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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code
(
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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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.
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).
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.
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☒ |
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Accelerated Filer |
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☐ |
Non-Accelerated Filer |
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☐ |
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Smaller Reporting Company |
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Emerging Growth Company |
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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
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: November 29, 2024 Common Stock, Par Value $0.0
1 per Share,
KOHL’S C ORPORATION
INDEX
PART I |
3 |
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Item 1. |
3 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
11 |
Item 3. |
19 |
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Item 4. |
19 |
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PART II |
20 |
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Item 1. |
20 |
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Item 1A. |
20 |
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Item 2. |
20 |
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Item 5. |
20 |
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Item 6. |
21 |
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22 |
PART I. FINANCI AL INFORMATION
Item 1. Financi al Statements
KOHL’S CORPORATION
CONSOLIDATED B ALANCE SHEETS
(Dollars in Millions) |
November 2, 2024 |
February 3, 2024 |
October 28, 2023 |
Assets |
(Unaudited) |
(Audited) |
(Unaudited) |
Current assets: |
|
|
|
Cash and cash equivalents |
$
|
$
|
$
|
Merchandise inventories |
|
|
|
Other |
|
|
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Total current assets |
|
|
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Property and equipment, net |
|
|
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Operating leases |
|
|
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Other assets |
|
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Total assets |
$
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$
|
$
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
Current liabilities: |
|
|
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Accounts payable |
$
|
$
|
$
|
Accrued liabilities |
|
|
|
Borrowings under revolving credit facility |
|
|
|
Current portion of: |
|
|
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Long-term debt |
|
— |
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Finance leases and financing obligations |
|
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Operating leases |
|
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Total current liabilities |
|
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Long-term debt |
|
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Finance leases and financing obligations |
|
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Operating leases |
|
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Deferred income taxes |
|
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Other long-term liabilities |
|
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Shareholders’ equity: |
|
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Common stock |
|
|
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Paid-in capital |
|
|
|
Treasury stock, at cost |
(
|
(
|
(
|
Retained earnings |
|
|
|
Total shareholders’ equity |
$
|
$
|
$
|
Total liabilities and shareholders’ equity |
$
|
$
|
$
|
See accompanying Notes to Consolidated Financial Statements
3
KOHL’S CORPORATION
CONSOLIDATED STAT EMENTS OF OPERATIONS
(Unaudited)
|
Three Months Ended |
Nine Months Ended |
||
(Dollars in Millions, Except per Share Data) |
November 2, 2024 |
October 28, 2023 |
November 2, 2024 |
October 28, 2023 |
Net sales |
$
|
$
|
$
|
$
|
Other revenue |
|
|
|
|
Total revenue |
|
|
|
|
Cost of merchandise sold |
|
|
|
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Operating expenses: |
|
|
|
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Selling, general, and administrative |
|
|
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Depreciation and amortization |
|
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Operating income |
|
|
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Interest expense, net |
|
|
|
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Income before income taxes |
|
|
|
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(Benefit) provision for income taxes |
— |
|
|
|
Net income |
$
|
$
|
$
|
$
|
Net income per share: |
|
|
|
|
Basic |
$
|
$
|
$
|
$
|
Diluted |
$
|
$
|
$
|
$
|
See accompanying Notes to Consolidated Financial Statements
4
KOHL’S CORPORATION
CONSOLIDATED STATEMENTS OF CHA NGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
|
Three Months Ended |
Nine Months Ended |
||
(Dollars in Millions, Except per Share Data) |
November 2, 2024 |
October 28, 2023 |
November 2, 2024 |
October 28, 2023 |
Common stock |
|
|
|
|
Balance, beginning of period |
$
|
$
|
$
|
$
|
Stock-based awards |
— |
— |
— |
— |
Retirement of treasury stock |
— |
— |
— |
(
|
Balance, end of period |
$
|
$
|
$
|
$
|
|
|
|
|
|
Paid-in capital |
|
|
|
|
Balance, beginning of period |
$
|
$
|
$
|
$
|
Stock-based awards |
|
|
|
|
Balance, end of period |
$
|
$
|
$
|
$
|
|
|
|
|
|
Treasury stock |
|
|
|
|
Balance, beginning of period |
$(
|
$(
|
$(
|
$(
|
Stock-based awards |
(
|
— |
(
|
(
|
Dividends paid |
— |
|
|
|
Retirement of treasury stock |
— |
— |
— |
|
Balance, end of period |
$(
|
$(
|
$(
|
$(
|
|
|
|
|
|
Retained earnings |
|
|
|
|
Balance, beginning of period |
$
|
$
|
$
|
$
|
Net income |
|
|
|
|
Dividends paid |
(
|
(
|
(
|
(
|
Retirement of treasury stock |
— |
— |
— |
(
|
Balance, end of period |
$
|
$
|
$
|
$
|
|
|
|
|
|
Total shareholders' equity, end of period |
$
|
$
|
$
|
$
|
|
|
|
|
|
Common stock |
|
|
|
|
Shares, beginning of period |
|
|
|
|
Stock-based awards |
— |
— |
— |
— |
Retirement of treasury stock |
— |
— |
— |
(
|
Shares, end of period |
|
|
|
|
Treasury stock |
|
|
|
|
Shares, beginning of period |
(
|
(
|
(
|
(
|
Stock-based awards |
— |
— |
— |
— |
Retirement of treasury stock |
— |
— |
— |
|
Shares, end of period |
(
|
(
|
(
|
(
|
Total shares outstanding, end of period |
|
|
|
|
|
|
|
|
|
Dividends paid per common share |
$
|
$
|
$
|
$
|
See accompanying Notes to Consolidated Financial Statements
5
KOHL’S CORPORATION
CONSOLIDATED STATEM ENTS OF CASH FLOWS
(Unaudited)
|
Nine Months Ended |
|
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Operating activities |
|
|
Net income |
$
|
$
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
Depreciation and amortization |
|
|
Share-based compensation |
|
|
Deferred income taxes |
(
|
(
|
Non-cash lease expense |
|
|
Other non-cash items |
|
|
Changes in operating assets and liabilities: |
|
|
Merchandise inventories |
(
|
(
|
Other current and long-term assets |
(
|
|
Accounts payable |
|
|
Accrued and other long-term liabilities |
(
|
|
Operating lease liabilities |
(
|
(
|
Net cash provided by operating activities |
|
|
Investing activities |
|
|
Acquisition of property and equipment |
(
|
(
|
Proceeds from sale of real estate |
|
|
Other |
|
(
|
Net cash used in investing activities |
(
|
(
|
Financing activities |
|
|
Net borrowings under revolving credit facility |
|
|
Shares withheld for taxes on vested restricted shares |
(
|
(
|
Dividends paid |
(
|
(
|
Repayment of long-term borrowings |
(
|
(
|
Premium paid on redemption of debt |
(
|
— |
Finance lease and financing obligation payments |
(
|
(
|
Proceeds from financing obligations |
|
|
Net cash provided by financing activities |
|
|
Net (decrease) increase in cash and cash equivalents |
(
|
|
Cash and cash equivalents at beginning of period |
|
|
Cash and cash equivalents at end of period |
$
|
$
|
Supplemental information |
|
|
Interest paid, net of capitalized interest |
$
|
$
|
Income taxes paid |
|
|
Property and equipment acquired (disposed) through exchange of: |
|
|
Finance lease liabilities |
(
|
(
|
Operating lease liabilities |
|
|
See accompanying Notes to Consolidated Financial Statements
6
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 February 3, 2024 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission ("SEC").
