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Kirkland's Reports Fourth Quarter and Fiscal 2013 Results

  Kirkland's Reports Fourth Quarter and Fiscal 2013 Results  Business Wire  NASHVILLE, Tenn. -- March 13, 2014  Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 52-week periods ended February 1, 2014.  Net sales for the 13 weeks ended February 1, 2014, decreased 4.2% to $156.1 million compared with $162.9million for the 14 weeks ended February 2, 2013. On a 13-week basis, comparable store sales for the fourth quarter of fiscal 2013, including e-commerce sales, were flat compared with a decrease of 2.6% in the prior-year quarter. Kirkland’s opened 8 stores and closed 7 during the fourth quarter, bringing the total number of stores to 324 at quarter end.  Net sales for the 52 weeks ended February 1, 2014, increased 2.7% to $460.6 million compared with $448.4million for the 53 weeks ended February 2, 2013. On a 52-week basis, comparable store sales for fiscal 2013, including e-commerce sales, increased 0.5% compared with a 3.0% decrease in fiscal 2012. The Company opened 24 stores and closed 23 during fiscal 2013.  The Company reported net income of $12.3 million, or $0.69 per diluted share, for the 13 weeks ended February 1, 2014, compared with net income of $14.3 million, or $0.82 per diluted share, for the 14 weeks ended February 2, 2013.  For the 52 weeks ended February 1, 2014, the Company reported net income of $14.5 million, or $0.82 per diluted share, compared with net income of $13.8 million, or $0.77 per diluted share, for the 53 weeks ended February 2, 2013.  Robert Alderson, Kirkland's President and Chief Executive Officer, said, “Our results for the fourth quarter were slightly better than our adjusted guidance, and we finished fiscal 2013 in a solid position with over $89 million in cash. Despite continued adverse weather events throughout February and into March, the early first quarter sales and margin trends have been positive and encouraging. As we look to fiscal 2014, we remain excited about the investments in store growth, merchandise systems and process improvement, greater e-commerce capabilities and focused branding initiatives that we expect to drive improved traffic, sales and earnings results.”  Fiscal 2014 Outlook                         For the 52-week period ending January 31, 2015 (“fiscal                        2014”), the Company expects to achieve approximately                        10% square footage growth with 35 to 40 new store Store Growth:        openings and 10 to 15 store closings. New store                        openings will be weighted more toward the second half                        of the year, and store closings will be weighted more                        toward the first half of the year.                                                Total sales for fiscal 2014 are expected to increase                        approximately 8% to 10% compared with fiscal 2013. This Sales:                 level of sales performance would imply a comparable                        store sales increase of approximately 3% to 4% for                        fiscal 2014.                                                The Company expects year-over-year improvement in                        merchandise and gross profit margins that is expected                        to result from a lower markdown rate, lower inbound                        freight costs, and sales leverage. Operating expenses                        are expected to increase on a dollar basis due to the Margin & Expenses:     growth in stores and incremental investments in                        corporate headcount. The Company is also anticipating                        approximately $0.03 to $0.04 per diluted share in                        additional costs associated with its second half lease                        expiration and transition to replacement corporate                        headquarters space.                                                Based on the above assumptions, the Company expects Earnings:              fiscal 2014 earnings per share to be in the range of                        $0.90 to $1.00. The Company expects its full year tax                        rate to be approximately 39%.                                                Capital expenditures in fiscal 2014 are estimated to Cash Flow:             range between $33 million and $36 million. Based on the                        above assumptions, the Company expects to generate                        positive cash flow in fiscal 2014.                          First Quarter Fiscal 2014 Outlook  The Company issued guidance for the first quarter ending May 3, 2014, of net income of $0.09 to $0.12 per diluted share. Net sales are expected to be in the range of $105 million to $106 million with a comparable store sales increase in the range of 2% to 3%. The Company expects to open approximately 6 stores and close approximately 7 stores during the quarter.  Investor Conference Call and Web Simulcast  Kirkland’s will issue its earnings release for the fourth quarter before the market opens on Thursday, March 13, 2014, and will host a conference call on the same day at 11:00a.m.ET. The number to call for the interactive teleconference is (212) 231-2918. A replay of the conference call will be available through Thursday, March 20, 2014, by dialing (402) 977-9140 and entering the confirmation number, 21706372.  