Nov 20, 2009 |
Kirkland's Reports Third Quarter Results |
Highlights:
• Comparable store sales increase 11.3% • Reports EPS of $0.27 versus loss of $0.07 a year ago • Total sales increased 7.6% despite 30 fewer stores from a year ago • Raises guidance assumptions for fiscal 2009
NASHVILLE, Tenn. (November 20, 2009) — Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 39-week periods ended October 31, 2009. Net sales for the 13-week period ended October 31, 2009, increased 7.6% to $92.4 million compared with $85.9 million for the 13-week period ended November 1, 2008. Comparable store sales for the third quarter of fiscal 2009 increased 11.3% compared with an increase of 1.2% in the prior year period.
Comparable store sales in off-mall stores increased 11.2% for the quarter, and comparable store sales in mall stores increased 11.7%. The Company opened 7 stores and closed 2 stores during the quarter to end the period with 296 stores.
Net sales for the 39-week period ended October 31, 2009, increased 2.2% to $263.4 million compared with $257.6 million for the 39-week period ended November 1, 2008. Comparable store sales for the 39 weeks ended October 31, 2009 increased 7.6% compared with an increase of 2.7% in the prior year period. Comparable store sales in off-mall stores increased 7.3% for the period, and comparable store sales in mall stores increased 8.4%. The Company opened 15 stores and closed 18 stores during the 39-week period.
The Company reported net income of $5.6 million, or $0.27 per diluted share, for the 13-week period ended October 31, 2009, compared with a net loss of $1.5 million, or $0.07 per diluted share, for the 13-week period ended November 1, 2008. For the 39-week period, the Company reported net income of $12.5 million, or $0.62 per diluted share, compared with a net loss of $5.7 million, or $0.29 per diluted share in the prior-year period.
As discussed in previous quarters, over the course of fiscal 2009 the Company has been reversing the valuation allowance established in prior years against its deferred tax assets. The Company believes that presenting adjusted net income and earnings per share for its 2009 periods to reflect more normalized tax rates is instrumental in judging the Company's performance for future periods when the Company is expected to incur a higher effective tax rate. Excluding adjustments to the valuation allowance for deferred tax assets and the recognition in the current period of certain income tax credits related to prior periods, adjusted net income was $4.6 million, or $0.23 per diluted share (adjusted), for the 13-week period, and $9.9 million, or $0.49 per diluted share (adjusted), for the 39-week period.
Robert Alderson, Kirkland's President and Chief Executive Officer, said, "This was an exceptional quarter for Kirkland's. The execution of our merchandise and store operating plans yielded strong sales and margin improvement due to improved conversion and reduced markdown activity. Our inventory has remained on-plan, clean, and fresh with an increasing percentage of new and replenished items, contributing to increased traffic throughout the quarter. The strong sell-through of our seasonal merchandise also complemented the year-long momentum in our core merchandise categories.
"Our operating performance through the first three quarters provides greater confidence in our outlook for the fourth quarter. New store openings are in place for the quarter, and inventory is well positioned for the holiday selling season. However, the deteriorating unemployment situation and its potential impact on consumer spending remains a concern despite the supposed end to the 2008-2009 recession. The fourth quarter is always our most important quarter of the year. We have planned for the tougher comparisons from a year ago that start in mid-December and supplemented our offerings to respond to expected challenges. With earnings through the first three quarters already exceeding full year fiscal 2008 earnings, we are well on our way to a record year for Kirkland's."
Mr. Alderson continued, "As we look ahead to fiscal 2010, our plan is to return to net store growth and a more normalized number of annual store closings. We plan to open 30 to 40 new stores and close 15 to 20 stores. However, year-over-year sales comparisons from this ramp-up in growth will be somewhat muted until 2011 due to the impact of net sales lost from store closings during fiscal 2009 and the timing of 2010 new store openings. We will continue to focus on achieving incremental gains in operating results from our key item merchandise strategy, merchandise productivity, higher sales volumes and lower operating costs in off-mall locations, continued occupancy cost reductions from renegotiating existing leases, operating expense control, and continued leverage of our distribution infrastructure.
"With the completion of the reversal of our valuation allowance on deferred tax assets during fiscal 2009, we expect to incur an effective tax rate of 39.5% in fiscal 2010 versus approximately 26.1% in fiscal 2009, which will impact year-over-year earnings comparisons in fiscal 2010. We expect to again generate positive cash flow in 2010 while fully funding all store growth and other capital needs from operations."
Click on attachment for entire release and financial tables.
|
Give Feedback |
|