- Published: 20 November 2014
- Written by Editor
Kirkland's Reports Third Quarter 2014 Results
NASHVILLE, Tenn.-- Kirkland's, Inc. (KIRK) today reported financial results for the 13-week and 39-week periods ended November 1, 2014.
Net sales for the 13 weeks ended November 1, 2014, increased 10.4% to $117.2 million compared with $106.1 million for the 13 weeks ended November 2, 2013. Comparable store sales for the 13 weeks ended November 1, 2014, including e-commerce sales, increased 6.3% compared with an increase of 4.9% in the prior-year quarter. Kirkland’s opened 10 stores and closed one store during the third quarter, bringing the total number of stores to 337 at quarter end.
Net sales for the 39 weeks ended November 1, 2014, increased 8% to $328.9 million compared with $304.5 million for the 39 weeks ended November 2, 2013. Comparable store sales, including e-commerce, for the 39 weeks ended November 1, 2014, increased 5.0% compared with an increase of 0.8% in the prior-year period.
The Company reported net income of $1.3 million, or $0.07 per diluted share, for the 13 weeks ended November 1, 2014, compared with net income of $1.0 million, or $0.06 per diluted share, for the 13 weeks ended November 2, 2013.
For the 39 weeks ended November 1, 2014, the Company reported net income of $2.3 million, or $0.13 per diluted share compared with net income of $2.2 million, or $0.13 per diluted share, for the 39 weeks ended November 2, 2013.
Robert Alderson, Kirkland's Chief Executive Officer, said, “The Kirkland’s brand continues to resonate with customers looking to fill their home décor and seasonal needs. Traffic was positive in the quarter, merchandise margins built on last year’s gains and demand was strong across both our seasonal and core product categories. Overall, we are encouraged by the progress our team is making to leverage investments in supply chain, technology, marketing and real estate. We look forward to executing a strong finish to fiscal 2014.”
Stock Repurchase Plan
During the third quarter, the Company repurchased 159,000 shares of common stock for a total expenditure of $2.7 million, or an average price of $16.95 per share. As of the end of the third quarter, the Company had 17.2 million shares outstanding and $26.1 million remaining under its current share repurchase authorization.
Updated Fiscal 2014 Outlook
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Earnings: |
Based on the Company’s strong sales and earnings performance to date in fiscal 2014, the Company has revised its full year earnings range to $0.90 to $0.97 per diluted share from its previous range of $0.87 to $0.97. This full year guidance implies an earnings expectation in the range of $0.77 to $0.84 per diluted share for the 13 weeks ending January 31, 2015 (the “fourth quarter”) based on an effective tax rate of 39%. | |
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Store Growth: |
For the fourth quarter, the Company expects to open 11 stores and close four stores. For Fiscal 2014, this represents 34 new store openings and 14 closings, a square footage increase of 7%. | |
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Sales: |
The Company expects total sales for the fourth quarter to range between $172 and $175 million. This implies a comparable store sales increase of 5% to 6%. Total sales for fiscal 2014 are expected to range between $501 million and $504 million. This level of sales performance would imply a comparable store sales increase of approximately 4.5% to 5.5% for fiscal 2014. | |
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Margin & Expenses: |
The fourth quarter earnings forecast implies slight year-over-year improvement in merchandise and gross profit margins. Operating expenses are expected to increase on a dollar basis due to the increase in stores and incremental investments in corporate headcount to support the Company’s growth initiatives. These operating expenses are expected to be flat to slightly down as a percentage of sales for the fourth quarter. For the full year, the Company anticipates operating margin to be slightly up. | |
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Cash Flow: |
Capital expenditures in fiscal 2014 are estimated to range between $31 million and $33 million. Based on the above assumptions, the Company expects to generate positive cash flow in fiscal 2014, excluding potential share repurchases. |
Investor Conference Call and Web Simulcast
Kirkland’s will host a conference call on November 20, 2014, at 11:00 a.m. Eastern time. The number to call for the interactive teleconference is (212) 231-2918. A replay of the conference call will be available through Wednesday, November 26, 2014, by dialing (402) 977-9140 and entering the confirmation number, 21706375.
