Nov 19, 2010 |
Kirkland's Reports Third Quarter Results |
NASHVILLE, Tenn. (November 19, 2010) — Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 39-week periods ended October 30, 2010.
Net sales for the 13-week period ended October 30, 2010, increased 0.4% to $92.7 million compared with $92.4 million for the 13-week period ended October 31, 2009. Comparable store sales for the third quarter of fiscal 2010 decreased 2.4% compared with an increase of 11.3% in the prior-year period. The Company opened 15 stores and closed 5 stores during the quarter to end the period with 296 stores.
Net sales for the 39-week period ended October 30, 2010, increased 4.7% to $275.7 million compared with $263.4 million for the 39-week period ended October 31, 2009. Comparable store sales for the 39 weeks ended October 30, 2010, increased 3.5% compared with an increase of 7.6% in the prior-year period. The Company opened 28 stores and closed 11 stores during the 39-week period.
The Company reported net income of $2.3 million, or $0.11 per diluted share, for the third quarter of fiscal 2010 compared with net income of $5.8 million, or $0.27 per diluted share ($0.23 per diluted share adjusted), for the third quarter of fiscal 2009. Income tax expense for the third quarter of fiscal 2009 included a benefit of approximately $1.0 million, or $0.04 per diluted share, related to the reversal of a portion of the valuation allowance on the Company's deferred tax assets established in prior periods.
For the 39-week period, the Company reported net income of $12.0 million, or $0.59 per diluted share, compared with net income of $12.5 million, or $0.62 per diluted share ($0.49 per diluted share adjusted), in the prior-year period. Income tax expense for the comparable 39-week period in fiscal 2009 included a benefit of approximately $2.6 million, or $0.13 per diluted share, related to the reversal of a portion of the valuation allowance on the Company's deferred tax assets established in prior periods.
As discussed in previous quarters, the Company believes that presenting adjusted net income and earnings per share for its 2009 periods to reflect normalized tax rates is instrumental in judging the Company's performance for fiscal 2010 and future periods when the Company is expected to incur a higher effective tax rate. See "Reconciliation of Non-GAAP Financial Information" below.
Robert Alderson, Kirkland's President and Chief Executive Officer, said, "Our new store class is on schedule, and we are pleased that we will open 38 stores, which is in the upper range of our target. Importantly, we will return to net store growth during the fourth quarter. Early results suggest that this year's class of new stores will be as strong as last year's class. Kirkland's balance sheet remains solid as we ended the quarter in line with our inventory target, and we continue to be a strong cash generator with significant free cash flow expected in 2010. However, the tough comparison to last year's record and robust comparable store sales, as well as the higher in-bound freight costs that we have previously discussed, presented difficult challenges. Traffic counts remained strong, but in a few of our key categories, our assortments did not convert customers at sufficient rates to achieve a comparable store sales increase for the quarter. We understand where the challenges and opportunities lie in our merchandise, and we are taking steps to achieve more consistent performance across all product categories for fiscal 2011."
Click on attachment for entire release and financial tables.
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