Kohl's 2007 Annual Report Download - page 4

Download and view the complete annual report

Please find page 4 of the 2007 Kohl's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 20

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20

Dear Shareholders,
The 2007 retail environment proved challenging for most retailers, and
Kohl’s was no exception. Although we achieved record sales for our
16th consecutive year as a public company, our earnings performance
was disappointing relative to our expectations entering the year.
Net sales for the year increased 5.6 percent to $16.5 billion. On a
comparable store basis, sales decreased 0.8 percent. Net income decreased
2.2 percent to $1.08 billion. Earnings per diluted share increased
from $3.31 to $3.39.
Financial Discipline
Kohl’s continues to be fi nancially
strong. Our sales per square foot are
among the highest in the industry.
Our operating margin of 11 percent
in 2007 was also one of the highest
in the industry. Our capital structure is
well positioned to support our expan-
sion plans. Internally generated cash
fl ows will continue to be the primary
source of funding for our future growth
and will provide liquidity in a challenging
economic environment.
We completed our 2006 $2 billion
share repurchase program in the
second quarter of 2007. In September,
we announced a new $2.5 billion
share repurchase program which is
expected to be completed by the end
of fi scal 2010. We are committed to
maintaining our BBB+ credit rating
as well as distributing excess capital
to our shareholders.
In 2007, we invested $1.5 billion in
capital projects to grow our store base,
remodel existing stores, support our
future growth and enhance productivity.
Growing Market Share
We added 112 stores in 2007, increasing
our store base from 817 to 929 stores.
We opened 80 stores on a single day
in October, marking the largest grand
opening in company history. Signifi cant
e x p a n s i o n o c c u r r e d i n t h e P a c i fi c
Northwest and Florida as well as in
established markets.
In 2008, we expect to open approxi-
mately 70–75 stores led by our entry
into the Miami-Ft. Lauderdale-West
Palm Beach market. As an ongoing
strategy to increase our market share,
we’ll also continue to expand our pres-
ence in existing markets. To support
both new and existing growth, we also
will open a new distribution center.
Strategies to Deliver
Our strategic initiatives remain
consistent and are the roadmap for our
future success. These initiatives focus
on merchandise content, marketing,
2