Kohl’s Comments on Investor Statement and Director Nominations - Seite 2

We also recently announced a new long-term partnership with Sephora – the most significant partnership in our Company’s history – which we are confident will make Kohl’s a leading beauty destination and accelerate our growth and profitability.

Investments over the last three years in stores, digital, technology, supply chain and marketing capabilities have supported the continued transformation of the business and positioned Kohl’s for future growth. Our innovative actions to drive traffic and customer acquisition successfully grew Kohl’s customer base, reaching a record 65 million customers in 2019. Additionally, we enhanced our omni experiences, including Buy Online, Pickup In Store, Buy Online Ship to Store, Store Drive Up and Amazon Returns. The Company will leverage this strong foundation as it executes against the new long-term strategic framework.

Strong Third Quarter and Preliminary Fourth Quarter Results

We are already making progress against our strategy. We reported strong third quarter and preliminary fourth quarter earnings that exceeded expectations and were well-received by investors even amidst an ongoing global pandemic that has significantly disrupted our industry. In both quarters, we delivered sequential sales improvement, a better than expected gross margin rate and strong SG&A expense management, all of which further strengthened our financial position.

Seven Equity Analyst Upgrades and Significant Shareholder Value Creation Since Introduction of New Strategy

Investors and analysts are reacting positively to our new strategy and strong recent performance, as evidenced by upgrades from seven equity analysts and one fixed income analyst since October. Additionally, Kohl’s stock price has appreciated more than 170% since we announced our new strategy in October, outperforming the S&P 500 by more than 150%.

Driving Top Line Growth

Our strategic plan is focused on accelerating top line growth and we are already gaining traction. While we are still managing through the pandemic and ensuring the safety of our associates and customers, we are positioning the business for growth and are focused on acquiring new customers and actively targeting opportunities to capture market share from the retail industry disruption.

We are building on proven momentum to drive top line growth in several key areas:

• Building a Transformational Beauty Business with Sephora: In December, we announced a major long-term partnership with Sephora to elevate our Beauty business and drive growth by attracting new and younger customers. Sephora will become Kohl’s exclusive beauty partner with at least 850 Sephora at Kohl’s locations by 2023 and a digital launch in August 2021. This highly complementary partnership illustrates the bold moves that we are making to accelerate our growth and expand our scale in-store and online. We expect this strategic partnership to drive substantial incremental customer traffic and significantly grow our Beauty business, as well as positively impact sales across other categories.
• Growing Our Active Business to 30% of Sales: We are significantly increasing our leadership position in Active, which grew at a 10% CAGR during 2017 to 2019 and continued to outperform in 2020. Today, Active represents 20% of our sales, roughly double what it was in 2013. We plan to increase Active to 30% of sales, driven by key national brands, expanded dedicated space in our stores, growing outdoor through partnerships like the recently announced Eddie Bauer launch, as well as amplifying our athleisure opportunity through the launch of FLX, our new athleisure private brand, next month.
• Reigniting Our Women's Business: We are reigniting growth in our Women’s business. We have a new leadership team for this business and we have optimized our product portfolio through the exit of 10 down-trending brands. Improving overall clarity has also been a focus and we have significantly reduced choice counts while continuing to build depth. We are also improving the in-store merchandising presentation and actively cultivating a pipeline of new brands to keep the portfolio fresh.
• Investing in Omnichannel to Increase Productivity: We are continuing to grow our omnichannel offering while leveraging our profitable, cash generative store base. Our investments are generating strong results, enabling us to grow digital penetration from 5% of sales in 2011 to 24% in 2019 – a nearly five-fold increase. Our Q4 preliminary earnings results show continued progress – digital sales grew more than 20% year-over-year and accounted for more than 40% of net sales, with our stores playing a critical role in supporting the heightened demand. We will continue to invest in the evolution of the Kohl’s digital experience and will evolve the store experience in the years ahead to provide more relevancy and discovery for our customers. Notably, an omni-customer at Kohl’s is four times more productive than a store-only shopper and six times more productive than a digital-only customer.

Expanding Operating Margin to 7% to 8% and Improving Expense Efficiency