Kirkland's Reports Second Quarter 2014 Results Business Wire NASHVILLE, Tenn. -- August 21, 2014 Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 26-week periods ended August 2, 2014. Net sales for the 13 weeks ended August 2, 2014, increased 6.6% to $103.5 million compared with $97.1million for the 13 weeks ended August 3, 2013. Comparable store sales for the 13 weeks ended August 2, 2014, including e-commerce sales, increased 3.6% compared with a decrease of 0.2% in the prior-year quarter. Kirkland’s opened 6 stores and closed 2 during the second quarter, bringing the total number of stores to 328 at quarter end. Net sales for the 26 weeks ended August 2, 2014, increased 6.7% to $211.7 million compared with $198.4 million for the 26 weeks ended August 3, 2013. Comparable store sales, including e-commerce, for the 26 weeks ended August 2, 2014, increased 4.3% compared with a decrease of 1.3% in the prior-year period. Kirkland’s opened 13 stores and closed 9 during the 26-week period. The Company reported a net loss of $1.1 million, or $0.06 per diluted share, for the 13 weeks ended August 2, 2014, compared with a net loss of $0.6 million, or $0.03 per diluted share, for the 13 weeks ended August 3, 2013. For the 26 weeks ended August 2, 2014, the Company reported net income of $1.0 million, or $0.06 per diluted share compared with net income of $1.2 million, or $0.07 per diluted share, for the 26 weeks ended August 3, 2013. Robert Alderson, Kirkland's Chief Executive Officer, said, “We experienced a strong start and a strong finish to the quarter with comparable sales and margins in line with our expectations. Slower traffic experienced in June and some delays in new store openings related to the timing of space availability affected an otherwise solid second quarter. Early sales and margin trends in August are encouraging, and we will look to build on that momentum through the second half of the year. Seasonal product has also been introduced in the stores and has been well received.” Stock Repurchase Plan During the quarter, the Company repurchased 68,000 shares of common stock for a total expenditure of $1.2 million, or an average price of $18.20 per share. As of the end of the second quarter, the Company had $28.8 million remaining under its current share repurchase authorization. Updated Fiscal 2014 Outlook For the 52-week period ending January 31, 2015 (“fiscal Store Growth: 2014”), the Company expects to open approximately 35 new stores and close approximately 15 stores. Total sales for fiscal 2014 are expected to increase approximately 7% to 8.5% compared with fiscal 2013. This Sales: level of sales performance would imply a comparable store sales increase of approximately 3% to 4.5% 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 $0.04 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 diluted share to be in the range of $0.87 to $0.97. The Company expects its full year tax rate to be approximately 39%. Capital expenditures in fiscal 2014 are estimated to range between $31 million and $34 million. Based on the Cash Flow: above assumptions, the Company expects to generate positive cash flow in fiscal 2014, excluding potential share repurchases. Third Quarter Fiscal 2014 Outlook The Company issued guidance for the third quarter ending November 1, 2014, of net income of $0.02 to $0.04 per diluted share. Net sales are expected to be in the range of $113 million to $115 million with a comparable store sales increase in the range of 3% to 4.5%. The Company expects to open approximately 13 stores and close approximately 2 stores during the quarter. Costs associated with the Company’s move to a replacement headquarters building will amount to approximately $0.02 per diluted share in the third quarter. Investor Conference Call and Web Simulcast Kirkland’s will host a conference call on August 21, 2014, 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, August 28, 2014, by dialing (402) 977-9140 and entering the confirmation number, 21706374. 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=100164 on August 21, 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 328 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 OPERATIONS (In thousands, except per share data) 13-Week 13-Week Period Ended Period Ended August 2, August 3, 2014 2013 Net sales $ 103,485 $ 97,123 Cost of sales 65,612 61,480 Gross profit 37,873 35,643 Operating expenses: Operating expenses 35,313 32,767 Depreciation 4,431 3,950 Operating loss (1,871 ) (1,074 ) Other (income) expense, net (159 ) 19 Loss before income taxes (1,712 ) (1,093 ) Income tax benefit (657 ) (516 ) Net loss $ (1,055 ) $ (577 ) Loss per share: Basic $ (0.06 ) $ (0.03 ) Diluted $ (0.06 ) $ (0.03 ) Shares used to calculate loss per share: Basic 17,335 17,174 Diluted 17,335 17,174 KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME (In thousands, except per share data) 26-Week 26-Week Period Ended Period Ended August 2, August 3, 2014 2013 Net sales $ 211,740 $ 198,356 Cost of sales 131,265 123,307 Gross profit 80,475 75,049 Operating expenses: Operating expenses 70,256 65,546 Depreciation 8,731 7,741 Operating income 1,488 1,762 Other (income) expense, net (172 ) 25 Income before income taxes 1,660 1,737 Income tax expense 660 541 Net income $ 1,000 $ 1,196 Earnings per share: Basic $ 0.06 $ 0.07 Diluted $ 0.06 $ 0.07 Shares used to calculate earnings per share: Basic 17,321 17,129 Diluted 17,831 17,535 KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) August 2, February 1, August 3, 2014 2014 2013 ASSETS Current assets: Cash and cash equivalents $ 68,468 $ 89,050 $ 63,489 Inventories, net 57,364 52,637 53,979 Deferred income taxes 2,828 2,777 1,630 Other current assets 12,534 8,817 12,258 Total current assets 141,194 153,281 131,356 Property and equipment, net 86,201 80,329 77,537 Other assets 2,065 1,838 1,757 Total assets $ 229,460 $ 235,448 $ 210,650 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,434 $ 23,102 $ 21,442 Income taxes payable - 5,875 - Other current liabilities 22,440 23,670 21,470 Total current liabilities 44,874 52,647 42,912 Non-current deferred income taxes 3,274 3,337 3,074 Deferred rent and other long-term 44,935 44,235 43,647 liabilities Total liabilities 93,083 100,219 89,633 Net shareholders' equity 136,377 135,229 121,017 Total liabilities and shareholders' $ 229,460 $ 235,448 $ 210,650 equity KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) 26-Week 26-Week Period Ended Period Ended August 2, August 3, 2014 2013 Net cash provided by (used in): Operating activities $ (4,518 ) $ 1,979 Investing activities (14,827 ) (6,841 ) Financing activities (1,237 ) 554 Cash and cash equivalents: Net decrease (20,582 ) (4,308 ) Beginning of the period 89,050 67,797 End of the period $ 68,468 $ 63,489 Contact: Kirkland's, Inc. W. Michael Madden, 615-872-4898 President & COO IR@Kirklands.com or SCR Partners Tripp Sullivan, 615-760-1104
Kirkland's Reports Second Quarter 2014 Results
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