Kohl's 2011 Annual Report Download - page 7

Recent economic conditions have caused disruptions and significant volatility in financial markets,
increased rates of default and bankruptcy and declining consumer and business confidence, which has led to
decreased levels of consumer spending, particularly on discretionary items. A continued or incremental
slowdown in the U.S. economy and the uncertain economic outlook could continue to adversely affect consumer
spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis. As all of our
stores are located in the United States, we are especially susceptible to deteriorations in the U.S. economy.
Consumer confidence is also affected by the domestic and international political situation. The outbreak or
escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the United States, could
lead to a decrease in spending by consumers.
Actions by our competitors could adversely affect our operating results.
The retail business is highly competitive. We compete for customers, associates, locations, merchandise,
services and other important aspects of our business with many other local, regional and national retailers. Those
competitors, some of which have a greater market presence than Kohl’s, include traditional store-based retailers,
internet and catalog businesses and other forms of retail commerce. Unanticipated changes in the pricing and
other practices of those competitors may adversely affect our performance.
Product safety concerns could adversely affect our sales and operating results.
If our merchandise offerings do not meet applicable safety standards or our customers’ expectations
regarding safety, we could experience lost sales, experience increased costs and/or be exposed to legal and
reputational risk. Events that give rise to actual, potential or perceived product safety concerns could expose us to
government enforcement action and/or private litigation. Reputational damage caused by real or perceived
product safety concerns, could have a negative impact on our sales.
If we do not offer merchandise our customers want and fail to successfully manage our inventory levels, our
sales and/or gross margin may be adversely impacted.
Our business is dependent on our ability to anticipate fluctuations in consumer demand for a wide variety of
merchandise. Failure to accurately predict constantly changing consumer tastes, preferences, spending patterns
and other lifestyle decisions could create inventory imbalances and adversely affect our performance and long-
term relationships with our customers. Additionally, failure to accurately predict changing consumer tastes may
result in excess inventory, which could result in additional markdowns and adversely affect our operating results.
Ineffective marketing could adversely affect our sales and profitability.
We believe that differentiating Kohl’s in the marketplace is critical to our success. We design our marketing
programs to increase awareness of our brands, which we expect will create and maintain customer loyalty,
increase the number of customers that shop our stores and increase our sales. If our marketing programs are not
successful, our sales and profitability could be adversely affected.
We may be unable to raise additional capital, if needed, or to raise capital on favorable terms.
If our existing cash, cash generated from operations and other sources, and funds available on our lines of
credit are insufficient to fund our future activities, including capital expenditures, or repay debt when it becomes
due, we may need to raise additional funds through public or private equity or debt financing. If unfavorable
capital market conditions exist if and when we were to seek additional financing, we may not be able to raise
sufficient capital on favorable terms and on a timely basis (if at all). Failure to obtain capital on acceptable terms,
or at all, when required by our business circumstances could have a material adverse effect on us including an
inability to fund new growth and other capital expenditures.
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