compute basic and diluted net income per share is as follows:


	Three Months Ended		Six Months Ended
(Dollar and Shares in Millions, Except per Share Data)	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Numerator—Net income	$ i 143	$ i 382	$ i 157	$ i 396
Denominator—Weighted-average shares:
Basic	i 127	i 152	i 127	i 153
Dilutive impact	i 1	i 2	i 2	i 2
Diluted	i 128	i 154	i 129	i 155
Net income per share:
Basic	$ i 1.13	$ i 2.51	$ i 1.24	$ i 2.58
Diluted	$ i 1.11	$ i 2.48	$ i 1.22	$ i 2.55

The following potential shares of common stock were excluded from the diluted net income per share calculation because their effect would have been anti-dilutive:


	Three Months Ended		Six Months Ended
(Shares in Millions)	July 30, 2022	July 31, 2021	July 30, 2022	July 31, 2021
Anti-dilutive shares	i 3	i 3	i 3	i 3

9. Subsequent Events

On i August 9, 2022, the Board of Directors of the Company declared a quarterly cash dividend of $ i 0.50 per share. The dividend will be paid on i September 21, 2022 to all shareholders of record at the close of business on i September 7, 2022.

On August 18, 2022, the Company entered into an accelerated share repurchase agreement ("ASR"), pursuant to its previously announced share repurchase program, with Goldman Sachs & Co. LLC to repurchase approximately $ i 500 million of the Company’s common stock. On August 22, 2022, the Company received an initial delivery of approximately i 11.8 million shares of common stock, representing approximately i 80% of the total shares that are expected to be repurchased under the ASR. Final settlement of the transactions under the ASR is expected to occur in November 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following discussion, unless noted, all references to "the quarter” and “the second quarter” are for the three fiscal months (13 weeks) ended July 30, 2022 or July 31, 2021. References to "year to date" and "first half" are for the six fiscal months (26 weeks) ended July 30, 2022 or July 31, 2021. References to "the first quarter" are for the three fiscal months (13 weeks) ended April 30, 2022 or May 1, 2021.

This Form 10-Q contains “forward-looking statements” made 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 intended to identify forward-looking statements. Forward-looking statements include the information under “2022 Outlook,” as well as statements about our future sales or financial performance and our plans, performance, and other objectives, expectations, or intentions, such as statements regarding our liquidity, debt service requirements, planned capital expenditures, future store initiatives, and adequacy of capital resources and reserves. Forward-looking statements are based on management’s then-current views and assumptions and, as a result, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Any such forward-looking statements are qualified by the important risk factors, described in Part I Item 1A of our 2021 Form 10-K and in Part II Item 1A of our Form 10-Q for the quarter ended April 30, 2022, or disclosed from time to time in our filings with the SEC, that could cause actual results to differ materially from those predicted by the forward-looking statements. Forward-looking statements relate to the date initially made and we undertake no obligation to update them.

Executive Summary

Kohl's is a leading omnichannel retailer operating 1,166 stores and a website (www.Kohls.com) as of July 30, 2022. Our Kohl's stores and website sell moderately-priced private and national brand apparel, footwear, accessories, beauty, and home products. Our Kohl's stores generally carry a consistent merchandise assortment with some differences attributable to local preferences, store size, and presence of Sephora shop-in-shops. Our website includes merchandise which is available in our stores, as well as merchandise that is available only online.

Key financial results for the quarter included:

•

Net sales decreased 8.5% and comparable sales decreased 7.7%

•

Earnings of $1.11 per diluted share

•

Gross margin was 39.6% of net sales, a 290 basis point decrease from last year

•

SG&A increased 3.4% and deleveraged as a percent of total revenue by 351 basis points to last year

•

Operating margin of 6.5%

Our Vision and Strategy

The Company’s vision is to be “the most trusted retailer of choice for the active and casual lifestyle” and its strategy is focused on delivering long-term shareholder value. Key strategic focus areas for the Company include: driving top line growth, delivering a 7% to 8% operating margin, maintaining disciplined capital management, and sustaining an agile, accountable, and inclusive culture.

