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 www.kirklands.com under Investor Relations or http://www.videonewswire.com/event.asp?id=86292 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 www.kirklands.com. 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
Kirkland's Reports First Quarter 2012 Results
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