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
Accounting Standards Issued and Adopted
There are no recently adopted accounting pronouncements that had a material impact on our financial statements.
Accounting Standards Issued but not yet Effective
Standard |
Description |
Effect on our Financial Statements |
Segment Reporting (ASU 2023-07) Issued November 2023
Effective for Fiscal Years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 |
The amendments in this ASU improve reportable segment disclosure requirements, primarily through enhanced disclosures around significant segment expenses. |
We are evaluating the impact of the new required disclosures on our financial statements but do not expect the effect of the adoption to be material. |
Income Taxes (ASU 2023-09) Issued December 2023
Effective for Fiscal Years beginning after December 15, 2024 |
The ASU requires entities to provide additional information in the rate reconciliation table and additional disclosures around income taxes paid. |
We are evaluating the impact of the new required disclosures on our financial statements but do not expect the effect of the adoption to be material. |
Income Statement Expenses (ASU 2024-03) Issued November 2024
Effective for Fiscal Years beginning after December 15, 2026 |
The ASU requires entities to disclose disaggregated information about certain income statement expense line items. |
We are evaluating the impact of the new required disclosures on our financial statements. |
7
2. Revenue Recognition
The following table summarizes Net sales by line of business:
|
Three Months Ended |
Nine Months Ended |
||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
November 2, 2024 |
October 28, 2023 |
Women's |
$
|
$
|
$
|
$
|
Men's |
|
|
|
|
Accessories (including Sephora) |
|
|
|
|
Home |
|
|
|
|
Children's |
|
|
|
|
Footwear |
|
|
|
|
Net Sales |
$
|
$
|
$
|
$
|
Unredeemed gift cards and merchandise return card liabilities totaled $
3. Debt
Outstanding borrowings under the $
Long-term debt, which excludes borrowings on the revolving credit facility, consists of the following unsecured debt:
|
|
|
Outstanding |
||
Maturity (Dollars in Millions) |
Effective Rate at Issuance |
Coupon Rate |
November 2, 2024 |
February 3, 2024 |
October 28, 2023 |
2023 |
|
|
$— |
$— |
$
|
2025 |
|
|
— |
|
|
2025 |
|
|
|
|
|
2029 |
|
|
|
|
|
2031 |
|
|
|
|
|
2033 |
|
|
|
|
|
2037 |
|
|
|
|
|
2045 |
|
|
|
|
|
Outstanding unsecured senior debt |
|
|
|
|
|
Unamortized debt discounts and deferred financing costs |
|
|
(
|
(
|
(
|
Current portion of unsecured senior debt |
|
|
(
|
— |
(
|
Long-term unsecured senior debt |
|
|
$
|
$
|
$
|
Effective interest rate at issuance |
|
|
|
|
|
Our estimated fair value of unsecured senior long-term debt is determined using Level 1 inputs, using financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our unsecured senior debt was $
In June 2024, we completed a voluntary redemption of the remaining $
8
Our various debt agreements contain covenants including limitations on additional indebtedness and certain financial tests. As of November 2, 2024 , we were in compliance with all covenants of the various debt agreements.
4. Stock-Based Awards
The following table summarizes our stock-based awards activity for the nine months ended November 2, 2024:
|
Nonvested Restricted Stock Awards and Units |
Performance Share Units |
||
(Shares and Units in Thousands) |
Shares |
Weighted
|
Units |
Weighted
|
Balance - February 3, 2024 |
|
$
|
|
$
|
Granted |
|
|
|
|
Vested |
(
|
|
(
|
|
Forfeited |
(
|
|
|
|
Balance - November 2, 2024 |
|
$
|
|
$
|
In 2019, we issued
5. Contingencies
With respect to Kelley v. Boneparth , No. 2:24-cv-00604-LA (E.D. Wis.), described in Note 5, Contingencies, of the Notes to our Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 2024, the plaintiff filed a notice of voluntary dismissal on November 15, 2024.
With respect to the securities putative class action, Shanaphy v. Kohl’s Corporation , No. 2:22-cv- 01016-LA (E.D. Wis.), described in Note 7, Contingencies, of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, the Court granted the Company’s motion to dismiss on September 30, 2024. The Court set a deadline of November 1, 2024, for the plaintiff to file a motion for leave to file a second amended complaint to the extent the plaintiff believed he could cure the complaint’s deficiencies through amendment. The plaintiff did not file a motion for leave to amend the complaint by the Court’s deadline. On November 5, 2024, the Court entered a judgment in favor of the Company.
In addition to what is noted above, we are subject to certain legal proceedings and claims arising out of the ordinary conduct of our business. In the opinion of management, the outcome of these proceedings and claims will not have a material adverse effect on our Consolidated Financial Statements.
