Kirkland's Reports First Quarter 2012 Results

  Kirkland's Reports First Quarter 2012 Results  Business Wire  NASHVILLE, Tenn. -- May 18, 2012  Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week period ended April 28, 2012.  Net sales for the 13 weeks ended April 28, 2012, increased 3.6% to $97.8 million compared with $94.4million for the prior-year quarter. Comparable store sales for the first quarter of fiscal 2012 decreased 1.2% compared with a decrease of 8.4% in the prior-year quarter. Kirkland’s opened 5 stores and closed 17 during the first quarter of 2012, bringing the total number of stores to 297 at quarter end.  The Company reported net income of $2.0 million, or $0.10 per diluted share, for the first quarter of fiscal 2012 compared with net income of $3.2 million, or $0.15 per diluted share, for the first quarter of fiscal 2011.  Robert Alderson, Kirkland's President and Chief Executive Officer, said, “We entered the first quarter with positive momentum and confidence that the substantial effort to address Spring merchandising and marketing opportunities would sustain those trends, but we noticed a distinct change in customer sentiment in the latter half of the quarter that we addressed with promotional activity. As a result, we experienced weaker margin and comparable store sales trends that have continued into early second quarter.  “Our second quarter outlook reflects the current environment in retail, but does not overshadow the continued investments we are making to support steady store growth, complete the four-year program to upgrade our information systems, deliver a consistent store experience and maintain the growth and momentum in our e-commerce effort. The opportunity for Kirkland’s is to deliver consistent and reasonable sales and earnings growth, and these investments are bringing us closer to achieving that goal. We are focusing intently on merchandising improvement to better leverage our industry leadership in inventory productivity and a loyal customer base.”  Stock Repurchase Plan  During the first quarter of fiscal 2012, the Company repurchased 219,434 shares of common stock for a total of $3.2 million, or an average price of $14.60 per share. The Company has $13.4 million remaining under its repurchase authorization.  Updated Fiscal 2012 Performance Goals                                       For the 53-week period ending February 2, 2013 (“fiscal                     2012”), the Company expects to open 40 to 45 new stores                     and close approximately 30 stores. This expected unit Store Growth:       growth of approximately 3% to 5% would represent an                     increase in square footage of approximately 8% to 10%. New                     store openings will be weighted more toward the second                     half of the year, while closings are weighted more toward                     the first half.                                          The Company expects total sales for fiscal 2012 to                     increase in the range of 7% to 9% compared with fiscal                     2011. This expectation for total sales growth reflects the Sales:              additional week in the retail calendar for Fiscal 2012.                     This level of sales growth would imply comparable store                     sales of slightly negative to flat for the fiscal year,                     excluding the impact of the additional week of sales.                                          Based on the current outlook, the Company expects                     operating margin in fiscal 2012 to be 90 to 140 basis                     points below fiscal 2011 due to higher fuel costs and Margins:            expected increases in container rates in the back-half of                     the year combined with a planned increase in marketing                     expenses, as well as investments in additional personnel                     in key areas of the business to support the Company’s                     growth plans and technology investments.                                          Based on the above assumptions, the Company expects Earnings:           earnings per share for fiscal 2012 to be in the range of                     $0.87 to $0.97. The Company expects its effective tax rate                     for fiscal 2012 to range between 38% and 38.5%.                                          Excluding activity under the Company’s share repurchase                     program, the Company expects to again generate positive Cash Flow:          cash flow in fiscal 2012. Capital expenditures in fiscal                     2012 are estimated to range between $29 million and $32                     million.                       Second Quarter Fiscal 2012 Outlook  For the second quarter ending July 28, 2012, the Company expects a net loss of $0.07 to $0.11 per diluted share compared with a net loss of $0.02 per share in the prior year quarter. Net sales are expected to be $94 million to $96 million, with comparable store sales flat to down 3%. The Company expects to open approximately 10 to 12 stores and close approximately 5 stores during the quarter.  Investor Conference Call and Web Simulcast  Kirkland’s will host a conference call at 11:00a.m.ET today to discuss the first quarter results. The number to call for the interactive teleconference is (212) 231-2919. A replay of the conference call will be available through Friday, May 25, 2012, by dialing (402) 977-9140 and entering the confirmation number, 21575898.  A live broadcast of Kirkland's quarterly conference call will be available online at the Company's website under Investor Relations or on May 18, 2012, beginning at 11:00a.m.ET. The online replay will follow shortly after the call and continue for one year.  About Kirkland’s, Inc.  