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Kirkland’s, Inc. (KIRK) today reported financial results for the
13-week and 26-week periods ended July 28, 2012.
Net sales for the 13 weeks ended July 28, 2012, increased 1.5% to $91.0
million compared with $89.7 million for 13-week period ended July 30,
2011. Comparable store sales, including e-commerce, for the second
quarter of fiscal 2012 decreased 3.6% compared with a decrease of 8.0%
in the prior-year quarter. Kirkland’s opened 10 stores and closed 5
during the second quarter of 2012, bringing the total number of stores
to 302 at quarter end.
Net sales for the 26-week period ended July 28, 2012, increased 2.6% to
$188.8 million compared with $184.1 million for the 26-week period ended
July 30, 2011. Comparable store sales, including e-commerce, for the 26
weeks ended July 28, 2012, decreased 2.4% compared with a decrease of
8.2% in the prior-year period. The Company opened 15 stores and closed
22 stores during the 26-week period.
The Company reported a net loss of $2.0 million, or $0.11 per diluted
share, for the second quarter of fiscal 2012 compared with a net loss of
$0.5 million, or $0.02 per diluted share, for the second quarter of
fiscal 2011.
For the 26-week period ended July 28, 2012, the Company reported a net
loss of $42,000, or $0.00 per diluted share, compared with net income of
$2.7 million, or $0.13 per diluted share, for the 26-week period ended
July 30, 2011.
Commenting on the second quarter results, Robert Alderson, Kirkland’s
President and Chief Executive Officer, said, "The distinct change in
consumer sentiment we noted a few months ago continued throughout this
quarter and pressured our results. While sales in the stores were below
what we expected and e-commerce better-than-anticipated, promotional
activity was more extensive than normal for the second quarter and
impacted merchandise margins.
"We have yet to see the sustained demand necessary to drive the results
we all expect from Kirkland’s, but we are aggressively addressing these
trends to position us for improved performance over the next several
quarters. We are pursuing an expansion of our e-commerce business, a new
brand strategy, a major store layout redesign and leveraging the rollout
of new information systems to improve our merchandise buying and
planning execution."
Stock Repurchase Plan
During the second quarter of fiscal 2012, the Company repurchased
1,142,464 shares of common stock for a total of $13.4 million, or an
average price of $11.74 per share, which completed the Company’s
repurchase plan. Since the inception of the plan in August 2011, the
Company repurchased 3,394,693 shares for a total of $40 million, at an
average price of $11.78.
Updated Fiscal 2012 Performance Goals
Store Growth: For the 53-week period ending February 2, 2013 ("fiscal 2012"), the
Company expects to open 40 to 44 new stores and close approximately
30 stores. This expected unit growth of approximately 4% would
represent an increase in company-wide square footage of
approximately 9%.
Sales: The Company expects total sales for fiscal 2012 to increase in the
range of 4% to 6% compared with fiscal 2011. This expectation for
total sales growth reflects the additional week in the retail
calendar for Fiscal 2012. This level of sales growth would imply a
comparable store sales decrease in the low single digit range,
excluding the impact of the additional week of sales.
Margins: Based on the current outlook, the Company expects operating margin
in fiscal 2012 to be 200 to 250 basis points below fiscal 2011 due
to expected increases in container rates in the second half of the
year combined with a continued promotional environment, as well as
investments in additional personnel in key areas of the business to
support the Company’s growth plans and technology investments.
Earnings: Based on the above assumptions, the Company expects earnings per
share for fiscal 2012 to be in the range of $0.72 to $0.82. The
Company expects its effective tax rate for fiscal 2012 to range
between 38% and 38.5%.
Cash Flow: Excluding activity under the Company’s share repurchase program, the
Company expects to again generate positive cash flow in fiscal 2012.
Capital expenditures in fiscal 2012 are estimated to range between
$29 million and $32 million.
Third Quarter Fiscal 2012 Outlook
For the third quarter ending October 27, 2012, the Company expects a net
loss of $0.03 to $0.07 per diluted share compared with net income of
$0.06 per share in the prior-year quarter. Net sales are expected to be
$97 million to $99 million, with comparable store sales down 3% to 5%.
The Company expects to open approximately 14 to 16 stores and close
approximately 4 stores during the quarter.
