Aug 21, 2014 |
Kirkland's Reports Second Quarter 2014 Results |
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 $97.1 million 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 Store Growth: |
|
For the 52-week period ending January 31, 2015 ("fiscal 2014"), the
Company expects to open approximately 35 new stores and close
approximately 15 stores.
| | |
| Sales: | |
Total sales for fiscal 2014 are expected to increase approximately
7% to 8.5% compared with fiscal 2013. This level of sales
performance would imply a comparable store sales increase of
approximately 3% to 4.5% for fiscal 2014.
| | |
| Margin & Expenses: | |
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 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.
| | |
| Earnings: | |
Based on the above assumptions, without regard to share repurchase
activity, the Company expects fiscal 2014 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%.
| | |
| Cash Flow: | |
Capital expenditures in fiscal 2014 are estimated to range between
$31 million and $34 million. Based on the 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
11:00 a.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 11:00 a.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 Period Ended | | 13-Week 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 Period Ended | | 26-Week 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 liabilities
| |
|
44,935
| |
|
44,235
| |
|
43,647
|
Total liabilities
| |
|
93,083
| |
|
100,219
| |
|
89,633
| | | | | | |
|
Net shareholders' equity
| |
|
136,377
| |
|
135,229
| |
|
121,017
| | | | | | |
|
Total liabilities and shareholders' equity
| |
$
|
229,460
| |
$
|
235,448
| |
$
|
210,650
|
| KIRKLAND'S, INC. | UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | (In thousands) | |
| | |
| | | | 26-Week Period Ended | | 26-Week 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 |
|
Kirkland's, Inc. W. Michael Madden, 615-872-4898 President &
COO IR@Kirklands.com or SCR
Partners Tripp Sullivan, 615-760-1104
|
|