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Kirkland's Reports Third Quarter 2013 Results



  Kirkland's Reports Third Quarter 2013 Results

Business Wire

NASHVILLE, Tenn. -- November 21, 2013

Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the
13-week and 39-week periods ended November 2, 2013.

Net sales for the 13 weeks ended November 2, 2013, increased 9.8% to $106.1
million compared with $96.7 million for the 13 weeks ended October 27, 2012.
Comparable store sales, including e-commerce sales, for the third quarter of
fiscal 2013 increased 4.9% compared with a decrease of 4.7% in the prior-year
quarter. Kirkland’s opened 9 stores and closed 3 during the third quarter of
fiscal 2013, bringing the total number of stores to 323 at quarter end.

Net sales for the 39 weeks ended November 2, 2013, increased 6.7% to $304.5
million compared with $285.5 million for the 39 weeks ended October 27, 2012.
Comparable store sales, including e-commerce, for the 39 weeks ended November
2, 2013, increased 0.8% compared with a decrease of 3.2% in the prior-year
period. The Company opened 16 stores and closed 16 stores during the 39-week
period.

The Company reported net income of $1.0 million, or $0.06 per diluted share,
for the third quarter of fiscal 2013 compared with a net loss of $0.4 million,
or $0.02 per diluted share, for the third quarter of fiscal 2012.

For the 39-week period ended November 2, 2013, the Company reported net income
of $2.2 million, or $0.13 per diluted share, compared with a net loss of $0.5
million, or $0.03 per diluted share, for the 39-week period ended October 27,
2012.

Robert Alderson, Kirkland's President and Chief Executive Officer, said,
“Sales momentum was strong during the quarter as our fall and holiday seasonal
merchandise performed well. We continued to see positive results from strong
product margin, higher conversion and higher average ticket as our merchandise
assortments are resonating well with customers. Traffic improved sequentially
during the quarter, and early fourth quarter trends are similar. Our outlook
for the fourth quarter remains upbeat, and we are optimistic about the further
rollout of our branding initiatives as well as the introduction of our loyalty
program, K Club.

“Our plan for fiscal 2014 is to continue to build on our momentum with growth
in sales, margin improvement, the execution of our multi-channel strategies
and further investments in branding and e-commerce. We also believe that
fiscal 2014 is an opportune time to begin a more aggressive approach to store
growth. We currently anticipate that our square footage growth will be at
least 10% in the coming year. This early outlook reflects the intense
foundational work we’ve done over the last three years, which has us
well-positioned to grow the business.”

Updated Fiscal 2013 Outlook

                     Based on the Company’s strong sales and earnings
                     performance to date in fiscal 2013, the Company has
                     increased its full year earnings range to $0.90 to
                     0.95 per diluted share from its previous range of
Earnings:            $0.80 to $0.90 per diluted share. This full year
                     guidance implies an earnings expectation of a range
                     of $0.77 to $0.82 per diluted share for the 13 weeks
                     ending February 1, 2014 (the “fourth quarter”) based
                     on an effective tax rate in the range of 38% to
                     38.5%.
                                                                           
                     For the fourth quarter, the Company expects to open
Store Growth:        8 stores and close 7 stores. For fiscal 2013, this
                     represents 24 new store openings and 23 closings, a
                     square footage increase of 3%.
                                                                           
                     The Company expects total sales for the fourth
                     quarter to range between $159 and $162 million. This
                     implies a comparable store sales increase of 2 to
Sales:               4%, when using a 13-week to 13-week comparison.
                     Total sales for fiscal 2013 are expected to be in
                     the range of $464 and $467 million, implying a
                     comparable store sales increase of 1 to 2% on a
                     52-week to 52-week comparative basis.
                                                                           
                     The fourth quarter earnings forecast implies
                     year-over-year improvement in merchandise and gross
                     profit margins that is expected to result from a
                     lower markdown rate, lower inbound freight costs,
Margin & Expenses:   and sales leverage. Operating expenses are expected
                     to increase on a dollar basis despite the extra week
                     last year due to continued investment in branding
                     initiatives, higher incentive pay accruals, and the
                     prior year insurance adjustment referenced below.
                                                                           
                     Capital expenditures in fiscal 2013 are estimated to
                     range between $18 and $19 million. Based on the
Cash Flow:           above assumptions, the Company expects to have
                     approximately $86 to $89 million in cash and cash
                     equivalents at year-end fiscal 2013.
                                                                           
                     Due to the shift in the retail calendar, the fourth
                     quarter of fiscal 2013 represents the 13 weeks
                     ending February 1, 2014, while the fourth quarter of
                     fiscal 2012 represents the 14 weeks ended February
                     2, 2013. The additional week in the prior year
                     quarter accounted for approximately $7.5 million in
Q4 Comparisons:      sales and an estimated earnings per share of         ves.
                     approximately $0.02. Additionally, for comparative
                     purposes, it should be noted that in the prior-year
                     quarter, the Company recorded a $0.03 benefit
                     resulting from a positive change in the actuarial
                     estimates of its general liability and workers’
                     compensation self-insurance reser
                                                                           

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
Friday, November 29, 2013, by dialing (402) 977-9140 and entering the
confirmation number, 21646339.

