Kohl's 2004 Annual Report Download - page 11

TO OUR SHAREHOLDERS: expect great things is
a commitment to grow the company and increase its
profitability. We will continue to be committed to becoming
the number one family-focused, value-oriented specialty
department store.
In 2004, we achieved our goal to return to 20% earnings
growth. Net income increased 26% in 2004 and over the
past five years our net income has grown at a compounded
annual growth rate of 23%. These increases were achieved
through a combination of comparable store sales increases,
square footage growth and gross margin expansion. We
continued to concentrate on profitable growth, ending the
year with 637 stores in 40 states, compared with 542 stores
in 36 states at the same time last year.
EXPANDING THE COMPANY In 2004, we opened
95 stores. Of these, 53 were in new markets and 42 were
fill-in stores in existing markets. We extended our presence
in California with entries into San Francisco with 11 stores,
Sacramento with seven stores, San Diego with five stores,
Fresno with three stores and Bakersfield with two stores.
Other new market entries include Salt Lake City, Utah,
with five stores, and Rochester, New York, and Memphis,
Tennessee, with three stores each.
We plan to open approximately 95 stores in fiscal 2005,
with approximately 33 stores opening in the spring and
the balance in the fall. The fall openings include our entry
into Florida, with seven stores in Orlando and three in
Jacksonville. We plan to fund all of this expansion through
our strong cash flow.
We also continue to keep our established stores looking
fresh and current. We remodeled stores in the Minneapolis
and Kansas City markets in 2004. In 2005, we will remodel
stores in Cleveland and Philadelphia.
SMALL STORE TEST In 2002, we initiated a small-store
test to serve trade areas of 100,000 or less in population.
The test consisted of one store each in Wisconsin, Iowa,
Michigan and North Carolina. At approximately 68,000
square feet, the stores have a layout that is similar to our
larger prototype stores and include all departments, but
with an edited merchandise selection. Over the past two
years, we have evaluated and refined all aspects of these
four test locations and are pleased with the development
of the concept and the performance of these stores. We
will continue to refine the concept and plan to open four
additional stores in 2005. The small-store concept is
a growth vehicle that will bring our great shopping
experience to many more customers and communities
across the country. The small stores will be a part of our
expansion every year going forward.
As we look to 2005 and beyond, our shareholders can
expect us to continue to open stores across the country and
maintain our commitment to 20% earnings growth.
9
99 00 01 02 03 04
542
637
457
382
320
259
STORES
(Open at year end)
99 00 01 02 03 04
$581
$730
$635
$488
$367
$255
NET INCOME
(a)
(In millions of dollars)
23.4%
CAGR*
19.7%
CAGR*
(a) 1999-2003 restated.
* Compounded annual growth rate.
Expect Great T hings: Shareholders