Kirkland's Reports Fourth Quarter And Fiscal 2015 Results

11 Mar, 2016, 07:01 ET from Kirkland's, Inc.

NASHVILLE, Tenn., March 11, 2016 /PRNewswire/ -- Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 52-week periods ended January 30, 2016.

Net sales for the 13 weeks ended January 30, 2016, increased 11.4% to $199.0 million compared with $178.7 million for the 13 weeks ended January 31, 2015. Comparable store sales for the fourth quarter of fiscal 2015, including e-commerce sales, increased 1.3% compared with an increase of 8.2% in the prior-year quarter. Kirkland's opened 12 stores and closed six during the fourth quarter, bringing the total number of stores to 376 at quarter end.

Net sales for the 52 weeks ended January 30, 2016, increased 10.7%, to $561.8 million compared with $507.6 million for the 52 weeks ended January 31, 2015. Comparable store sales for fiscal 2015, including e-commerce sales, increased 2.9% compared with a 6.1% increase in fiscal 2014. The Company opened 43 stores and closed 11 during fiscal 2015.

Net income for the 13 weeks ended January 30, 2016 increased 6.7% to $16.6 million, or $0.97 per diluted share, compared with net income of $15.6 million, or $0.87 per diluted share, for the 13 weeks ended January 31, 2015.

Net income for the 52 weeks ended January 30, 2016, was $16.6 million, or $0.94 per diluted share, compared with $17.8 million, or $1.00 per diluted share, for the 52 weeks ended January 31, 2015.  Adjusted net income, which excludes a $0.02 per diluted share charge in the first quarter of 2015 related to the retirement of the Company's previous CEO, for the 52 weeks ended January 30, 2016 was $17.0 million, or $0.96 per diluted share.

Mike Madden, President and Chief Executive Officer of Kirkland's, commented, "While 2015 presented challenges for Kirkland's and retail in general, we are enthusiastic about the progress we have made to support our growth plans and bolster the entire organization for the long term.  Our real estate effort is generating more consistency in our new store openings through process improvements and an enhanced site selection method.  Recent investments in our omni-channel initiative, while still early in the process, are beginning to have an impact as evidenced by a 38% increase in digital revenue for 2015.  We have made tangible strides in delivering a complementary customer experience between the channels."

"We are very pleased to have returned $51 million to shareholders during 2015 through a special dividend and share repurchases, reflecting our confidence in the long-term prospects for the Company and its position in the marketplace.  We ended the year in a strong financial position, with no debt and ample liquidity to invest in the business and execute our growth strategy."

Madden continued, "The retail environment continues to evolve at a rapid pace.  We are positioning the organization to respond to these opportunities effectively and nimbly through systems, processes and people. Our long-term earnings plan includes a goal to drive double-digit sales growth with improving profit margins as we increase store-level sales productivity, leverage our real estate opportunity and further expand our omni-channel capability – all with the intent of improving the overall customer experience and interaction with our brand."

Fiscal 2016 Outlook

Kirkland's is offering its initial outlook for fiscal 2016 on an annual basis and is discontinuing its practice of providing quarterly guidance. The Company expects to update its annual guidance, if necessary, each quarter and will continue to focus on communicating the interim drivers of its business fundamentals as well as an assessment of long-range goals.

Store Growth:

For the 52-week period ending January 28, 2017 ("fiscal 2016"), the Company expects to achieve approximately 6% to 8% square footage growth with 35 to 40 new store openings and 10 to 15 store closings. Openings and closings are expected to be weighted toward the first half of the year.

Sales:

Total sales for fiscal 2016 are expected to increase approximately 10% to 12% compared with fiscal 2015. This level of sales performance assumes a low-single-digit comparable store sales increase for fiscal 2016.

Margin & Expenses:

The Company expects its gross profit margin to decline slightly year-over-year as an improvement in the merchandise margin is expected to be offset by an increase in supply chain costs to support e-commerce and store unit expansion. Operating expenses are expected to decrease as a percent of sales. For the full year, the Company expects a slight contraction to a modest improvement in its operating margin.