Kirkland's, Inc. was founded in 1966 and is a specialty retailer of home décor in the United States. Although originally focused in the Southeast, the Company has grown beyond that region and currently operates 297 stores in 30 states. The Company's stores present a broad selection of distinctive merchandise, including framed art, mirrors, candles, lamps, picture frames, accent rugs, garden accessories and artificial floral products. The Company's stores also offer an extensive assortment of gifts, as well as seasonal merchandise. More information can be found at  Forward-Looking Statements  Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Kirkland's actual results to differ materially from forecasted results.Those risks and uncertainties include, among other things, the competitive environment in the home décor industry in general and in Kirkland's specific market areas, inflation, product availability and growth opportunities, seasonal fluctuations, and economic conditions in general.Those and other risks are more fully described in Kirkland's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K filed on April 12, 2012.Kirkland's disclaims any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.    KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (dollars in thousands, except per share amounts)                                                                                                                                                                       13-Week Period Ended                                                April 28,    April 30,                                                2012         2011                                                              Net sales                                      $ 97,788     $  94,403 Cost of sales                                   59,319      56,315 Gross profit                                     38,469        38,088                                                              Operating expenses: Operating expenses                               32,284        29,681 Depreciation                                    3,015       3,241 Operating income                                 3,170         5,166                                                              Other (income) expense, net                     (3     )     37 Income before income taxes                       3,173         5,129 Income tax expense                              1,218       1,959 Net income                                     $ 1,955     $  3,170                                                              Earnings per share: Basic                                          $ 0.11      $  0.16 Diluted                                        $ 0.10      $  0.15                                                              Shares used to calculate earnings per share: Basic                                           18,269      19,915 Diluted                                         18,772      20,660     KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (dollars in thousands)                                                                                                                                                                                    April 28,   January 28,   April 30,                                            2012        2012          2011 ASSETS                                                                       Current assets: Cash and cash equivalents                  $ 73,162    $  83,123     $ 90,254 Inventories, net                             47,484       47,306       44,620 Deferred income taxes                        1,725        1,657        3,571 Other current assets                        8,118       7,784       6,810 Total current assets                         130,489      139,870      145,255                                                                       Property and equipment, net                  61,414       60,315       46,013 Non-current deferred income taxes            1,150        1,108        1,456 Other assets                                1,496       1,296       879                                                                       Total assets                               $ 194,549   $  202,589    $ 193,603                                                                                                                                             LIABILITIES AND SHAREHOLDERS' EQUITY                                                                       Current liabilities: Accounts payable                           $ 18,050    $  21,592     $ 19,824 Income taxes payable                         1,931        3,146        601 Other current liabilities                   18,637      21,805      20,287 Total current liabilities                    38,618       46,543       40,712                                                                       Deferred rent and other long-term           38,633      38,384      30,615 liabilities Total liabilities                           77,251      84,927      71,327                                                                       Net shareholders' equity                    117,298     117,662     122,276                                                                       Total liabilities and shareholders'        $ 194,549   $  202,589    $ 193,603 equity     KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands)                                                                               13-Week Period Ended                                   April 28,    April 30,                                   2012         2011 Net cash provided by (used in):                                                      Operating activities         $ (2,733 )   $ 2,060      Investing activities           (4,109 )     (3,096 )      Financing activities          (3,119 )    68                                                      Cash and cash equivalents:      Net decrease                   (9,961 )     (968   )      Beginning of the period       83,123     91,222       End of the period            $ 73,162    $ 90,254                                                            Contact:  Kirkland's, Inc. W. Michael Madden, 615-872-4800 Senior Vice President & CFO or Corporate Communications, Inc. Tripp Sullivan, 615-324-7335  
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