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2022 Outlook

Our updated outlook for fiscal 2022 is as follows:


Net sales	(5%) to (6%) vs 2021
Operating margin	4.2% - 4.5%
Diluted earnings per share	$2.80 - $3.20
Capital expenditures	$825 million

We repurchased $158 million in shares in the first quarter of 2022 and entered into a $500 million ASR on August 18, 2022.

A weakening macro environment, high inflation, and dampened consumer spending are having broad implications across much of retail, especially in discretionary categories like apparel. Our updated full year guidance contemplates lower sales and margin pressure from a more difficult economic backdrop and a more competitive landscape.

Results of Operations

Total Revenue


	Three Months Ended			Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change	July 30, 2022	July 31, 2021	Change
Net sales	$3,863	$4,223	$(360)	$7,334	$7,885	$(551)
Other revenue	224	224	—	468	449	19
Total revenue	$4,087	$4,447	$(360)	$7,802	$8,334	$(532)

Net sales decreased 8.5% in the second quarter of 2022 and 7.0% year to date 2022.

•

Comparable sales decreased 7.7% in the second quarter of 2022 and 6.5% year to date 2022 driven by lower store traffic and smaller basket sizes.

•

Digital sales were flat for the second quarter of 2022 and decreased 2% year to date 2022. Digital penetration was 28% of net sales in the second quarter of 2022 and 29% of net sales year to date 2022.

•

From a line of business perspective, Accessories, Women's, and Men's outperformed the Company average for the second quarter and year to date 2022, while Home, Footwear, and Children's underperformed the Company.

•

Active apparel outperformed the Company in the second quarter of 2022 with strong growth in our athleisure and outdoor offerings. Total active underperformed the overall business in the second quarter of 2022 and year to date 2022 due in part to the strong growth achieved last year as well as supply chain-related challenges in athletic footwear. Total active represented 23% of sales for the second quarter and year to date 2022.

Net sales includes revenue from the sale of merchandise, net of expected returns, and shipping revenue.

Comparable sales is a measure that highlights the performance of our stores and digital channel by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales includes all store and digital sales, except sales from stores open less than 12 months, stores that have been closed, and stores where square footage has changed by more than 10%. We measure the change in digital sales by including all sales initiated online or through mobile applications, including omnichannel transactions which are fulfilled through our stores.

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We measure digital penetration as digital sales over net sales. These amounts do not take into consideration fulfillment node, digital returns processed in stores, and coupon behaviors.

Comparable sales and digital penetration measures vary across the retail industry. As a result, our comparable sales calculation and digital penetration are non-GAAP measures that may not be consistent with the similarly-titled measures reported by other companies.

Other revenue was flat for the second quarter of 2022 and increased $19 million year to date 2022. The increase year to date was driven by higher credit revenue due to higher late fees.

On March 14, 2022, we amended and restated our private label credit card program agreement with Capital One through March 31, 2030. The agreement will operate in substantially the same manner as it currently operates.

Cost of Merchandise Sold and Gross Margin


	Three Months Ended				Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change		July 30, 2022	July 31, 2021	Change
Net sales	$3,863	$4,223	$(360)		$7,334	$7,885	$(551)
Cost of merchandise sold	2,332	2,426	(94)		4,472	4,659	(187)
Gross margin	$1,531	$1,797	$(266)		$2,862	$3,226	$(364)
Gross margin as a percent of net sales	39.6%	42.5%	(290)	bps	39.0%	40.9%	(189)	bps

Cost of merchandise sold includes the total cost of products sold, including product development costs, net of vendor payments other than reimbursement of specific, incremental, and identifiable costs; inventory shrink; markdowns; freight expenses associated with moving merchandise from our vendors to our distribution centers; shipping expenses for digital sales; terms cash discount; and depreciation of product development facilities and equipment. Our cost of merchandise sold may not be comparable with that of other retailers because we include distribution center and buying costs in selling, general, and administrative expenses while other retailers may include these expenses in cost of merchandise sold.

Gross margin is calculated as net sales less cost of merchandise sold. In the second quarter of 2022, gross margin was 39.6% of net sales, decreasing 290 basis points. Year to date 2022 gross margin was 39.0% of net sales, decreasing 189 basis points. The decrease in gross margin for the second quarter was primarily driven by elevated freight costs, product cost inflation, and increased promotional activity. Year to date, the decrease was driven by increased freight costs.