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=96772 on November 21, 2013,
beginning at 11 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 324 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
(In thousands, except per share data)
                                                                  
                                                                    
                                                     13-Week Period Ended
                                                     November 2,   October 27,
                                                     2013          2012
                                                                    
Net sales                                            $ 106,134     $  96,688
Cost of sales                                          64,999         62,669  
Gross profit                                           41,135         34,019
                                                                    
Operating expenses:
Operating expenses                                     35,392         31,643
Depreciation                                           4,049          3,122   
Operating income (loss)                                1,694          (746   )
                                                                    
Other expense, net                                     12             19      
Income (loss) before income taxes                      1,682          (765   )
Income tax expense (benefit)                           674            (349   )
Net income (loss)                                    $ 1,008       $  (416   )
                                                                    
Earnings (loss) per share:
Basic                                                $ 0.06        $  (0.02  )
Diluted                                              $ 0.06        $  (0.02  )
                                                                    
Shares used to calculate earnings (loss) per
share:
Basic                                                  17,267         17,067  
Diluted                                                17,762         17,067  
                                                                              

 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
                                                                  
                                                                    
                                                     39-Week Period Ended
                                                     November 2,   October 27,
                                                     2013          2012
                                                                    
Net sales                                            $ 304,490     $ 285,480
Cost of sales                                          188,306       182,998  
Gross profit                                           116,184       102,482
                                                                    
Operating expenses:
Operating expenses                                     100,938       94,668
Depreciation                                           11,790        9,342    
Operating income (loss)                                3,456         (1,528  )
                                                                    
Other expense, net                                     37            38       
Income (loss) before income taxes                      3,419         (1,566  )
Income tax expense (benefit)                           1,215         (1,108  )
Net income (loss)                                    $ 2,204       $ (458    )
                                                                    
Earnings (loss) per share:
Basic                                                $ 0.13        $ (0.03   )
Diluted                                              $ 0.13        $ (0.03   )
                                                                    
Shares used to calculate earnings (loss) per
share:
Basic                                                  17,175        17,602   
Diluted                                                17,610        17,602   
                                                                              

                                                                              
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
                                                                
                                                                              
                                     November 2,   February 2,   October 27,
                                     2013          2013          2012
ASSETS
                                                                              
Current assets:
Cash and cash equivalents            $  54,634     $  67,797     $  34,339
Inventories, net                        68,833        49,577        64,191
Income taxes receivable                 4,491         -             4,479
Deferred income taxes                   1,687         1,602         1,497
Other current assets                    7,989         9,370         9,917
Total current assets                    137,634       128,346       114,423
                                                                              
Property and equipment, net             79,664        78,499        76,004
Non-current deferred income taxes       -             -             803
Other assets                            1,823         1,559         1,457
                                                                              
Total assets                         $  219,121    $  208,404    $  192,687
                                                                              
                                                                              
LIABILITIES AND SHAREHOLDERS'
EQUITY
                                                                              
Current liabilities:
Accounts payable                     $  24,751     $  21,642     $  27,793
Income taxes payable                    -             520           -
Other current liabilities               23,886        21,009        19,874
Total current liabilities               48,637        43,171        47,667
                                                                              
Non-current deferred income taxes       2,966         3,128         -
Deferred rent and other long-term       44,312        44,230        42,083
liabilities
Total liabilities                       95,915        90,529        89,750
                                                                              
Net shareholders' equity                123,206       117,875       102,937
                                                                              
Total liabilities and                $  219,121    $  208,404    $  192,687
shareholders' equity
                                                                              

 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
                                               
                                  39-Week Period Ended
                                  November 2,   October 27,
                                  2013          2012
Net cash provided by (used in):
                                                 
Operating activities              $ (1,114  )   $ (7,430  )
Investing activities                (13,064 )     (24,996 )
Financing activities                1,015         (16,358 )
                                                 
Cash and cash equivalents:
Net decrease                        (13,163 )     (48,784 )
Beginning of the period             67,797        83,123   
End of the period                 $ 54,634      $ 34,339   
                                                           

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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