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=100920 on November 20, 2014, beginning at 11:00 a.m. Eastern time. 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 341 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 Period Ended | 13-Week Period Ended | |||||||
| November 1, | November 2, | |||||||
| 2014 | 2013 | |||||||
| Net sales | $ | 117,198 | $ | 106,134 | ||||
| Cost of sales | 71,446 | 64,999 | ||||||
| Gross profit | 45,752 | 41,135 | ||||||
| Operating expenses: | ||||||||
| Operating expenses | 39,111 | 35,392 | ||||||
| Depreciation | 4,670 | 4,049 | ||||||
| Operating income | 1,971 | 1,694 | ||||||
| Other expense, net | 1 | 12 | ||||||
| Income before income taxes | 1,970 | 1,682 | ||||||
| Income tax expense | 710 | 674 | ||||||
| Net income | $ | 1,260 | $ | 1,008 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.07 | $ | 0.06 | ||||
| Diluted | $ | 0.07 | $ | 0.06 | ||||
| Shares used to calculate earnings per share: | ||||||||
| Basic | 17,258 | 17,269 | ||||||
| Diluted | 17,734 | 17,763 | ||||||
| KIRKLAND'S, INC. | |||||||||||
| UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME | |||||||||||
| (In thousands, except per share data) | |||||||||||
| 39-Week Period Ended | 39-Week Period Ended | ||||||||||
| November 1, | November 2, | ||||||||||
| 2014 | 2013 | ||||||||||
| Net sales | $ | 328,938 | $ | 304,490 | |||||||
| Cost of sales | 202,711 | 188,306 | |||||||||
| Gross profit | 126,227 | 116,184 | |||||||||
| Operating expenses: | |||||||||||
| Operating expenses | 109,367 | 100,938 | |||||||||
| Depreciation | 13,401 | 11,790 | |||||||||
| Operating income | 3,459 | 3,456 | |||||||||
| Other (income) expense, net | (171 | ) | 37 | ||||||||
| Income before income taxes | 3,630 | 3,419 | |||||||||
| Income tax expense | 1,370 | 1,215 | |||||||||
| Net income | $ | 2,260 | $ | 2,204 | |||||||
| Earnings per share: | |||||||||||
| Basic | $ | 0.13 | $ | 0.13 | |||||||
| Diluted | $ | 0.13 | $ | 0.13 | |||||||
| Shares used to calculate earnings per share: | |||||||||||
| Basic | 17,300 | 17,176 | |||||||||
| Diluted | 17,799 | 17,611 | |||||||||
| KIRKLAND'S, INC. | ||||||||||||||
| UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||||||||||
| (In thousands) | ||||||||||||||
| November 1, | February 1, | November 2, | ||||||||||||
| 2014 | 2014 | 2013 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 56,642 | $ | 89,050 | $ | 54,634 | ||||||||
| Inventories, net | 77,456 | 52,637 | 68,833 | |||||||||||
| Deferred income taxes | 2,969 | 2,777 | 1,687 | |||||||||||
| Other current assets | 12,549 | 8,817 | 12,480 | |||||||||||
| Total current assets | 149,616 | 153,281 | 137,634 | |||||||||||
| Property and equipment, net | 90,683 | 80,329 | 79,664 | |||||||||||
| Other assets | 2,125 | 1,838 | 1,823 | |||||||||||
| Total assets | $ | 242,424 | $ | 235,448 | $ | 219,121 | ||||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 32,049 | $ | 23,102 | $ | 24,751 | ||||||||
| Income taxes payable | - | 5,875 | - | |||||||||||
| Other current liabilities | 25,296 | 23,670 | 23,886 | |||||||||||
| Total current liabilities | 57,345 | 52,647 | 48,637 | |||||||||||
| Non-current deferred income taxes | 3,116 | 3,337 | 2,966 | |||||||||||
|
Deferred rent and other long-term liabilities |
46,305 | 44,235 | 44,312 | |||||||||||
| Total liabilities | 106,766 | 100,219 | 95,915 | |||||||||||
| Net shareholders' equity | 135,658 | 135,229 | 123,206 | |||||||||||
| Total liabilities and shareholders' equity | $ | 242,424 | $ | 235,448 | $ | 219,121 | ||||||||
| KIRKLAND'S, INC. | |||||||||||
| UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | |||||||||||
| (In thousands) | |||||||||||
| 39-Week Period Ended | 39-Week Period Ended | ||||||||||
| November 1, | November 2, | ||||||||||
| 2014 | 2013 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | (4,473 | ) | $ | (1,114 | ) | |||||
| Investing activities | (24,049 | ) | (13,064 | ) | |||||||
| Financing activities | (3,886 | ) | 1,015 | ||||||||
| Cash and cash equivalents: | |||||||||||
| Net decrease | (32,408 | ) | (13,163 | ) | |||||||
| Beginning of the period | 89,050 | 67,797 | |||||||||
| End of the period | $ | 56,642 | $ | 54,634 | |||||||
Kirkland's, Inc.
W. Michael Madden, 615-872-4898
President & COO
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or
SCR Partners
Jeff Black, 615-760-3679
or
Tripp Sullivan, 615-760-1104