6. Income Taxes
The effective income tax rate for the third quarter of 2024 was (
7. 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 stock-based awards and stock warrants. The potentially dilutive shares outstanding during the period include unvested restricted stock units, unvested restricted stock awards, and warrants, which utilize the treasury stock method, as well as unvested
9
performance share units that utilize the contingently issuable share method. Potentially dilutive shares are excluded from the computations of diluted earnings per share 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 |
Nine Months Ended |
||
(Dollars and Shares in Millions, Except per Share Data) |
November 2, 2024 |
October 28, 2023 |
November 2, 2024 |
October 28, 2023 |
Numerator—Net income |
$
|
$
|
$
|
$
|
Denominator—Weighted-average shares: |
|
|
|
|
Basic |
|
|
|
|
Dilutive impact |
|
|
|
|
Diluted |
|
|
|
|
Net income per share: |
|
|
|
|
Basic |
$
|
$
|
$
|
$
|
Diluted |
$
|
$
|
$
|
$
|
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 |
Nine Months Ended |
||
(Shares in Millions) |
November 2, 2024 |
October 28, 2023 |
November 2, 2024 |
October 28, 2023 |
Anti-dilutive shares |
|
|
|
|
8. Subsequent Events
On
On November 25, 2024, the Company announced that Thomas A. Kingsbury will step down as Chief Executive Officer, effective January 15, 2025. Mr. Kingsbury will continue to serve in an advisory role to the new Chief Executive Officer and retain his position on the Board of Directors through his retirement on May 10, 2025. The Company further announced that, on November 22, 2024, the Board of Directors appointed J. Ashley Buchanan to serve as Chief Executive Officer and a member of the Board of Directors, effective January 15, 2025.
10
Item 2. Management’s Discussion and Analysis o f Financial Condition and Results of Operations
For purposes of the following discussion, unless noted, all references to "the quarter” and “the third quarter” are for the three fiscal months (13 weeks) ended November 2, 2024 or October 28, 2023. References to "the second quarter" are for the three fiscal months (13 weeks) ended August 3, 2024 or July 29, 2023. References to the "first half" are for the six fiscal months (26 weeks) ended August 3, 2024 or July 29, 2023. References to "year to date" are for the nine fiscal months (39 weeks) ended November 2, 2024 or October 28, 2023.
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 statements under management's discussion and analysis, financial and capital allocation outlook and may include comments 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 2023 Form 10-K, 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 1,178 stores and a website (www.Kohls.com) as of November 2, 2024. 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 Sephora at Kohl's shop-in-shops ("Sephora 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 third quarter include:
11
Our Strategy
Kohl's strategy is focused on delivering long-term shareholder value. To achieve this, the Company has established four overarching priorities to drive improved sales and profitability. These priorities include enhancing the customer experience, accelerating and simplifying its value strategies, managing inventory and expenses with discipline, and strengthening the balance sheet.
Updated 2024 Financial and Capital Allocation Outlook
For the full year 2024, which has 52 weeks compared to 53 weeks in full year 2023, the Company currently expects the following:
Results of Operations
Total Revenue
|
Three Months Ended |
Nine Months Ended |
||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
Net sales |
$3,507 |
$3,843 |
$(336) |
$10,210 |
$10,876 |
$(666) |
Other revenue |
203 |
211 |
(8) |
614 |
644 |
(30) |
Total revenue |
$3,710 |
$4,054 |
$(344) |
$10,824 |
$11,520 |
$(696) |
Net sales includes revenue from the sale of merchandise, net of expected returns and deferrals due to future performance obligations, and shipping revenue.
Net sales decreased 8.8% in the third quarter of 2024 and 6.1% year to date 2024.
12
|
Three Months Ended |
Nine Months Ended |
||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
Women's |
$869 |
$1,007 |
(13.7%) |
$2,796 |
$3,094 |
(9.6%) |
Men's |
701 |
792 |
(11.5%) |
2,041 |
2,296 |
(11.1%) |
Accessories (including Sephora) |
650 |
620 |
4.8% |
1,934 |
1,703 |
13.6% |
Home |
473 |
494 |
(4.3%) |
1,301 |
1,389 |
(6.3%) |
Children's |
486 |
562 |
(13.5%) |
1,189 |
1,352 |
(12.1%) |
Footwear |
328 |
368 |
(10.9%) |
949 |
1,042 |
(8.9%) |
Net Sales |
$3,507 |
$3,843 |
(8.8%) |
$10,210 |
$10,876 |
(6.1%) |
Comparable sales decreased 9.3% in the third quarter of 2024 and 6.4% year to date 2024. 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 twelve months, stores that have been closed, and stores that have been relocated where square footage has changed by more than 10%.
Digital sales decreased 7% in the third quarter of 2024 and 5% year to date 2024. Digital penetration represented 26% of net sales in the third quarter and year to date 2024, compared to 26% in the third quarter of 2023 and 25% year to date 2023. 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. 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 may not be consistent with the similarly titled measures reported by other companies.
Other revenue includes revenue from credit card operations, third-party advertising on our website, unused gift cards and merchandise return cards (breakage), and other non-merchandise revenue.
Other revenue decreased $8 million in the third quarter of 2024 and $30 million year to date 2024. The decrease in both periods was driven by our credit business, which declined in line with Net sales. Additionally, year to date the decrease was driven by increasing credit loss rates within our credit business.
As it relates to our credit business and recent regulatory developments, on March 5, 2024, the Consumer Financial Protection Bureau released a final rule reducing the safe harbor dollar amount for credit card late fees and eliminating the automatic annual inflation adjustment to such safe harbor dollar amount. This rule could adversely impact Kohl’s credit card revenues, particularly if our mitigation efforts are not successful and/or if consumer behavior changes in response to our mitigation strategies or the rule itself.
While the rule had an original effective date of May 14, 2024 industry organizations challenged the rule, and on May 10, 2024, the United States District Court for the Northern District of Texas granted a preliminary injunction, staying implementation of the rule. As of November 2, 2024, this injunction remains in effect. The ultimate outcome of this legal challenge, including its impact on the rule’s effectiveness and implementation, remains uncertain.
We are actively pursuing various mitigation strategies should the rule become effective, including scaling our recently launched co-brand card and implementing other initiatives with Capital One, our credit partner. We continue to closely monitor developments on the issue and assess the potential impacts of the rule on our business.
13
Cost of Merchandise Sold and Gross Margin
|
Three Months Ended |
Nine Months Ended |
||||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
||
Net sales |
$3,507 |
$3,843 |
$(336) |
|
$10,210 |
$10,876 |
$(666) |
|
Cost of merchandise sold |
2,137 |
2,349 |
(212) |
|
6,188 |
6,638 |
(450) |
|
Gross margin |
$1,370 |
$1,494 |
$(124) |
|
$4,022 |
$4,238 |
$(216) |
|
Gross margin as a percent of net sales |
39.1% |
38.9% |
20 |
bps |
39.4% |
39.0% |
42 |
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; and terms cash discount. 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. For the third quarter of 2024, gross margin was 39.1% of net sales, an increase of 20 basis points to last year. Year to date 2024, gross margin was 39.4% of net sales, an increase of 42 basis points to last year. In both the third quarter and year to date 2024, the increase was driven by strong inventory management resulting in fewer clearance markdowns as our inventory was down 3% to last year at the end of the third quarter as well as lower freight costs. Partially offsetting the increase in the third quarter was higher digital penetration and increased promotional activity. Year to date, the increase was partially offset by elevated shrink levels.
