Kohl’s Inc. reported net income for the fourth quarter increased 28% to $431 million, or $1.40 per share, compared to $336 million, or $1.10, a year ago. Sales were $5.7 billion, an increase of 8.5% for the quarter. Comparable store sales for the quarter increased 4.5%.

For the year, net income was $991 million, or $3.23 per diluted share, compared to $885 million, or $2.89 per diluted share, for fiscal 2008. Net sales increased 4.8% to $17.2 billion. Comparable store sales increased 0.4% over the prior year.

Kevin Mansell, Kohl’s chairman, president and chief executive officer, said, “We are pleased that we were able to gain market share in a difficult environment, achieving both total and comparable store sales increases for the year. We improved our merchandise margins significantly through strong inventory management and successful private and exclusive brand strategies. Expenses were well managed while improving the store experience for our customers. I am very proud of our 130,000 associates and the role they played in these results and want to thank them for their hard work, loyalty and dedication in delivering on our promise to ” expect great things” from Kohl’s.”

Mansell added, “Consumers continue to be financially strained and are looking for value and ways to make their dollars go further. As a result, we are planning conservatively in our sales expectations, inventory levels and expenses. We will be very competitive in order to continue to gain market share. We are focused on the future as we invest prudently in stores – both new and remodeled – and our high-growth e-commerce business, technology and talent to ensure our profitable growth in the long run.”

Expansion Update

Kohl’s ended the year with 1,058 stores in 49 states, including 56 which were successfully opened in 2009. The Company completed 51 store remodels, compared to 36 stores last year. In fiscal 2010, the Company expects to open approximately 30 stores and remodel 85 stores.

Free Cash Flow

The Company reported free cash flow of $1.6 billion in 2009, more than double 2008 free cash flow of $684 million. Free cash flow is a non-GAAP financial measure which the Company defines as net cash provided by operating activities less capital expenditures. Free cash flow should be evaluated in addition to, and not considered a substitute for, other financial measures such as net income and cash flow provided by operations. The Company believes that free cash flow represents its ability to generate additional cash flow from its business operations.

The following table reconciles net cash provided by operating activities
(a GAAP measure) to free cash flow (a non-GAAP measure) for the years
ended January 30, 2010 and January 31, 2009.


(in Millions)

2009

2008

Net cash provided by operating activities

$ 2,234

$1,698

Acquisition of property & equipment and favorable lease rights

(666)

(1,014)

Free cash flow

$ 1,568

$ 684

Earnings Guidance

The Company issued its initial guidance for fiscal 2010. Based on assumptions of a total sales increase of 4 to 6% and a comparable store sales increase of 1 to 3% for both the quarter and year, the Company expects earnings per diluted share of $0.48 to $0.52 for the first quarter of 2010 and $3.40 to $3.63 for the year.