Kohl's 2014 Annual Report Download - page 49

Download and view the complete annual report

Please find page 49 of the 2014 Kohl's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 82

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82





Revenue from the sale of merchandise at our stores is recognized at the time of sale, net of any returns. Sales of merchandise shipped to our customers
are recorded based on estimated receipt of merchandise by the customer. Net sales do not include sales tax as we are considered a pass-through conduit for
collecting and remitting sales taxes.
Revenue from Kohl's gift card sales is recognized when the gift card is redeemed. Gift card breakage revenue is based on historical redemption patterns
and represents the balance of gift cards for which we believe the likelihood of redemption by a customer is remote.

The following table illustrates the primary costs classified in Cost of Merchandise Sold and Selling, General and Administrative Expenses:



• Total cost of products sold including product development costs, net of
vendor payments other than reimbursement of specific, incremental and
identifiable costs
• Inventory shrink
• Markdowns
• Freight expenses associated with moving merchandise from our vendors to
our distribution centers
• Shipping and handling expenses of sales generated on-line
• Terms cash discount
• Compensation and benefit costs including:
• Stores
• Corporate headquarters, including buying and merchandising
• Distribution centers
• Occupancy and operating costs of our retail, distribution and
corporate facilities
• Net revenues from the Kohl’s credit card program
• Freight expenses associated with moving merchandise from our
distribution centers to our retail stores and between distribution
and retail facilities
• Advertising expenses, offset by vendor payments for
reimbursement of specific, incremental and identifiable costs
• Other administrative revenues and expenses
The classification of these expenses varies across the retail industry.

We receive consideration for a variety of vendor-sponsored programs, such as markdown allowances, volume rebates and promotion and advertising
support. The vendor consideration is recorded as earned either as a reduction of inventory costs or Selling, General and Administrative (“SG&A”) expenses
based on the application of Accounting Standards Codification (“ASC”) No. 605, Subtopic 50, “Customer Payments and Incentives.” Promotional and
advertising allowances are intended to offset our advertising costs to promote vendors’ merchandise. Markdown allowances and volume rebates are recorded
as a reduction of inventory costs.

We currently operate the Kohl's Yes2You Rewards program in which customers earn points based on their spending and other promotional activities.
Upon accumulating certain point levels, customers receive rewards to apply to future purchases. We accrue the cost of anticipated redemptions related to the
program when the points are earned at the initial purchase. The costs of the program are recorded in cost of merchandise sold.
F-10