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Kirkland's Reports Third Quarter 2012 Results



  Kirkland's Reports Third Quarter 2012 Results

Business Wire

NASHVILLE, Tenn. -- November 20, 2012

Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the
13-week and 39-week periods ended October 27, 2012.

Net sales for the 13 weeks ended October 27, 2012, was $96.7 million compared
with $97.1 million for 13-week period ended October 29, 2011. Comparable store
sales, including e-commerce, for the third quarter of fiscal 2012 decreased
4.7% compared with a decrease of 3.6% in the prior-year quarter. Kirkland’s
opened 10 stores and closed 4 during the third quarter of 2012, bringing the
total number of stores to 308 at quarter end.

Net sales for the 39-week period ended October 27, 2012, increased 1.5% to
$285.5 million compared with $281.2 million for the 39-week period ended
October 29, 2011. Comparable store sales, including e-commerce, for the 39
weeks ended October 27, 2012, decreased 3.2% compared with a decrease of 6.7%
in the prior-year period. The Company opened 25 stores and closed 26 stores
during the 39-week period.

The Company reported a net loss of $0.4 million, or $0.02 per diluted share,
for the third quarter of fiscal 2012 compared with net income of $1.2 million,
or $0.06 per diluted share, for the third quarter of fiscal 2011.

For the 39-week period ended October 27, 2012, the Company reported a net loss
of $0.5 million, or $0.03 per diluted share, compared with net income of $3.9
million, or $0.19 per diluted share, for the 39-week period ended October 29,
2011.

Robert Alderson, Kirkland's President and Chief Executive Officer, noted,
“Overall results for the third quarter were in line with our previously issued
guidance. We successfully implemented our merchandise management system as
scheduled. Although our outlook remains conservative and somewhat cautious due
to limited visibility less than a month into the quarter, we are focused on
maximizing fourth quarter performance. As we approach fiscal 2013, our
priorities for driving future sales and earnings results continue to be
elevating our brand awareness, expanding our e-commerce business and improving
our merchandising process and execution.”

Fourth Quarter and Fiscal 2012 Outlook

                 
                  For the 14-week period ending February 2, 2013 (“the fourth
                  quarter”), the Company expects to open 17 new stores and
Store Growth:     close approximately 2 stores. For fiscal 2012, this
                  represents 42 new store openings and 28 closings, a unit
                  increase of approximately 4.5% and a square footage increase
                  of approximately 10%.
                   
                  The Company expects total sales for the fourth quarter to
                  range between $160 million and $163 million, inclusive of
                  the additional week in the retail calendar this year. This
Sales:            implies a comparable store sales decrease of 2% to 5% using
                  a 13-week to 13-week comparison. Total sales for fiscal 2012
                  are expected to be in the range of $445.5 million to $448.5
                  million, implying a comparable store sales decrease of 3% to
                  4% on a 52-week to 52-week comparative basis.
                   
                  The Company expects earnings per share for the fourth
                  quarter to be in the range of $0.71 to $0.76, which would
Earnings:         equate to earnings per share for fiscal 2012 of $0.67 to
                  $0.72. The Company expects its effective tax rate for fiscal
                  2012 to range between 38% and 38.5%.
                   
                  Capital expenditures in fiscal 2012 are estimated to range
                  between $30 million and $32 million. Based on the above
Cash Flow:        assumptions, the Company expects to have approximately $61
                  million to $64 million in cash and cash equivalents at
                  year-end fiscal 2012.
                   

Investor Conference Call and Web Simulcast

Kirkland’s will host a conference call at 11:00 a.m. ET today to discuss the
third quarter results. The number to call for the interactive teleconference
is (212) 231-2919. A replay of the conference call will be available through
Tuesday, November 27, 2012, by dialing (402) 977-9140 and entering the
confirmation number, 21575900.