Selling, General, and Administrative Expense (“SG&A”)


	Three Months Ended				Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change		July 30, 2022	July 31, 2021	Change
SG&A	$1,283	$1,241	$42		$2,576	$2,411	$165
As a percent of total revenue	31.4%	27.9%	351	bps	33.0%	28.9%	409	bps

SG&A includes compensation and benefit costs (including stores, corporate, buying, and distribution centers); occupancy and operating costs of our retail, distribution, and corporate facilities; freight expenses associated with moving merchandise from our distribution centers to our retail stores and among distribution and retail facilities other than expenses to fulfill digital sales; marketing expenses, offset by vendor payments for reimbursement of specific, incremental, and identifiable costs; expenses related to our credit card operations; and other administrative revenues and expenses. We do not include depreciation and amortization in SG&A. The classification of these expenses varies across the retail industry.

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Many of our expenses, including store payroll and distribution costs, are variable in nature. These costs generally increase as sales increase and decrease as sales decrease. We measure both the change in these variable expenses and the expense as a percent of revenue. If the expense as a percent of revenue decreased from the prior year, the expense "leveraged". If the expense as a percent of revenue increased over the prior year, the expense "deleveraged".

The following table summarizes the changes in SG&A by expense type:


	Three Months Ended	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 30, 2022
Store expenses	$44	$126
Distribution	6	22
Corporate and other	(8)	17
Total increase	$42	$165

SG&A expenses increased $42 million, or 3.4%, to $1.3 billion in the second quarter of 2022. As a percentage of revenue, SG&A deleveraged by 351 basis points. Year to date 2022, SG&A expenses increased $165 million, or 6.8%, to $2.6 billion. As a percentage of revenue, SG&A deleveraged by 409 basis points. The increase in SG&A during the second quarter and year to date 2022 was primarily driven by strategic investments made in our stores to support the Sephora shop-in-shops openings, store refreshes, and reflows. Additionally, we experienced increases in wages and heightened transportation costs both in the second quarter and year to date 2022. Last, Corporate and other costs decreased in the second quarter of 2022 and increased year to date 2022. The decrease in the second quarter of 2022 was due to lower general corporate costs partially offset by $9 million of expense related to the strategic review process. The year to date 2022 increase was primarily driven by nearly $26 million of expenses related to the proxy contest and the strategic review process.

Other Expenses


	Three Months Ended			Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change	July 30, 2022	July 31, 2021	Change
Depreciation and amortization	$206	$210	$(4)	$406	$421	$(15)
Interest expense, net	77	62	15	145	129	16
Loss on extinguishment of debt	—	—	—	—	201	(201)

The decrease in depreciation and amortization in the first half of 2022 was primarily driven by reduced capital spending in technology.

Net interest expense increased in the first half of 2022 due to more financing leases, partially offset by a decrease in interest expense in the first quarter of 2022 due to the benefit of debt reductions as a result of our liability management strategies employed during 2021.

In the first quarter of 2021, we completed a cash tender offer and recognized a loss of $201 million from the extinguishment of debt.

Income Taxes


	Three Months Ended			Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change	July 30, 2022	July 31, 2021	Change
Provision for income taxes	$46	$126	$(80)	$46	$117	$(71)
Effective tax rate	24.6%	24.8%		22.8%	22.8%

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The decrease in provision for income taxes was driven by lower taxable income in the second quarter and year to date 2022. The year to date rates reflect the recognition of favorable tax items in the first quarter of both 2022 and 2021.