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=97960 on March 13, 2014, 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 321 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 INCOME (In thousands, except per share data)                                                                                                             13-Week        14-Week                                                 Period Ended   Period Ended                                                February 1,    February 2,                                                2014           2013 Net sales                                      $   156,073    $   162,885 Cost of sales                                     91,441        96,751 Gross profit                                       64,632         66,134                                                                Operating expenses: Operating expenses                                 39,939         39,245 Depreciation                                      4,157         3,833 Operating income                                   20,536         23,056                                                                Other income, net                                 4             4 Income before income taxes                         20,540         23,060 Income tax expense                                8,214         8,807 Net income                                     $   12,326     $   14,253                                                                Earnings per share: Basic                                          $   0.71       $   0.83 Diluted                                        $   0.69       $   0.82                                                                Shares used to calculate earnings per share: Basic                                             17,297        17,076 Diluted                                           17,903        17,440        KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands, except per share data)                                                                                                                                                                           52-Week        53-Week                                                 Period Ended   Period Ended                                                February 1,    February 2,                                                2014           2013                                                                Net sales                                      $  460,563     $  448,365 Cost of sales                                    279,747      279,749  Gross profit                                      180,816        168,616                                                                Operating expenses: Operating expenses                                140,877        133,913 Depreciation                                     15,947       13,175   Operating income                                  23,992         21,528                                                                Other expense, net                               (33     )     (34     ) Income before income taxes                        23,959         21,494 Income tax expense                               9,429        7,699    Net income                                     $  14,530     $  13,795                                                                  Earnings per share: Basic                                          $  0.84       $  0.79     Diluted                                        $  0.82       $  0.77                                                                    Shares used to calculate earnings per share: Basic                                            17,207       17,463   Diluted                                          17,685       17,856          KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands)                                                                                                                                                                            February 1,   February 2,                                                 2014          2013 ASSETS                                                                Current assets: Cash and cash equivalents                       $  89,050     $  67,797 Inventories, net                                   52,637        49,577 Income taxes receivable                            446           832 Deferred income taxes                              2,777         1,602 Other current assets                              8,371        9,370 Total current assets                               153,281       129,178                                                                Property and equipment, net                        80,329        78,499 Other assets                                      1,838        1,559                                                                Total assets                                    $  235,448    $  209,236                                                                                                                               LIABILITIES AND SHAREHOLDERS' EQUITY                                                                Current liabilities: Accounts payable                                $  23,102     $  21,642 Income taxes payable                               5,875         1,352 Other current liabilities                         23,670       21,009 Total current liabilities                          52,647        44,003                                                                Non-current deferred income taxes                  3,337         3,128 Deferred rent and other long-term liabilities     44,235       44,230 Total liabilities                                 100,219      91,361                                                                Net shareholders' equity                          135,229      117,875                                                                Total liabilities and shareholders' equity      $  235,448    $  209,236        KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands)                                                                                  52-Week        53-Week                                    Period Ended   Period Ended                                   February 1,    February 2,                                   2014           2013 Net cash provided by (used in): Operating activities              $  39,213      $  32,347 Investing activities                 (17,954 )      (31,373 ) Financing activities                (6      )     (16,300 )                                                   Cash and cash equivalents: Net increase (decrease)              21,253         (15,326 ) Beginning of the period             67,797       83,123   End of the period                 $  89,050     $  67,797                                                                                                                                                                                           Contact:  Kirkland's, Inc. W. Michael Madden, 615-872-4800 Senior Vice President & CFO or Corporate Communications, Inc. Tripp Sullivan, 615-324-7335