Selling, General, and Administrative Expense
|
Three Months Ended |
Nine Months Ended |
||||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
||
SG&A |
$1,291 |
$1,360 |
$(69) |
|
$3,769 |
$3,902 |
$(133) |
|
As a percent of total revenue |
34.8% |
33.5% |
125 |
bps |
34.8% |
33.9% |
95 |
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.
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 our expenses as a percentage of revenue and changes in this percentage compared to the prior year. 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".
14
The following table summarizes the changes in SG&A by expense type:
|
Three Months Ended |
Nine Months Ended |
(Dollars in Millions) |
November 2, 2024 |
November 2, 2024 |
Store expenses |
$(17) |
$(80) |
Corporate and other |
(44) |
(39) |
Distribution |
(5) |
(18) |
Marketing |
(3) |
4 |
Total decrease |
$(69) |
$(133) |
SG&A expenses decreased $69 million, or 5.1%, to $1.3 billion in the third quarter of 2024. As a percentage of revenue, SG&A deleveraged by 125 basis points. Year to date 2024, SG&A expenses decreased $133 million, or 3.4%, to $3.8 billion. As a percentage of revenue, SG&A deleveraged by 95 basis points. The decreases in SG&A expenses for the third quarter and year to date 2024 were due to tightly managing expenses across the organization, especially in corporate and store-related expenses. Partially offsetting the year to date decrease were investments in marketing and technology to support new growth initiatives.
Other Expenses
|
Three Months Ended |
Nine Months Ended |
||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
Depreciation and amortization |
$184 |
$188 |
$(4) |
$560 |
$562 |
$(2) |
Interest expense, net |
76 |
89 |
(13) |
245 |
262 |
(17) |
The decrease in Depreciation and amortization in the third quarter and year to date 2024 was primarily driven by reduced capital spending in technology. Partially offsetting the decrease in both periods were increased store investments, including Sephora shops.
Net interest expense decreased in the third quarter and year to date 2024 due to a lower average outstanding balance on the revolving credit facility and reduced outstanding unsecured senior debt. Year to date 2024, decreases in interest expense were partially offset by a $5 million loss on extinguishment of debt recognized in connection with a voluntary redemption of the remaining $113 million of outstanding 9.50% notes due May 15, 2025 completed in June 2024.
Income Taxes
|
Three Months Ended |
Nine Months Ended |
||||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
November 2, 2024 |
October 28, 2023 |
Change |
(Benefit) provision for income taxes |
$— |
$9 |
$(9) |
$1 |
$25 |
$(24) |
Effective tax rate |
(2.8%) |
13.3% |
|
1.3% |
16.4% |
|
The third quarter and year to date 2024 and 2023 rates reflect the recognition of favorable tax items in both years. Due to lower pre-tax income, the favorable discrete items had a greater impact in 2024.
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.
We expect that our operations will continue to be influenced by general economic conditions, including food, fuel and energy prices, employment rates, wage inflation, and costs to source our merchandise, including tariffs. There can be no assurances that such factors will not impact our business in the future.
15
Liquidity and Capital Resources
Capital Allocation
Our capital allocation strategy is to invest to maximize our overall long-term return and maintain a strong balance sheet, with a long-term objective of achieving an 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; third we will complete debt reduction transactions, when appropriate; and fourth we return excess cash to shareholders through our share repurchase program.
We will continue to invest in the business, as we plan to invest approximately $500 million in 2024, which includes the investment in 140 small format Sephora shop openings, 350 impulse queuing lines, the launch of 200 Babies “R” Us shops, and six new store openings, including one relocation. We remain committed to the dividend, and on November 13, 2024, our Board of Directors declared a quarterly cash dividend of $0.50 per share. The dividend will be paid on December 24, 2024 to all shareholders of record at the close of business on December 11, 2024. In June 2024, we completed a voluntary redemption of the remaining $113 million of outstanding 9.50% notes due May 15, 2025. We are not planning any share repurchases during the current year.
Our period-end Cash and cash equivalents balance decreased to $174 million from $190 million in the third quarter of 2023. Our Cash and cash equivalents balance includes short-term investments of $7 million and $11 million as of November 2, 2024, and October 28, 2023, 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.
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
•
Debt reduction
•
Share repurchases
|
|
•
Cash flow from operations
•
Line of credit under our revolving credit facility
•
Issuance of debt
|
|
Nine Months Ended |
||
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Change |
Net cash provided by (used in): |
|
|
|
Operating activities |
$52 |
$379 |
$(327) |
Investing activities |
(363) |
(491) |
128 |
Financing activities |
302 |
149 |
153 |
Operating Activities
Our operating cash outflows generally consist of payments to our employees for wages, salaries and other 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 payments on our debt borrowings.
16
Operating activities generated $52 million of cash year to date 2024 compared to $379 year to date 2023. Operating cash flow decreased primarily due to lower net income and the timing of payments year over year.
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, equipment, and real estate.
Investing activities used $363 million of cash year to date 2024 and $491 million year to date 2023. The decrease in cash used in investing activities was primarily driven by fewer Sephora shop openings and other investments, consistent with our reduced capital expenditure plans for fiscal 2024.
At the end of the quarter, we had a Sephora presence in over 1,000 of our stores, including 862 full size 2,500 square foot shops and 190 small format Sephora shops. In 2024, we anticipate capital expenditures of approximately $500 million, which includes the investment in 140 small format Sephora shop openings, 350 impulse queuing lines, the launch of 200 Babies “R” Us shops, and six new store openings, including one relocation.
Financing Activities
Our financing strategy is to ensure adequate 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 our credit ratings.
During the first half of 2024, Fitch downgraded our senior unsecured credit rating from BBB- to BB and revised their outlook to stable. While Moody's reaffirmed our credit rating, they also revised their outlook to stable.
As of November 2, 2024, our senior unsecured credit ratings and outlook were as follows:
|
Moody’s |
S&P |
Fitch |
Long-term debt |
Ba3 |
BB |
BB |
Outlook |
Stable |
Negative |
Stable |
The majority of our financing activities generally include proceeds and/or repayments of borrowings under our revolving credit facility and long-term debt, dividend payments, and repurchases of common stock. Financing cash outflows also include payments to our landlords for leases classified as financing leases and financing obligations.