GAAP to Non-GAAP Reconciliation


(Dollars in Millions, Except per Share Data)	Operating Income	Income before Income Taxes	Net Income	Earnings Per Diluted Share
Three Months Ended July 30, 2022
GAAP	$266	$189	$143	$1.11
Loss on extinguishment of debt	—	—	—	—
Income tax impact of items noted above	—	—	—	—
Adjusted (non-GAAP) (1)	$266	$189	$143	$1.11
Three Months Ended July 31, 2021
GAAP	$570	$508	$382	$2.48
Loss on extinguishment of debt	—	—	—	—
Income tax impact of items noted above	—	—	—	—
Adjusted (non-GAAP) (1)	$570	$508	$382	$2.48
Six Months Ended July 30, 2022
GAAP	$348	$203	$157	$1.22
Loss on extinguishment of debt	—	—	—	—
Income tax impact of items noted above	—	—	—	—
Adjusted (non-GAAP) (1)	$348	$203	$157	$1.22
Six Months Ended July 31, 2021
GAAP	$843	$513	$396	$2.55
Loss on extinguishment of debt	—	201	201	1.29
Income tax impact of items noted above	—	—	(50)	(0.32)
Adjusted (non-GAAP)	$843	$714	$547	$3.52

(1)

Amounts shown for the three months ended July 30, 2022 and July 31, 2021 and for the six months ended July 30, 2022 are GAAP as there are no adjustments to Non-GAAP. These amounts are shown for comparability purposes.

We believe the adjusted results in the table above are useful because they provide enhanced visibility into our results for the periods excluding the impact of certain items such as those included in the table above. However, these non-GAAP financial measures are not intended to replace the comparable GAAP measures.

Seasonality and Inflation

Our business, like that of other retailers, is subject to seasonal influences. Sales and income are typically higher during the back-to-school and holiday seasons. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

In addition to COVID-19, we expect that our operations will continue to be influenced by general economic conditions, including food, fuel, and energy prices, higher unemployment, wage and transportation inflation, product cost inflation, and costs to source our merchandise, including tariffs. There can be no assurances that such factors will not continue to impact our business in the future.

Liquidity and Capital Resources

Capital Allocation

Our capital allocation strategy is to invest to maximize our overall long-term return, maintain a strong balance sheet, and maintain our investment grade rating. We follow a disciplined approach to capital allocation based on the following priorities: first we invest in our business to drive long-term profitable growth; second we pay a quarterly dividend; and

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third we return excess cash to shareholders through our share repurchase program. In addition, when appropriate, we will complete liability management transactions.

Our period-end cash and cash equivalents balance decreased to $222 million from $2.6 billion in the second quarter of 2021. Our cash and cash equivalents balance includes short-term investments of $11 million and $2.3 billion as of July 30, 2022, and July 31, 2021, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments. We also place dollar limits on our investments in individual funds or instruments.

We expect our balance sheet and cash flow metrics to be more challenging in 2022 and most notably at the end of the third quarter of fiscal 2022 as we build inventory in advance of the holiday season.

The following table presents our primary uses and sources of cash:

Cash Uses

Cash Sources

• Operational needs, including salaries, rent, taxes, and other operating costs

• Inventory

• Capital expenditures

• Dividend payments

• Share repurchases

• Debt reduction

• Cash flow from operations

• Line of credit under our revolving credit facility

• Issuance of debt


	Six Months Ended
(Dollars in Millions)	July 30, 2022	July 31, 2021	Change
Net cash (used in) provided by:
Operating activities	$(546)	$1,692	$(2,238)
Investing activities	(544)	(187)	(357)
Financing activities	(275)	(1,207)	932

Operating Activities

Our operating cash outflows generally consist of payments to our employees for wages, salaries and employee benefits, payments to our merchandise vendors for inventory (net of vendor allowances), payments to our shipping carriers, and payments to our landlords for rent. Operating cash outflows also include payments for income taxes and interest on our debt borrowings.

Operating activities used $546 million of cash in the first half of 2022 compared to $1.7 billion of cash generated in the first half of 2021. The decrease in operating cash flow was primarily driven by an increase in inventory. The inventory increase was due to increased beauty inventory to support the Sephora shop-in-shop rollouts, elevated in-transit levels due to continued supply chain challenges, and a rebuild of inventory in key areas such as active and women's.

Investing Activities

Our investing cash outflows include payments for capital expenditures, including investments in new and existing stores, improvements to supply chain, and technology costs. Our investing cash inflows are generally from proceeds from sales of property and equipment.

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Investing activities used $544 million in the first half of 2022 and $187 million in the first half of 2021. The increase was primarily driven by in-store investments related to Sephora shop-in-shop build-outs, store refreshes, and other customer experience and sales driving enhancements.

