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
 
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