Kohl's 2012 Annual Report Download - page 9

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Regulatory and litigation developments could adversely affect our business operations and financial performance.
Various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change
from time to time. The costs and other effects of new or changed legal requirements cannot be determined with certainty. For
example, new legislation or regulations may result in increased costs directly for our compliance or indirectly to the extent such
requirements increase prices of goods and services, reduce the availability of raw materials or further restrict our ability to
extend credit to our customers.
We continually monitor the state and federal legal/regulatory environment for developments that may impact us. Failure to
detect changes and comply with such laws and regulations may result in an erosion of our reputation, disruption of business
and/or loss of employee morale. Additionally, we are regularly involved in various litigation matters that arise in the ordinary
course of our business. Litigation or regulatory developments could adversely affect our business operations and financial
performance.
Unauthorized disclosure of sensitive or confidential customer information could severely damage our reputation, expose us to
risks of litigation and liability, disrupt our operations and harm our business.
As part of our normal course of business, we collect, process and retain sensitive and confidential customer, employee and
company information. The protection of this data is extremely important to us, our employees and our customers. Despite the
considerable security measures we have in place, our facilities and systems, and those of our third-party service providers, may
be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human
errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of
confidential information, whether by us or our vendors, could disrupt our operations, damage our reputation and customers'
willingness to shop in our stores or on our website, violate applicable laws, regulations, orders and agreements, and subject us
to additional costs and liabilities which could be material.
Item 1B. Unresolved Staff Comments
Not applicable
Item 2. Properties
Stores
As of February 2, 2013, we operated 1,146 stores in 49 states. Our typical, or “prototype,” store has approximately
88,000 gross square feet of retail space and serves trade areas of 150,000 to 200,000 people. Most “small” stores are 55,000 to
68,000 square feet and serve trade areas of 100,000 to 150,000 people. Our “urban” stores, currently located in the New York
and Chicago markets, serve very densely populated areas of up to 500,000 people and average approximately 125,000 gross
square feet of retail space.
Our typical lease has an initial term of 20-25 years and four to eight renewal options for consecutive five-year extension
terms. Substantially all of our leases provide for a minimum annual rent that is fixed or adjusts to set levels during the lease
term, including renewals. Approximately one-fourth of the leases provide for additional rent based on a percentage of sales
over designated levels.