During the first half of 2022, we opened 340 Sephora-branded retail shop-in-shops and now have a total of 540 Sephora shop-in-shops open. We are planning on opening another 60 shop-in-shops in 2022 and at least 250 shop-in-shops in 2023. We are also working with Sephora to have a Sephora presence in the remaining 300 stores.

Financing Activities

Our financing strategy is to ensure liquidity and access to capital markets. We also strive to maintain a balanced portfolio of debt maturities, while minimizing our borrowing costs. Our ability to access the public debt market has provided us with adequate sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings.

If our credit ratings were lowered, our ability to access the public debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and there is no guarantee our current credit ratings will remain the same.

The majority of our financing activities include repurchases of common stock, proceeds from and/or repayments of long-term debt, and dividend payments.

Financing activities used $275 million in the first half of 2022 and $1.2 billion in the first half of 2021.

In the second quarter of 2022 we drew on our credit facility. As of July 30, 2022, $79 million was outstanding.

In March 2021, we issued $500 million in aggregate principal amount of 3.375% notes with semi-annual interest payments beginning in November 2021. The notes include coupon rate step ups if our long-term debt is downgraded to below a BBB- credit rating by S&P Global Ratings or Baa3 by Moody’s Investors Service, Inc. The notes mature in May 2031.

In April 2021, we completed a cash tender offer for $1.0 billion of senior unsecured debt. We recognized a $201 million loss on extinguishment of debt in the first quarter of 2021, which includes the $192 million tender premium paid to tendering note holders in accordance with the terms of the tender offer, a $6 million non-cash write-off of deferred financing costs and original issue discounts associated with the extinguished debt, and $3 million in other fees.

We paid cash for treasury stock purchases of $158 million in the first half of 2022 and $301 million in the first half of 2021. The 2022 purchases were made pursuant to a Rule 10b5-1 plan adopted in November 2021. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors.

Cash dividend payments were $127 million ($1.00 per share) in the first half of 2022 and $77 million ($0.50 per share) in the first half of 2021.

As of July 30, 2022, our credit ratings and outlook were as follows:


	Moody’s	Standard & Poor’s	Fitch
Long-term debt	Baa2	BBB-	BBB-
Outlook	Stable	Negative	Stable

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Key Financial Ratios

Key financial ratios that provide certain measures of our liquidity are as follows:


(Dollars in Millions)	July 30, 2022	July 31, 2021
Working capital	$1,260	$2,349
Current ratio	1.37	1.71

Our working capital and inventory levels typically build throughout the fall, peaking during the November and December holiday selling season.

The decrease in our working capital and current ratio is primarily due to lower cash balances as a result of higher capital expenditures and an increase in inventory.

Debt Covenant Compliance

As of July 30, 2022, we were in compliance with all covenants in our debt instruments and expect to remain in compliance during the remainder of fiscal 2022.

Contractual Obligations

There have been no significant changes in the contractual obligations disclosed in our 2021 Form 10-K other than leases, which have been disclosed in Note 4 of the Consolidated Financial Statements, and borrowings in our revolving credit facility, which have been disclosed in Note 3 of the Consolidated Financial Statements and under "Liquidity and Capital Resources - Financing Activities".

Off-Balance Sheet Arrangements

We have not provided any financial guarantees arising from arrangements with unconsolidated entities or persons as of July 30, 2022.

We have not created, and are not a party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt, or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into our financial statements that are reasonably likely to materially affect our financial condition, liquidity, results of operations, or capital resources.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect reported amounts. Management has discussed the development, selection, and disclosure of its estimates and assumptions with the Audit Committee of our Board of Directors. There have been no significant changes in the critical accounting policies and estimates discussed in our 2021 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in the market risks described in our 2021 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure

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controls and procedures (the “Evaluation”) at a reasonable assurance level as of the last day of the period covered by this report.