Financing activities generated $302 million of cash year to date 2024 and $149 million of cash year to date 2023.
Year to date 2024, we drew $657 million on our $1.5 billion credit facility compared to $540 million drawn year to date 2023. Borrowings under the revolving credit facility, recorded as short-term debt, had $749 million outstanding as of November 2, 2024, and had $625 million outstanding as of October 28, 2023.
In the second quarter of 2024, we completed a voluntary redemption of the remaining $113 million of outstanding 9.50% notes due May 15, 2025. In February 2023, $164 million in aggregate principal amount of our 3.25% notes matured and was repaid.
There was no cash used for treasury stock purchases year to date 2024 or 2023. Share repurchases are discretionary in nature. The timing and amount of repurchases are based upon available cash balances, our stock price, and other factors. As previously noted, we are not planning any share repurchases during the current year.
17
Cash dividend payments were $166 million ($1.50 per share) year to date 2024 compared to $165 million ($1.50 per share) year to date 2023.
Key Financial Ratios
Key financial ratios that provide certain measures of our liquidity are as follows:
(Dollars in Millions) |
November 2, 2024 |
October 28, 2023 |
Working capital |
$224 |
$564 |
Current ratio |
1.05 |
1.14 |
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 are driven by increased borrowings under the revolving credit facility and additional long-term debt due within the next year. Additionally, the decrease is driven by a decrease in inventory due to inventory management as our receipts were down 7% versus the prior year. We placed a lower percentage of our overall receipts in the early part of the buying cycle to allow for additional flexibility to chase receipts based on trending sales, establish a better flow of goods to our stores, and maintain better in-stock positions, with the goal of minimizing the impact of future markdowns and out-of-stock positions.
Debt Covenant Compliance
Our senior secured, asset based revolving credit facility contains customary events of default and financial, affirmative and negative covenants, including but not limited to, a springing financial covenant relating to our fixed charge coverage ratio and restrictions on indebtedness, liens, investments, asset dispositions, and restricted payments. As of November 2, 2024, we were in compliance with all covenants.
Contractual Obligations
Aside from the voluntary redemption of the remaining $113 million of outstanding 9.50% notes due May 15, 2025 and the change in borrowings under our revolving credit facility, which have been disclosed in Note 3 of the Consolidated Financial Statements, there have been no significant changes in the contractual obligations disclosed in our 2023 Form 10-K.
Off-Balance Sheet Arrangements
We have not provided any financial guarantees arising from arrangements with unconsolidated entities or persons as of November 2, 2024.
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 2023 Form 10-K.
18
Item 3. Quantitative and Qualitat ive Disclosures about Market Risk
We redeemed the remaining $113 million of outstanding 9.50% notes due May 15, 2025 in June 2024, which has been disclosed in Note 3 of the Consolidated Financial Statements. There have been no other significant changes in the Quantitative and Qualitative Disclosures about Market Risk described in our 2023 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 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 November 2, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
19
PART II. OTH ER INFORMATION
Item 1. L egal Proceedings
For a description of our legal proceedings, see Note 5, Contingencies, of the Notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q, which is incorporated by reference in response to this item.
Item 1A. Ri sk Factors
There have been no significant changes in the Risk Factors described in our 2023 Form 10-K.
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 November 2, 2024:
(Dollars in Millions, Except per Share Data) |
Total Number
|
Average
|
Total Number
|
Approximate
|
August 4 - August 31, 2024 |
9,504 |
$19.22 |
— |
$2,476 |
September 1 - October 5, 2024 |
11,229 |
$19.72 |
— |
$2,476 |
October 6 - November 2, 2024 |
24,702 |
$19.51 |
— |
$2,476 |
Total |
45,435 |
$19.50 |
— |
|
Item 5. Other Information
D
20
Item 6. Exhibits
Exhibit |
|
Description |
10.1 |
|
|
10.2 |
|
|
10.3 |
|
|
10.4 |
|
|
31.1 |
|
|
31.2 |
|
|
32.1 |
|
|
32.2 |
|
|
101.INS |
|
Inline XBRL Instance Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101) |
21
SIGNA TURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Kohl’s Corporation (Registrant) |
|
|
Date: December 5, 2024 |
/s/ Jill Timm |
|
Jill Timm On behalf of the Registrant and as Chief Financial Officer (Principal Financial Officer) |
22
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|---|---|---|
Metatron Capital SICAV plc | 394,048,087 | 1,868,200 | |
VANGUARD GROUP INC | 33,052,711 | 20,445,415,444 | |
PRICE T ROWE ASSOCIATES INC /MD/ | 10,973,057 | 6,787,605 | |
Capital World Investors | 9,325,777 | 5,768,589,000 | |
Capital Research Global Investors | 8,187,683 | 5,064,621,216 | |
FMR LLC | 7,877,459 | 4,872,760,768 | |
GEODE CAPITAL MANAGEMENT, LLC | 7,659,943 | 4,719,477,131 | |
MASSACHUSETTS FINANCIAL SERVICES CO /MA/ | 3,392,690 | 2,098,616,253 | |
PICTET ASSET MANAGEMENT LTD | 3,037,588 | 1,532,372 | |
Legal & General Group Plc | 2,980,177 | 1,843,445,451 | |
POLEN CAPITAL MANAGEMENT LLC | 2,806,786 | 1,736,193,727 | |
Fisher Asset Management, LLC | 2,636,558 | 1,630,895,992 | |
PICTET ASSET MANAGEMENT SA | 2,577,185 | 1,344,646,274 | |
PRIMECAP MANAGEMENT CO/CA/ | 2,574,877 | 1,592,741,667 | |
WELLINGTON MANAGEMENT GROUP LLP | 2,528,637 | 1,564,138,989 | |
Pictet Asset Management Holding SA | 2,489,654 | 1,539,903,277 | |
CHARLES SCHWAB INVESTMENT MANAGEMENT INC | 2,443,937 | 1,511,746,069 | |
AMUNDI | 2,420,898 | 1,441,523,716 | |