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=90209 on November 20, 2012,
beginning at 11:00 a.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 313 stores in 33
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 OPERATIONS
(numbers in thousands, except per share amounts)
 
 
                                                   13 Week Period Ended
                                                   October 27,     October 29,
                                                   2012            2011
                                                                    
Net sales                                          $  96,688       $   97,071
Cost of sales                                         62,669           60,938
Gross profit                                          34,019           36,133
                                                                    
Operating expenses:
Operating expenses                                    31,643           31,295
Depreciation                                          3,122            2,914
Operating income (loss)                               (746   )         1,924
                                                                    
Other expense, net                                    19               4
Income (loss) before income taxes                     (765   )         1,920
Income tax provision (benefit)                        (349   )         673
Net income (loss)                                  $  (416   )     $   1,247
                                                                    
Earnings (loss) per share:
Basic                                              $  (0.02  )     $   0.06
Diluted                                            $  (0.02  )     $   0.06
                                                                    
Shares used to calculate earnings (loss) per
share:
Basic                                                 17,067           19,918
Diluted                                               17,067           20,204
                                                                        

 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(numbers in thousands, except per share amounts)
 
 
                                                   39 Week Period Ended
                                                   October 27,     October 29,
                                                   2012            2011
                                                                    
Net sales                                          $ 285,480       $ 281,175
Cost of sales                                        182,998         176,109  
Gross profit                                         102,482         105,066
                                                                    
Operating expenses:
Operating expenses                                   94,668          89,728
Depreciation                                         9,342           8,888    
Operating income (loss)                              (1,528  )       6,450
                                                                    
Other expense (income), net                          38              (1      )
Income (loss) before income taxes                    (1,566  )       6,451
Income tax provision (benefit)                       (1,108  )       2,514    
Net income (loss)                                  $ (458    )     $ 3,937    
                                                                    
Earnings (loss) per share:
Basic                                              $ (0.03   )     $ 0.20     
Diluted                                            $ (0.03   )     $ 0.19     
                                                                    
Shares used to calculate earnings (loss) per
share:
Basic                                                17,602          19,930   
Diluted                                              17,602          20,498   
                                                                              

 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
 
                                   October 27,     January 28,     October 29,
                                   2012            2012            2011
ASSETS
                                                                    
Current assets:
Cash and cash equivalents          $  34,339       $  83,123       $  60,343
Inventories, net                      64,191          47,306          59,940
Income taxes receivable               4,479           -               2,664
Deferred income taxes                 1,497           1,657           2,174
Other current assets                  9,917           7,784           11,176
Total current assets                  114,423         139,870         136,297
                                                                    
Property and equipment, net           76,004          60,315          58,366
Non-current deferred income           803             1,108           2,412
taxes
Other assets                          1,457           1,296           1,176
                                                                    
Total assets                       $  192,687      $  202,589      $  198,251
                                                                    
                                                                    
LIABILITIES AND SHAREHOLDERS'
EQUITY
                                                                    
Current liabilities:
Accounts payable                   $  27,793       $  21,592       $  24,975
Income taxes payable                  -               3,146           -
Other current liabilities             19,874          21,805          21,145
Total current liabilities             47,667          46,543          46,120
                                                                    
Deferred rent and other               42,083          38,384          35,023
long-term liabilities
Total liabilities                     89,750          84,927          81,143
                                                                    
Net shareholders' equity              102,937         117,662         117,108
                                                                    
Total liabilities and              $  192,687      $  202,589      $  198,251
shareholders' equity
                                                                    

 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 
                                    39 Week Period Ended
                                    October 27,     October 29,
                                    2012            2011
Net cash provided by (used in):
                                                     
Operating activities                $ (7,430  )     $ (1,917  )
Investing activities                  (24,996 )       (21,175 )
Financing activities                  (16,358 )       (7,787  )
                                                     
Cash and cash equivalents:
Net decrease                          (48,784 )       (30,879 )
Beginning of the period               83,123          91,222   
End of the period                   $ 34,339        $ 60,343   
                                                     

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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