Based upon the Evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at the reasonable assurance level. Disclosure controls and procedures are defined by Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act") as controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended July 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

There have been no significant changes in the Risk Factors described in our 2021 Form 10-K, other than as set out in our Quarterly Report on Form 10-Q for the quarter ended April 30, 2022, in Item 1A of Part II.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In February 2022, our Board of Directors increased the remaining share repurchase authorization under our existing share repurchase program to $3.0 billion. Purchases under the repurchase program may be made in the open market, through block trades, and other negotiated transactions. We expect to execute the share repurchase program primarily in open market transactions, subject to market conditions. There is no fixed termination date for the repurchase program, and the program may be suspended, discontinued, or accelerated at any time.

The following table contains information for shares of common stock repurchased and shares acquired from employees in lieu of amounts required to satisfy minimum tax withholding requirements upon the vesting of the employees’ stock-based compensation during the three fiscal months ended July 30, 2022:


(Dollars in Millions, Except per Share Data)	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
May 1 - May 28, 2022	15,312	$48.44	—	$2,976
May 29 - July 2, 2022	27,856	40.48	—	$2,976
July 3 - July 30, 2022	6,219	26.98	—	$2,976
Total	49,387	$41.25	—

Item 5. Other Information

On August 9, 2022, the Board of Directors (the “Board”) of the Company approved and adopted the Amended and Restated Bylaws (the “Bylaws”), which became effective the same day, in order to, among other things, (i) address recently adopted amendments to Rule 14a-19 under the Securities Exchange Act of 1934, as amended, by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s nominees unless such person has complied with Rule 14a-19, and that any person soliciting proxies in support of a director nominee other than the Board’s nominees must comply with the requirements to provide notices required under Rule 14a-19 in a timely manner and deliver reasonable evidence that the Rule 14a-19 requirements have been met; (ii) require any notice of director nomination to be accompanied by a completed written questionnaire required of the Company’s directors and officers, and that the questionnaire and written representation and agreement of a nominee be in the form provided by the Company; and (iii) require that a shareholder directly or indirectly soliciting proxies from other shareholders use a proxy card color other than white.

The preceding summary of the amendments to the Bylaws is qualified in its entirety by reference to, and should be read in connection with, the complete copy of the Amended and Restated Bylaws filed herewith as Exhibits 3.1 (clean) and 3.2 (marked).

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Item 6. Exhibits


Exhibit		Description
3.1		Amended and Restated Bylaws (clean version), incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K dated August 10, 2022.
3.2		Amended and Restated Bylaws (marked version), incorporated by reference to Exhibit 3.2 of the Company's Current Report on Form 8-K dated August 10, 2022.
10.1		Amended and Restated Executive Compensation Agreement between Kohl’s, Inc. and Siobhán McFeeney dated as of July 16, 2022.*
10.2		Amended and Restated Raymond Executive Compensation Agreement between Kohl’s, Inc. and Christie Raymond dated as of August 16, 2022.*
31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)

		*A management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Kohl’s Corporation (Registrant)

Date: September 1, 2022	/s/ *Jill Timm*
	Jill Timm On behalf of the Registrant and as Chief Financial Officer (Principal Financial Officer)

Dates Referenced Herein and Documents Incorporated by Reference

This ‘10-Q’ Filing	Date	Other Filings

	3/31/30
	9/21/22
	9/7/22
Filed on:	9/1/22
	8/26/22
	8/22/22	4
	8/18/22	8-K
	8/9/22
For Period end:	7/30/22
	7/2/22
	5/28/22
	4/30/22	10-Q
	3/14/22	8-K, DFAN14A, UPLOAD
	1/29/22	10-K
	7/31/21	10-Q
	5/1/21	10-Q
		List all Filings

2 Subsequent Filings that Reference this Filing

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 3/21/24  Kohl’s Corp.                      10-K        2/03/24   75:10M                                    Donnelley … Solutions/FA
 3/16/23  Kohl’s Corp.                      10-K        1/28/23   71:10M                                    Donnelley … Solutions/FA

1 Previous Filing that this Filing References

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 8/10/22  Kohl’s Corp.                      8-K:5,8,9   8/10/22   14:893K                                   Donnelley … Solutions/FA

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Filing Submission 0000950170-22-018031 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Kohl’s Corp. – ‘10-Q’ for 7/30/22

On: Thursday, 9/1/22, at 4:01pm ET · For: 7/30/22 · Accession #: 950170-22-18031 · File #: 1-11084

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