UBS AM, a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC | 2,163,487 | 1,338,268,153 | |
Clearbridge Investments, LLC | 2,093,583 | 1,295,027,837 | |
AMUNDI ASSET MANAGEMENT US, INC. | 2,035,533 | 928,978 | |
PUTNAM INVESTMENTS LLC | 1,719,355 | 912,616,664 | |
DIMENSIONAL FUND ADVISORS LP | 1,707,644 | 1,056,264,974 | |
DZ BANK AG Deutsche Zentral Genossenschafts Bank, Frankfurt am Main | 1,694,238 | 1,047,891,166 | |
T. Rowe Price Investment Management, Inc. | 1,650,456 | 1,020,923 | |
BROWN ADVISORY INC | 1,613,087 | 997,807,031 | |
SCHRODER INVESTMENT MANAGEMENT GROUP | 1,609,095 | 995,337,895 | |
Unisphere Establishment | 1,600,000 | 989,712,000 | |
GENERATION INVESTMENT MANAGEMENT LLP | 1,587,174 | 981,778,223 | |
Parametric Portfolio Associates LLC | 1,549,040 | 914,941 | |
Prostatis Group LLC | 1,452,094 | 1,473,367 | |
MANUFACTURERS LIFE INSURANCE COMPANY, THE | 1,419,585 | 878,110,332 | |
INTERNATIONAL ASSETS INVESTMENT MANAGEMENT, LLC | 1,416,416 | 13,274 | |
Alecta Tjanstepension Omsesidigt | 1,412,000 | 872,841,920 | |
SUSQUEHANNA INTERNATIONAL GROUP, LLP | 1,381,618 | 854,627,446 | |
Mitsubishi UFJ Asset Management Co., Ltd. | 1,360,069 | 841,297,881 | |
LOOMIS SAYLES & CO L P | 1,298,012 | 802,911 | |
Alphinity Investment Management Pty Ltd | 1,250,356 | 773,432,710 | |
Nuveen Asset Management, LLC | 1,239,378 | 766,655,811 | |
EATON VANCE MANAGEMENT | 1,210,607 | 614,008 | |
DEUTSCHE BANK AG\ | 1,207,356 | 746,834,200 | |
Swedbank AB | 1,194,680 | 738,993,205 | |
C WorldWide Group Holding A/S | 1,160,326 | 717,743 | |
HSBC HOLDINGS PLC | 1,136,039 | 700,194,315 | |
Swiss National Bank | 1,133,000 | 700,839,810 | |
Veritas Asset Management LLP | 1,130,476 | 699,278,539 | |
PARNASSUS INVESTMENTS, LLC | 1,127,870 | 697,666,546 | |
Ensign Peak Advisors, Inc | 1,083,029 | 669,929,250 | |
Temasek Holdings (Private) Ltd | 1,071,180 | 662,599,813 | |
Longview Partners (Guernsey) LTD | 1,012,067 | 626,034,284 | |
Corient Private Wealth LLC | 949,928 | 587,597,053 | |
BNP PARIBAS FINANCIAL MARKETS | 942,076 | 601,172,719 | |
MACKENZIE FINANCIAL CORP | 922,056 | 570,356,180 | |
ENVESTNET ASSET MANAGEMENT INC | 909,697 | 562,711,155 | |
FIRST MANHATTAN CO. LLC. | 886,330 | 548,573,000 | |
CREDIT SUISSE AG/ | 859,879 | 499,770,273 | |
California Public Employees Retirement System | 843,248 | 521,607,915 | |
Sustainable Growth Advisers, LP | 807,492 | 499,490,326 | |
Voya Investment Management LLC | 805,828 | 498,049,180 | |
ATLANTA CAPITAL MANAGEMENT CO L L C | 802,260 | 406,898 | |
Cantillon Capital Management LLC | 799,000 | 494,237,430 | |
Vontobel Holding Ltd. | 793,597 | 490,895,297 | |
Qube Research & Technologies Ltd | 791,290 | 489,468,255 | |
KING LUTHER CAPITAL MANAGEMENT CORP | 789,193 | 488,171,114 | |
Mirova US LLC | 785,808 | 486,077,255 | |
DekaBank Deutsche Girozentrale | 772,643 | 474,529 | |
ROYAL LONDON ASSET MANAGEMENT LTD | 770,416 | 476,556,225 | |
Allianz Asset Management GmbH | 761,545 | 471,068,891 | |
CITADEL ADVISORS LLC | 737,586 | 456,248,572 | |
VONTOBEL ASSET MANAGEMENT INC | 718,886 | 443,173,732 | |
WCM INVESTMENT MANAGEMENT, LLC | 714,722 | 439,139,504 | |
FARALLON CAPITAL MANAGEMENT LLC | 709,456 | 438,848,198 | |
National Pension Service | 702,529 | 434,563,364 | |
Impax Asset Management Group plc | 702,337 | 433,315,089 | |
NATIONAL BANK OF CANADA /FI/ | 646,692 | 400,024,085 | |
CANADA PENSION PLAN INVESTMENT BOARD | 644,515 | 398,677,644 | |
BlueSpruce Investments, LP | 635,631 | 393,182,268 | |
CALIFORNIA STATE TEACHERS RETIREMENT SYSTEM | 621,783 | 384,616,310 | |
CIBC Private Wealth Group LLC | 620,916 | 384,079,726 | |
AXA S.A. | 613,680 | 379,604,038 | |
RAYMOND JAMES & ASSOCIATES | 586,785 | 362,967,746 | |
Stockbridge Partners LLC | 576,583 | 356,656,946 | |
Robeco Institutional Asset Management B.V. | 574,355 | 355,278,772 | |
HARDING LOEVNER LP | 568,502 | 351,641,764 | |
TD Asset Management Inc | 557,828 | 342,740,680 | |
Meridiem Investment Management Ltd. | 552,301 | 341,488,780 | |
CANADA LIFE ASSURANCE Co | 550,455 | 340,841 | |
BROWN BROTHERS HARRIMAN & CO | 540,368 | 334,255,590 | |
MILLENNIUM MANAGEMENT LLC | 536,476 | 331,847,959 | |
JANE STREET GROUP, LLC | 526,175 | 325,476,070 | |
LORING WOLCOTT & COOLIDGE FIDUCIARY ADVISORS LLP/MA | 525,385 | 292,838,960 | |
NN Investment Partners Holdings N.V. | 524,845 | 309,998 | |
Ninety One UK Ltd | 523,377 | 323,745,311 | |
TWO SIGMA ADVISERS, LP | 514,000 | 317,944,980 | |
1832 Asset Management L.P. | 510,812 | 315,972,979 | |
NATIXIS ADVISORS, LLC | 502,083 | 310,573 | |
Sarasin & Partners LLP | 488,325 | 302,063,194 | |
Aperio Group, LLC | 456,946 | 212,837 | |
Grantham, Mayo, Van Otterloo & Co. LLC | 454,399 | 281,077,589 | |
Bank Julius Baer & Co. Ltd, Zurich | 439,813 | 310,952,595 |
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|---|---|---|
Dr. Jacks currently serves as President of Break Through Cancer, an organization focusing on collaborative approaches to cancer research, has worked for over 30 years as a professor in the Department of Biology at Massachusetts Institute of Technology, and previously served as Founding Director of the Koch Institute, a cancer research center. As a result of his many years of experience in the field of cancer research, including board-level and industry-specific service on public company boards, Dr. Jacks brings to the Board significant scientific, technological and industry expertise. Dr. Jacks also brings valuable board-level experience from his many years serving on public company boards and scientific advisory boards of biotechnology companies, pharmaceutical companies and academic institutions. | |||
Mr. Sperling currently serves as Co-Chief Executive Officer of Thomas H. Lee Partners, LP (“THL”), a private equity firm. During his 20-year career leading THL, he has gained broad experience with the various industries represented in the THL portfolio, including healthcare and technology. As a result of this experience, Mr. Sperling brings to the Board valuable experience driving strategic direction and growth of organizations, and also corporate finance and acquisition experience. Mr. Sperling also brings valuable board-level experience from his years of serving on public company boards. | |||
