Selling square footage increased from $70 million at year end 2007 to $75 million at year end 2008 an increase of 7.3%.
- The firm had $841 million in short and long term investments at year end 2008 compared to $483 million last year. The majority of the short term investments are in money market funds with a small portion in commercial paper.
- Kohl also recorded temporary mark-to-market adjustments of $46 million net of tax through equity related to long term investments.
- The inventory of $2.8 billion is 2% below last year in total and inventory per store is down just over 9%.
The firm generated cash from operations of $1.7 billion in 2008 approximately $700 million more than last year''s generation.
- Capital expenditures were $1.0 billion in 2008 down 34% from $1.5 billion last year.
- Free cash flow was $687 million almost $1 billion better than last year. Capital expenditures were approximately $800 million for fiscal 2009 and free cash similar to this year.
- Accounts payable of $881 million versus last year’s $836 million up about 5.4%. Accounts payable as a percent of inventory were 31.5% versus 29.3% last year.
All lines of business in all regions reported a decrease in comparable sales in both the quarter and the year.
- Accessories, footwear, men''s and children''s outperformed the company for both the quarter and the year.
- Accessories was led in the fourth quarter by sterling silver jewelry, handbags and beauty.
- In footwear children''s and athletic shoes reported the strongest performance. Men''s was led by basics and casual sportswear.
- Children''s was driven by infants and toddlers. Women''s and home underperformed the company for both the quarter and the year. In women''s updated sportswear and intimate were the strongest categories.
Given the run rate of the business in 2008 expectations for 2009 are for comparable sales to decrease 5% to 8% for both the first quarter and the full year.
- For the first quarter February will be better than that range, March should be within that range and April at the more negative end of that range.
- In the merchandise initiatives the firm continues to be very pleased with the performance of brands introduced in 2008.
- Jumping Beans and opening price point children''s private brand is driving the infant and toddler success.
- The Gold Toe hosiery business continues to help men''s, women''s and children''s basics outperform the company.
The Elle brand has been an overwhelming success, it is part of the reason the missy updated business has been the leader in women''s sportswear.
- The expansion of the Food Network brand platform to include Bobby Flay has helped house wares and small electrics outperform the rest of home.
- Exclusive and private brands together were up 105 basis points in penetration to 40.3% of sales primarily due to exclusive national brands.
- The customer continues to respond well to new brand launches and the penetration continues to increase and has substantial room to grow particularly on the exclusive brand font.
Research continues to show that that acceptance is being driven by the very high brand awareness each of these brands has when it was launched.
- Inventory per store is approximately 9% lower than last year stronger than the mid single digit decreases originally guided towards achieving.
- The level of reduction in clearance inventories is substantially larger approximately 30% less than last year on a per store basis.
- Within the regular priced inventories the actual changes by area year-over-year vary widely based on how the firm has positioned inventories and receipt plans for each area.
Some areas like women''s sportswear are down more than the total store.
- Basic areas like men''s, women''s or children''s underwear and hosiery are actually higher than last year per store.
- Inventory per store at the end of the first quarter should be down mid single digits per store with a additional investment in basics.
- In addition to carrying a lower overall level of inventory the firm continues to focus on flowing receipts in season as needed for the cycle time reduction initiatives.
Customer service scores improved by 8% over the last year due to improvements in the physical environment of the stores, a focus on engaging customers on the sales floor and at point of sale.
- The firm also scored number one on the American Customer Satisfaction Index a survey done by the University of Michigan and includes all of the firm''s peers.
- Gross margin performance was up 52 basis points. It also impacted free cash flow results very favorably.
- Free cash flow improved by almost $1 billion over last year.
- Those gross margin results were also aided by the investments in technology including assortment planning, markdown and size optimization.
The firm has moved well beyond just cutting overall inventories but are increasing inventory effectiveness by flowing receipts closer to sales aided by cycle time initiatives.
- Efforts to create a differentiated brand portfolio around exclusive brands that have strong existing equity have led to a significant increase in penetration of these brands to total sales.
- There has been immediate acceptance by consumers around brands like Simply Vera, Vera Wang, Chaps, Candies, Tony Hawk, Food Network, Daisy Fuentes, Elle, Fila Sport and new this year Dana Buchman and Hang Ten.
- These brands had high consumer awareness at their respective launches.
On the new store front there will continue to be consolidation and failures which may open up attractive real estate opportunities such as the Mervyns stores the firm was able to absorb this year.
- The firm is beginning to get traction on managing expenses using lower comp assumptions.
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