Kohl's executives discussed 2006 financial performance and outlined future growth plans at the company's annual shareholders' meeting ehld this week.
The company reported that net income increased 31.7% to $1.1 billion, or $3.31 per diluted share, for the twelve months ended February 3, compared with $842.0 million, or $2.43 per diluted share, a year ago. Total sales increased 16.0% to $15.5 billion from $13.4 billion a year ago. On a comparable 52-week basis, comparable store sales increased 5.9%.
Larry Montgomery, Kohl's chairman and chief executive officer, said, “We are very pleased with the top-and bottom-line results for the year as we delivered consistent sales performance across all regions and all lines of business. We saw continued gross margin improvements as we benefited from improved inventory flow and allocation and increased penetration from our private and exclusive brands. We achieved leverage on the expense line for the year while continuing to invest for our future growth. In 2007, we will continue our focus on merchandise content, marketing, inventory management and the in-store shopping experience to increase share of wallet with current customers and drive in new customers.”
Montgomery added, “I am very proud of our more than 114,000 associates and the role they played in delivering another record year and want to thank them for their hard work, loyalty and dedication to serving our customers. They are the reason you can continue to 'expect great things' from Kohl's in 2007.”
2006 and 2007 Expansion Update
In 2006, the company successfully opened 85 new stores, including entries into Portland, Ore.; Seattle, Wash. and Tampa, Fla. At the end of fiscal 2006, the company operated 817 stores in 45 states compared with 732 stores in 41 states at the end of 2005.
Building on that momentum, Kohl's plans to open 110-115 stores in Fiscal 2007 including its initial entry into Idaho and Wyoming, marking the company's 46th and 47th states of operation. The company believes all regions have significant growth potential. Kohl's also has announced plans to operate more than 1,200 locations by 2010.
Kohl's introduced a new store prototype in Fall 2006 and will continue building new stores with these enhanced features. Additionally, the company will remodel 29 of its existing stores by mid-May of this year and plans to double the number of remodels in 2008. Currently 90 of Kohl's 834 stores have been upgraded to reflect the new prototype.
The mainstay of Kohl's growth has been 88,000-square-foot, one-level stores, however, the company has been introducing more 68,000-square-foot, small format stores (39 to date) and now has four 133,000-square-foot, multi level urban stores. All three store formats are part of Kohl's expansion plan.
Additional plans for increasing market share include opening a New York design office to support Kohl's exclusive brands such as Chaps, Candie's, ELLE and this fall, Simply Vera Vera Wang and Food Network. Currently brands available Only at Kohl's make up 7% of the company's offering. Lastly, Kohl's will work to attain more share of customers' wallets in 2007 through the development of cross shopping strategies.
