Kirkland's Reports First Quarter 2014 Results

  Kirkland's Reports First Quarter 2014 Results

             Announces $30 Million Share Repurchase Authorization

Business Wire

NASHVILLE, Tenn. -- May 22, 2014

Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the
13-week period ended May 3, 2014.

Net sales for the 13 weeks ended May 3, 2014, increased 6.9% to $108.3 million
compared with $101.2million for the 13 weeks ended May 4, 2013. Comparable
store sales for the first quarter of fiscal 2014, including e-commerce sales,
increased 5.0% compared with a decrease of 2.3% in the prior-year quarter.
Kirkland’s opened 7 stores and closed 7 during the first quarter, leaving the
total number of stores at 324 at quarter end.

The Company reported net income of $2.1 million, or $0.12 per diluted share,
for the 13 weeks ended May 3, 2014, compared with net income of $1.8 million,
or $0.10 per diluted share, for the 13 weeks ended May 4, 2013.

Robert Alderson, Kirkland's President and Chief Executive Officer, said, “We
are pleased with the sales momentum during the quarter in our stores and
online after the slower start related to adverse weather events. Despite a
somewhat more promotional environment late in the quarter, sales remained
strong leading to earnings performance at the high end of our guidance. The
year thus far is proceeding according to our plan, and we continue to expect
benefits for the balance of the year from our investments in store growth,
merchandise systems, e-commerce and branding initiatives.”

Stock Repurchase Authorization of $30 Million

The Company also announced that its Board of Directors authorized a stock
repurchase plan providing for the purchase in the aggregate of up to $30
million of the Company’s outstanding common stock over the next 24 months. The
shares may be repurchased from time to time in open market or negotiated
transactions, and the amount and timing of those purchases will be based on a
variety of factors, including stock acquisition price, regulatory limitations
and other market and economic factors. The stock repurchase program does not
require the Company to repurchase any specific number of shares, and the
Company may terminate the repurchase program at any time. As of May 21, 2014,
the Company had 17.3 million common shares outstanding.

Mr. Alderson added, “We maintain a strong balance sheet, and our unique store
model continues to suggest future cash flow generation. As we
opportunistically increase the growth rate of the business, the Board’s
decision to authorize another round of share repurchases signals our
confidence in the future of Kirkland’s.”

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 5% 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:     increase in stores and incremental investments in
                       corporate headcount to support our growth initiatives.
                       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, without regard to share
                       repurchase activity, the Company expects fiscal 2014
Earnings:              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
                       range between $33 million and $36 million. Based on the
Cash Flow:             above assumptions, the Company expects to generate
                       positive cash flow in fiscal 2014, excluding potential
                       share repurchases.
                       

Second Quarter Fiscal 2014 Outlook

The Company issued guidance for the second quarter ending August 2, 2014, of a
net loss of $0.03 to $0.06 per diluted share. Net sales are expected to be in
the range of $104 million to $105 million with a comparable store sales
increase in the range of 3% to 4%. The Company expects to open approximately 8
stores and close approximately 2 stores during the quarter.

Investor Conference Call and Web Simulcast

Kirkland’s will issue its earnings release for the first quarter before the
market opens on Thursday, May 22, 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, May 29, 2014, by dialing (402) 977-9140 and
entering the confirmation number, 21706373.

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=99176 on May 22, 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 326 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 17, 2014. 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          13-Week

                                                 Period Ended     Period Ended
                                                 May 3,           May 4,
                                                 2014             2013
Net sales                                        $  108,255       $   101,233
Cost of sales                                      65,653          61,827
Gross profit                                        42,602            39,406
                                                                  
Operating expenses:
Operating expenses                                  34,943            32,779
Depreciation                                       4,300           3,791
Operating income                                    3,359             2,836
                                                                  
Other (income) expense, net                        (13     )        6
Income before income taxes                          3,372             2,830
Income tax expense                                 1,317           1,057
Net income                                       $  2,055        $   1,773
                                                                  
Earnings per share:
Basic                                            $  0.12         $   0.10
Diluted                                          $  0.12         $   0.10
                                                                  
Shares used to calculate earnings per share:
Basic                                              17,308          17,083
Diluted                                            17,825          17,433

                                                             
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
                                                                     
                                                                     
                                       May 3,        February 1,     May 4,
                                       2014          2014            2013
ASSETS
                                                                     
Current assets:
Cash and cash equivalents              $ 82,418      $  89,050       $ 74,111
Inventories, net                         50,702         52,637         47,889
Deferred income taxes                    2,857          2,777          1,638
Other current assets                    8,595         8,817         7,591
Total current assets                     144,572        153,281        131,229
                                                                     
Property and equipment, net              82,768         80,329         76,964
Other assets                            2,028         1,838         1,680
                                                                     
Total assets                           $ 229,368     $  235,448      $ 209,873
                                                                     
                                                                     
LIABILITIES AND SHAREHOLDERS'
EQUITY
                                                                     
Current liabilities:
Accounts payable                       $ 19,465      $  23,102       $ 20,933
Income taxes payable                     866            5,875          -
Other current liabilities               22,870        23,670        21,719
Total current liabilities                43,201         52,647         42,652
                                                                     
Non-current deferred income              3,239          3,337          3,057
taxes
Deferred rent and other                 44,930        44,235        43,778
long-term liabilities
Total liabilities                       91,370        100,219       89,487
                                                                     
Net shareholders' equity                137,998       135,229       120,386
                                                                     
Total liabilities and                  $ 229,368     $  235,448      $ 209,873
shareholders' equity

                                                
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)

                                    13-Week          13-Week

                                    Period Ended     Period Ended
                                    May 3,           May 4,
                                    2014             2013
Net cash provided by (used in):
                                                     
     Operating activities           $  221           $  8,561
     Investing activities              (6,930  )        (2,322  )
     Financing activities             77             75      
                                                     
Cash and cash equivalents:
     Net increase (decrease)           (6,632  )        6,314
     Beginning of the period          89,050         67,797  
     End of the period              $  82,418       $  74,111  

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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