Kirkland's Reports Second Quarter 2013 Results Business Wire NASHVILLE, Tenn. -- August 22, 2013 Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 26-week periods ended August 3, 2013. Net sales for the 13 weeks ended August 3, 2013, increased 6.7% to $97.1 million compared with $91.0million for the 13 weeks ended July 28, 2012. Comparable store sales, including e-commerce sales, for the second quarter of fiscal 2013 decreased 0.2% compared with a decrease of 3.6% in the prior-year quarter. Kirkland’s opened 6 stores and closed 6 during the second quarter of fiscal 2013, bringing the total number of stores to 317 at quarter end. Net sales for the 26 weeks ended August 3, 2013, increased 5.1% to $198.4 million compared with $188.8 million for the 26 weeks ended July 28, 2012. Comparable store sales, including e-commerce, for the 26 weeks ended August 3, 2013, decreased 1.3% compared with a decrease of 2.4% in the prior-year period. The Company opened 7 stores and closed 13 stores during the 26-week period. The Company reported a net loss of $0.6 million, or $0.03 per diluted share, for the second quarter of fiscal 2013 compared with a net loss of $2.0 million, or $0.11 per diluted share, for the second quarter of fiscal 2012. For the 26-week period ended August 3, 2013, the Company reported net income of $1.2 million, or $0.07 per diluted share, compared with a net loss of $42,000, or $0.00 per diluted share, for the 26-week period ended July 28, 2012. Robert Alderson, Kirkland's President and Chief Executive Officer, said, “Consistent trends through the second quarter, combined with a stronger margin from a less promotional stance, led to the in-line sales and better-than-anticipated earnings results. We are well-positioned to deliver on stronger second half performance with improving trends in our merchandise margin, conversion and average ticket. While traffic remains a challenge, we are encouraged by the initial test results from our branding initiatives and will look to extend and expand our activities during the second half of 2013.” Updated Fiscal 2013 Outlook For the 52-week period ending February 1, 2014 (“fiscal 2013”), the Company expects to open approximately 25 new stores and Store Base: close approximately 20 stores. The majority of new store openings will occur by Thanksgiving with the balance opening after the holiday period, while the remaining closings will primarily occur after the holiday period. Total sales for the 52-week fiscal 2013 are expected to increase Sales: approximately 3% to 4% compared with 53-week fiscal 2012. This level of total sales performance implies comparable store sales results of flat to a slight increase for fiscal 2013. Based on the current outlook, merchandise margin is expected to increase during the second half of fiscal 2013 on a year-over-year basis. Inbound freight costs, which are a component of the merchandise margin, are expected to contribute to the margin increase through lower year-over-year container Margins: rates. Continued strict focus on operating expense controls, combined with a conservative store opening plan, should position the Company to better leverage any upside to its current revenue projections. However, the Company expects investments in personnel, as well as increases in marketing, e-commerce expenses, and depreciation to offset some of the expense efficiencies. Based on the above assumptions, the Company expects fiscal 2013 Earnings: earnings per share to be in the range of $0.80 to $0.90. The Company expects its full year effective tax rate to be approximately 38.5%. Capital expenditures in fiscal 2013 are estimated to range Cash Flow: between $19 million and $21 million. Based on the above assumptions, the Company expects to be cash flow positive in fiscal 2013. Third Quarter Fiscal 2013 Outlook For the third quarter ending November 2, 2013, the Company expects net income of $0.00 to $0.03 per diluted share compared with a net loss of $0.02 per share in the prior-year quarter. Net sales are expected to be $103 million to $105 million, with a modest increase in comparable store sales. The Company expects to open approximately 10 stores and close approximately 3 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 second quarter results. The number to call for the interactive teleconference is (212) 231-2919. A replay of the conference call will be available through Thursday, August 29, 2013, by dialing (402) 977-9140 and entering the confirmation number, 21646259. 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=95243 on August 22, 2013, 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 317 stores in 35 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 18, 2013. 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 (dollars in thousands, except per share amounts) 13-Week Period Ended August 3, July 28, 2013 2012 Net sales $ 97,123 $ 91,004 Cost of sales 61,480 61,010 Gross profit 35,643 29,994 Operating expenses: Operating expenses 32,767 30,741 Depreciation 3,950 3,205 Operating loss (1,074 ) (3,952 ) Other expense, net 19 22 Loss before income taxes (1,093 ) (3,974 ) Income tax benefit (516 ) (1,977 ) Net loss $ (577 ) $ (1,997 ) Loss per share: Basic $ (0.03 ) $ (0.11 ) Diluted $ (0.03 ) $ (0.11 ) Shares used to calculate loss per share: Basic 17,174 17,470 Diluted 17,174 17,470 KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (numbers in thousands, except per share amounts) 26-Week Period Ended August 3, July 28, 2013 2012 Net sales $ 198,356 $ 188,792 Cost of sales 123,307 120,329 Gross profit 75,049 68,463 Operating expenses: Operating expenses 65,546 63,025 Depreciation 7,741 6,220 Operating income (loss) 1,762 (782 ) Other expense, net 25 19 Income (loss) before income taxes 1,737 (801 ) Income tax expense (benefit) 541 (759 ) Net income (loss) $ 1,196 $ (42 ) Earnings (loss) per share: Basic $ 0.07 $ (0.00 ) Diluted $ 0.07 $ (0.00 ) Shares used to calculate earnings (loss) per share: Basic 17,129 17,869 Diluted 17,535 17,869 KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (dollars in thousands) August 3, February 2, July 28, 2013 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 63,489 $ 67,797 $ 49,614 Inventories, net 53,979 49,577 49,773 Income taxes receivable 4,164 - 3,727 Deferred income taxes 1,630 1,602 1,635 Other current assets 8,094 9,370 10,138 Total current assets 131,356 128,346 114,887 Property and equipment, net 77,537 78,499 68,840 Non-current deferred income taxes - - 1,086 Other assets 1,757 1,559 1,425 Total assets $ 210,650 $ 208,404 $ 186,238 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 21,442 $ 21,642 $ 22,583 Income taxes payable - 520 - Other current liabilities 21,470 21,009 20,772 Total current liabilities 42,912 43,171 43,355 Non-current deferred income taxes 3,074 3,128 - Deferred rent and other long-term 43,647 44,230 40,159 liabilities Total liabilities 89,633 90,529 83,514 Net shareholders' equity 121,017 117,875 102,724 Total liabilities and shareholders' $ 210,650 $ 208,404 $ 186,238 equity KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (dollars in thousands) 26-Week Period Ended August 3, July 28, 2013 2012 Net cash provided by (used in): Operating activities $ 1,979 $ (2,364) Investing activities (6,841) (14,786) Financing activities 554 (16,359) Cash and cash equivalents: Net decrease (4,308) (33,509) Beginning of the period 67,797 83,123 End of the period $ 63,489 $ 49,614 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 Second Quarter 2013 Results
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