At Kohl’s (NYSE:KSS) annual shareholders meeting today, company executives outlined strategic initiatives designed to help weather a difficult economic environment and deliver long-term profitability.
Larry Montgomery, Kohl’s chairman and chief executive officer, said, “As I noted when year-end results were reported in February, the 2007 retail environment proved challenging; however, Kohl’s continues to be financially strong. Our sales per square foot and operating margins are among the highest in the industry. We also continue our nationwide expansion and will celebrate the opening of our 1,000th store this fall. With this continued growth, Kohl’s added more than 11,000 jobs in 2007. Our 125,000 associates bring talent, inspiration and leadership to Kohl’s to ensure we consistently deliver great brands, value, convenience and customer service in each of our locations.”
Montgomery continued, “We are planning inventory levels and expenses based upon very conservative sales estimates while continuing to invest the necessary resources to ensure our profitable growth over the long term.”
2007 and 2008 Strategic Overview
In 2007, the company made significant progress on its four key initiatives – merchandise content, inventory management, marketing and in-store experience.
Part of Kohl’s ongoing effort to differentiate itself in the marketplace has been the introduction of new, world-class brands. In 2007, private and exclusive brands comprised approximately 39 percent of sales. In 2008, Kohl’s expects the combination to grow 100 to 200 basis points supported by the continued growth of ELLE, Food Network and Simply Vera Vera Wang as well as new introductions such as Bobby Flay, Jumping Beans and FILA SPORT. The company also will become the exclusive U.S. retailer for Dana Buchman women’s apparel, intimates, accessories and footwear when the collection makes its debut in spring 2009. These introductions will be supported by comprehensive marketing plans intended to build each unique lifestyle brand. Other 2008 opportunities outlined in the meeting include continued strategies to improve inventory management through size and pricing optimization.
In 2007, the company successfully opened 112 new stores, 80 of which occurred on a single day in October, marking the largest grand opening in Kohl’s history. At the end of fiscal 2007, the company operated 929 stores in 47 states compared with 817 stores in 45 states at the end of 2006. Building on that momentum, Kohl’s plans to open 70-75 stores in fiscal 2008, including the company’s 1,000th store and entry into Miami-Fort Lauderdale-West Palm Beach this fall. To support the company’s continued expansion, Kohl’s will add a new distribution center in Ottawa, Ill., expected to open in October.
With customers’ in-store experience as a company priority, Kohl’s continues to evolve its store design. New stores include enhanced features such as glass storefront entrances, updated cash wraps and fitting rooms, and redesigned Juniors, Jewelry and Intimates departments. In the fall, additional enhancements will be introduced in the Children’s and Shoe departments. The company remodeled 29 stores to reflect these innovative features in 2007 and will remodel an additional 36 by July 2008 bringing the total number of updated stores to more than 250.
In an effort to become a leading environmentally responsible retailer, Kohl’s is focused on maximizing energy efficiency, minimizing waste and reducing climate damaging emissions. With solar installations under way in five states, Kohl’s distributed solar program is now the largest in the world among retailers. Other environmental accomplishments include:
- Kohl’s opened a state-of-the-art, green photo studio in January which is expected to earn a Gold Leadership in Energy & Environmental Design (LEED) certification from the U.S. Green Building Council.
- Beginning with fall grand openings and continuing through 2009, Kohl’s will pursue LEED certification on all newly constructed stores as part of one of the largest retail LEED implementations in the country.
- Kohl’s is the No. 2 purchaser of Green Power among retailers with 20 percent of its energy coming from renewable resources.
- Energy management systems, which include centralized control systems and occupancy sensor lighting for stockrooms, break rooms and offices, are in place in all Kohl’s stores nationwide as well as ENERGY STAR roofs, irrigation controls, localized water heaters and high efficiency lighting, heating and cooling.
- Last year alone, the company recycled more than 100,000 tons of cardboard, plastic and packaging; 89,000 pounds of cans/glass/aluminum; and 180 million hangers. Kohl’s merchandise bags are made of 20% recycled material and gift boxes made of 100% recycled material.
- Working Mother named Kohl’s one of the Best Green Companies for America’s Children.
Annual Meeting Results
During the meeting, the company also announced the preliminary results of the shareholder votes on the four initiatives up for vote.
(1) Kohl's shareholders re-elected Steven A. Burd, Wayne Embry, John F. Herma, William S. Kellogg, Kevin Mansell, R. Lawrence Montgomery, Frank V. Sica, Peter M. Sommerhauser, Stephanie A. Streeter and Stephen E. Watson to the board of directors for one-year terms, with each director receiving more than 93 percent of the votes cast.
James Ericson, who served 11 years on the Board, and Elton White, who served 14 years, both retired as of the Annual Meeting. Montgomery thanked them for the strategic direction and knowledge they provided during their years of service to Kohl’s.
(2) The appointment of Ernst & Young LLP as Kohl’s independent registered public accounting firm received approximately 98 percent of the votes cast.
(3) A proposal was brought by the United Brotherhood of Carpenters Pension Fund requesting that in the uncontested election of directors, director nominees shall be elected by the affirmative vote of the majority of votes cast. The proposal received 46 percent of the votes cast.
(4) A proposal brought forth by the Sheet Metal Workers’ National Pension Fund regarding Kohl’s Executive Compensation Plan received approximately 30 percent of the votes cast.
To review Kohl’s 10-K and 2007 fiscal performance, visit www.kohls.com.
About Kohl’s
Kohl’s Department Stores
Based in Menomonee Falls, Wis., Kohl’s (NYSE: KSS) is a family-focused, value-oriented specialty department store offering moderately priced, exclusive and national brand apparel, shoes, accessories, beauty and home products in an exciting shopping environment. Kohl’s operates 957 stores in 47 states and will celebrate the opening of its 1,000th store in the fall. A company committed to the communities it serves, Kohl’s has raised more than $102 million for children’s initiatives nationwide through its Kohl’s Cares for Kids® philanthropic program. For a list of store locations and information, or for the added convenience of shopping online, visit www.kohls.com.
Cautionary Statement Regarding Forward-Looking Information
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Kohl's intends forward-looking terminology such as “believes,”“expects,” “may,”“will,” “should,”“anticipates,” “plans,” or similar expressions to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. These risks and uncertainties include, but are not limited to those described in Item 1A in Kohl’s Annual Report on Form 10-K, which is expressly incorporated herein by reference, and other factors as may periodically be described in Kohl's filings with the SEC.
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