Mr. Chai previously served as Chief Financial Officer of Uber Technologies Inc., a ridesharing technology platform, as President and CEO of The Warranty Group, a provider of specialty insurance products, and as President of CIT Group, a financial institution. As a result of Mr. Chai’s broad background and experience of holding executive management positions in a variety of industries and organizations, he brings to the Board valuable strategic leadership, financial acumen and expertise, and accounting experience. | |||
Dr. Harris currently serves as Chief Business Officer of Dell Medical School of the University of Texas, Austin. He has had a long-standing career as a physician and previously served as Chief Information Officer of Cleveland Clinic Hospital, and Chief Strategy Officer of the Cleveland Clinic Foundation. His background and experience as a strategic leader in healthcare organizations position Dr. Harris to provide valuable insight and perspective on healthcare. As a result of Dr. Harris’s experience, he brings to the Board valuable strategic leadership and industry knowledge. Dr. Harris also brings valuable board-level experience from his many years serving on public company boards. | |||
Dear Shareholder, Thank you for the confidence you have placed in Thermo Fisher Scientific. With your support, we continue to build a brighter future for our company and for our world. All of it begins with fulfilling our Mission to enable our customers to make the world healthier, cleaner and safer. Whether we are helping our customers diagnose disease, develop new treatments, protect our planet or keep people safe, we know our work is improving lives globally. This inspires our more than 120,000 colleagues to bring their best each day, and that fuels our success. Looking back on 2023, we effectively navigated a challenging macroeconomic environment, became an even stronger partner for our customers and made a positive impact on society. Starting with our financial results, our team’s outstanding execution and focus on our customers enabled us to deliver differentiated performance. This included revenue of $42.86 billion, GAAP diluted earnings per share (EPS) of $15.45 and adjusted EPS* of $21.55, along with free cash flow* of $7.01 billion. In addition, we returned significant capital to our shareholders through $3.5 billion of stock buybacks and dividends. At the same time, we continued to advance our proven growth strategy, which consists of three pillars: • Delivering high-impact innovation • Deepening our trusted partner status with our customers • Building on our unparalleled commercial engine In 2023, we invested $1.3 billion in R&D to deliver new technologies across our businesses that are helping our customers address some of the world’s greatest challenges. In addition, we made significant advancements in partnerships and collaborations with our customers, while also enhancing our offering with exciting complementary strategic acquisitions to further strengthen our trusted partner status. During the year we also made additional global investments in our capacity and unparalleled commercial capabilities. All of this is advancing our industry leadership and propelling our continued success. This success would not be possible without our commitment to living our 4i Values of Integrity, Intensity, Innovation and Involvement. As a Mission-driven company, we understand that our obligation goes beyond enabling our customers’ success and extends to making the world a better place by supporting our communities and being a good steward of our planet. In 2023, we made significant progress on our sustainability initiatives, advanced STEM education and global health equity, and collectively volunteered more than 100,000 hours to make a difference in our communities. We look forward to sharing more details in our annual Corporate Social Responsibility Report, which we’ll publish later this year. As I reflect on 2023, I am very proud of what we achieved – and all of it was made possible by our incredible colleagues. That’s why we continue to strengthen our vibrant and inclusive culture, and we continue to make the right long-term investments in our people to enable us to attract and retain the best talent in the industry. On behalf of our global team, thank you again for your support of Thermo Fisher Scientific. We look forward to your attendance at our 2024 Annual Meeting of Shareholders on May 22, 2024, at 9:00 a.m. (ET). Sincerely, Marc N. Casper / Chairman, President and Chief Executive Officer / April 9, 2024 | |||
Mr. Manzi retired from the Board effective May 24, 2023. | |||
Ms. Johnson is the CEO of Franklin Resources, Inc., which is a global investment management holding company whose operations are conducted through its subsidiaries. Ms. Johnson is in compliance with our policy although she serves on other public company boards in her capacity as their CEO. In addition to the holding company, she serves on the boards of certain of its funds, which are registered as investment companies and are managed or advised by subsidiaries of Franklin Resources, Inc. Since Ms. Johnson’s responsibilities as a board member of these companies are integrally related to and subsumed within her role as CEO of Franklin Resources, Inc., the Board believes that this board service does not meaningfully increase her time commitments or fiduciary duties, as would be the case with service on unaffiliated public company boards. The Board appreciates shareholders’ focus on director commitments and believes that Ms. Johnson has demonstrated, and will continue to demonstrate, the ability to dedicate sufficient time to carry out her Board duties effectively. | |||