Investor Conference Call and Web Simulcast
Kirkland’s will host a conference call at 11:00 a.m. ET today to discuss
the second quarter results. The number to call for the interactive
teleconference is (212) 231-2919. A replay of the conference call will
be available through Friday, August 24, 2012, by dialing (402) 977-9140
and entering the confirmation number, 21575899.
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=88700
on August 17, 2012, 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
decor in the United States. Although originally focused in the
Southeast, the Company has grown beyond that region and currently
operates 300 stores in 30 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 decor 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 12, 2012. 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
(numbers in thousands, except per share amounts)
13 Week Period Ended
------------------------------------
July 28, July 30,
2012 2011
----------------- -----------------
Net sales $ 91,004 $ 89,701
Cost of sales 61,010 58,856
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Gross profit 29,994 30,845
Operating expenses:
Operating expenses 30,741 28,752
Depreciation 3,205 2,733
------ ------
Operating loss (3,952 ) (640 )
Other expense (income), net 22 (42 )
------ ------ ----
Loss before income taxes (3,974 ) (598 )
Income tax benefit (1,977 ) (118 )
------ ---- ------ ----
Net loss $ (1,997 ) $ (480 )
==== ====== ==== ==== ====== ====
Loss per share:
Basic $ (0.11 ) $ (0.02 )
==== ====== ==== ==== ====== ====
Diluted $ (0.11 ) $ (0.02 )
==== ====== ==== ==== ====== ====
Shares used to calculate loss per share:
Basic 17,470 19,957
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Diluted 17,470 19,957
====== ======
KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(numbers in thousands, except per share amounts)
26 Week Period Ended
--------------------------------------
July 28, July 30,
2012 2011
------------------ ------------------
Net sales $ 188,792 $ 184,104
Cost of sales 120,329 115,171
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Gross profit 68,463 68,933
Operating expenses:
Operating expenses 63,025 58,433
Depreciation 6,220 5,974
------- -------
Operating income (loss) (782 ) 4,526
Other expense (income), net 19 (5 )
------- ------- ----
Income (loss) before income taxes (801 ) 4,531
Income tax provision (benefit) (759 ) 1,841
------- ---- -------
Net income (loss) $ (42 ) $ 2,690
==== ======= ==== ==== =======
Earnings (loss) per share:
Basic $ (0.00 ) $ 0.13
==== ======= ==== ==== =======
Diluted $ (0.00 ) $ 0.13
==== ======= ==== ==== =======
Shares used to calculate earnings (loss) per share:
Basic 17,869 19,936
======= =======
Diluted 17,869 20,645
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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
July 28, January 28, July 30,
2012 2012 2011
------------- -------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 49,614 $ 83,123 $ 75,106
Inventories, net 49,773 47,306 47,656
Income taxes receivable 3,727 - 3,880
Deferred income taxes 1,635 1,657 3,274
Other current assets 10,138 7,784 9,283
------- ------- -------
Total current assets 114,887 139,870 139,199
Property and equipment, net 68,840 60,315 51,940
Non-current deferred income taxes 1,086 1,108 1,394
Other assets 1,425 1,296 847
------- ------- -------
Total assets $ 186,238 $ 202,589 $ 193,380
==== ======= ===== ======= ==== =======
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 22,583 $ 21,592 $ 17,011
Income taxes payable - 3,146 -
Other current liabilities 20,772 21,805 21,527
------- ------- -------
Total current liabilities 43,355 46,543 38,538
Deferred rent and other long-term liabilities 40,159 38,384 31,999
------- ------- -------
Total liabilities 83,514 84,927 70,537
------- ------- -------
Net shareholders’ equity 102,724 117,662 122,843
------- ------- -------
Total liabilities and shareholders’ equity $ 186,238 $ 202,589 $ 193,380
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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
26 Week Period Ended
------------------------------
July 28, July 30,
2012 2011
------------------ ------------------
Net cash provided by (used in):
Operating activities $ (2,364 ) $ (5,606 )
Investing activities (14,786 ) (11,811 )
Financing activities (16,359 ) 1,301
------- ---- -------
Cash and cash equivalents:
Net decrease (33,509 ) (16,116 )
Beginning of the period 83,123 91,222
------- -------
End of the period $ 49,614 $ 75,106
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SOURCE: Kirkland’s, Inc.
Kirkland’s, Inc.
W. Michael Madden, 615-872-4800
Senior Vice President & CFO
or
Corporate Communications, Inc.
Tripp Sullivan, 615-324-7335
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