Mr. Mullen previously served as Executive Chair of the Board of Directors of Editas Medicine, a clinical-stage biotechnology company, as Chief Executive Officer of Patheon N.V., a contract development and manufacturing organization which was acquired by the Company in 2017, and as Chief Executive Officer of Biogen Inc. Due to his 35-plus years of senior leadership experience in the pharmaceutical and biotechnology industries, he brings to the Board valuable industry knowledge and industry-specific strategic leadership skills. Mr. Mullen also brings valuable board-level experience from his many years serving on public company boards in the pharmaceutical industry. | |||
Mr. Weisler previously served as Chief Executive Officer of HP Inc., an information technology company. Prior to that he served in various roles with increasing levels of responsibility at HP, Lenovo Group Inc., and at Telstra Corp. Lt., a telecommunications company. As a result of his experience, Mr. Weisler brings to the Board valuable strategic and senior management leadership skills, financial expertise, international experience, technological expertise and M&A experience. Mr. Weisler also brings valuable board-level experience from his service on public company boards. | |||
Dr. Spar currently serves as a professor of Business Administration at Harvard Business School and Senior Associate Dean for Business in Global Society, and previously served as President and CEO of the Lincoln Center for the Performing Arts and as President of Barnard College. As a result of her varied experience, Dr. Spar brings to the Board valuable executive management and strategic leadership skills, financial expertise, and a unique perspective on technology’s role in shaping society and the global economy. Dr. Spar also brings valuable experience serving on public company boards. | |||
Ms. Chandy previously served as President of the Industrial Division of Pall Corporation, a leading supplier of filtration, separation and purification technologies and as Chief Marketing Officer at the Dow Chemical Company and at Rohm and Haas Corporation. Prior to that she served in various roles with increasing levels of responsibility at Thermo Fisher Scientific, Boston Scientific, and Millipore Corporation. As a proven executive with experience in global life sciences and multi-industrial companies, she brings to the Board experience in executive management, marketing, strategy, innovation, and M&A, and has experience in relevant market segments, technologies, geographies, and business functions. Ms. Chandy also brings valuable board-level experience from her many years serving on public company boards. | |||
Ms. Keith currently serves as Chief Executive Officer of P&G Beauty at Procter & Gamble, a global consumer products company. During her 30-plus year career at P&G, Ms. Keith served in roles in manufacturing, logistics, innovation planning, and marketing, then continued into various management and senior leadership roles. Ms. Keith also serves as Executive Sponsor for Corporate Sustainability at P&G, where she works alongside P&G’s Chief Sustainability Officer to guide the company’s sustainability progress. As an experienced executive, Ms. Keith brings to the Board strategic leadership skills, financial expertise, international business experience and M&A experience. |
Name and Principal Position |
Year | Salary |
Stock
Awards |
Option
Awards |
Non-Equity
Incentive Plan
Compensation |
All Other
Compensation |
Total | ||||||||||||||||||||||||||||
Marc N. Casper
Chairman, President and
|
2023 | $ | 1,730,027 | $ | 8,357,021 | $ | 5,536,313 | $ | 2,623,068 | $ | 730,240 | $ | 18,976,669 | ||||||||||||||||||||||
|
2022 |
|
$ |
1,687,260 |
|
$ |
10,336,396 |
|
$ |
9,861,822 |
|
$ |
5,547,713 |
|
$ |
775,718 |
|
$ |
28,208,909 |
|
|||||||||||||||
2021 | $ | 1,624,247 | $ | 8,460,843 | $ | 4,090,719 | $ | 6,334,565 | $ | 723,984 | $ | 21,234,358 | |||||||||||||||||||||||
Stephen Williamson
Senior Vice President and
|
2023 | $ | 1,014,577 | $ | 2,535,540 | $ | 1,680,428 | $ | 805,777 | $ | 203,937 | $ | 6,240,259 | ||||||||||||||||||||||
|
2022 |
|
$ |
974,808 |
|
$ |
2,340,271 |
|
$ |
1,564,106 |
|
$ |
1,762,843 |
|
$ |
211,045 |
|
$ |
6,853,073 |
|
|||||||||||||||
2021 | $ | 933,411 | $ | 2,575,043 | $ | 1,226,715 | $ | 2,002,168 | $ | 214,989 | $ | 6,952,326 | |||||||||||||||||||||||
Michel Lagarde
Executive Vice President and
|
2023 | $ | 1,099,210 | $ | 3,025,589 | $ | 2,004,706 | $ | 912,674 | $ | 206,712 | $ | 7,248,891 | ||||||||||||||||||||||
|
2022 |
|
$ |
1,068,630 |
|
$ |
2,856,932 |
|
$ |
1,910,056 |
|
$ |
2,020,353 |
|
$ |
207,552 |
|
$ |
8,063,523 |
|
|||||||||||||||
2021 | $ | 959,153 | $ | 3,195,811 | $ | 3,541,191 | $ | 2,057,386 | $ | 230,365 | $ | 9,983,906 | |||||||||||||||||||||||
Gianluca Pettiti Executive Vice President |
2023 | $ | 868,836 | $ | 2,449,680 | $ | 1,622,562 | $ | 627,299 | $ | 163,506 | $ | 5,731,883 | ||||||||||||||||||||||
|
2022 |
|
$ |
768,630 |
|
$ |
2,176,836 |
|
$ |
1,455,183 |
|
$ |
1,263,628 |
|
$ |
76,430 |
|
$ |
5,740,707 |
|
|||||||||||||||
2021 | $ | 611,647 | $ | 2,506,068 | $ | 2,493,936 | $ | 958,176 | $ | 36,057 | $ | 6,605,884 | |||||||||||||||||||||||
Lisa P. Britt
Senior Vice President and
|
2023 | $ | 695,268 | $ | 1,008,529 | $ | 668,291 | $ | 401,587 | $ | 115,786 | $ | 2,889,461 |
No Customers Found
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|---|---|---|
CASPER MARC N | Chairman & CEO | 131,175 | 5,000 |
CASPER MARC N | Director | 101,192 | 5,000 |
Williamson Stephen | Sr. VP and CFO | 27,393 | 18,700 |
Williamson Stephen | Director | 19,399 | 12,674 |
Lagarde Michel | Director | 18,134 | 0 |
Pettiti Gianluca | Executive Vice President | 17,556 | 0 |
Britt Lisa P. | Director | 17,323 | 0 |
Pettiti Gianluca | Director | 16,663 | 0 |
MANZI JIM P | Director | 14,807 | 0 |
Chai Nelson | Director | 13,909 | 0 |
Boxer Michael A | SVP and General Counsel | 12,901 | 0 |
Boxer Michael A | Director | 12,546 | 0 |
WEISLER DION J | Director | 4,516 | 0 |
Holmes Joseph R. | Director | 1,786 | 0 |
Holmes Joseph R. | VP & Chief Accounting Officer | 1,575 | 0 |
Spar Debora L | Director | 1,207 | 0 |