Earnings:

Based on the above assumptions, the Company expects fiscal 2016 earnings per share to be in the range of $0.98 to $1.11. The Company expects earnings in the first half of 2016 to decline versus last year and expects second half earnings to be above last year's levels as it executes on inventory, store growth and in-store productivity initiatives. The full year earnings projection assumes a tax rate of approximately 38.5% and excludes any potential share repurchases.

Cash Flow:

Capital expenditures in fiscal 2016, which are expected to be driven primarily by new store openings and continued investments in omni-channel and supply chain initiatives, are estimated to range between $25 million and $30 million compared with $35 million in fiscal 2015. The Company expects to generate positive cash flow in fiscal 2016.

Investor Conference Call and Web Simulcast Kirkland's will host a conference call today, March 11, 2016, at 11:00 a.m. ET. The number to call for the interactive teleconference is (412) 542-4163. A replay of the conference call will be available through Friday, March 18, 2016, by dialing (412) 317-0088 and entering the confirmation number, 10080768.

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 https://www.webcaster4.com/Webcast/Page/957/13317 on March 11, 2016, 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 374 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, fluctuations in cost and availability of products, interruptions in supply chain and distribution systems, the ability to control employment, and other operating costs, ability of suitable retail locations and other growth opportunities, disruptions in information technology systems including the potential for security breaches of Kirkland's or its customers' information, seasonal fluctuations in consumer spending, 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 14, 2015.  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

January 30,

January 31,

2016

2015

Net sales 

$     198,970

$        178,683

Cost of sales

118,452

102,013

Gross profit 

80,518

76,670

Operating expenses:

Operating expenses

47,704

46,250

Depreciation

6,086

5,238

Operating income

26,728

25,182

Other expense (income), net

53

(8)

Income before income taxes 

26,675

25,190

Income tax expense

10,073

9,636

Net income

$       16,602

$          15,554

Earnings per share:

Basic 

$           0.99

$              0.91

Diluted 

$           0.97

$              0.87

Shares used to calculate earnings per share:

Basic 

16,765

17,146

 Diluted

17,084

17,778

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data) 

52-Week Period Ended

52-Week Period Ended

January 30,

January 31,

2016

2015

Net sales 

$     561,807

$        507,621

Cost of sales

343,013

304,724

Gross profit 

218,794

202,897

Operating expenses:

Operating expenses

170,421

155,617

Depreciation

22,182

18,639

Operating income

26,191

28,641

Other expense (income), net

94

(179)

Income before income taxes 

26,097

28,820

Income tax expense

9,524

11,006

Net income

$       16,573

$          17,814

Earnings per share:

Basic 

$           0.97

$              1.03

Diluted 

$           0.94

$              1.00

Shares used to calculate earnings per share:

Basic 

17,131

17,262

 Diluted

17,569

17,793

 

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

January 30,

January 31,

2016

2015

ASSETS

Current assets:

  Cash and cash equivalents

$              44,352

$              99,138

  Inventories, net

67,711

55,775

  Deferred income taxes

3,329

3,538

  Other current assets

15,206

8,878

       Total current assets

130,598

167,329

Property and equipment, net

105,444

90,992

Other assets

1,934

2,166

Total assets

$            237,976

$            260,487

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$              28,080

$              24,705

  Income taxes payable

4,984

5,648

  Other current liabilities

25,943

27,027

     Total current liabilities

59,007

57,380

Non-current deferred income taxes

4,671

4,138

Deferred rent and other long-term liabilities

54,724

47,907

     Total liabilities

118,402

109,425

Net shareholders' equity

119,574

151,062

Total liabilities and shareholders' equity

$            237,976

$            260,487

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands) 

52-Week Period Ended

52-Week Period Ended

January 30,

January 31,

2016

2015

 Net cash provided by (used in): 

 Operating activities 

$       32,162

$       44,488

 Investing activities 

(35,114)

(29,647)

 Financing activities 

(51,834)

(4,753)

 Cash and cash equivalents: 

 Net (decrease) increase 

(54,786)

10,088

 Beginning of the period 

99,138

89,050

 End of the period 

$       44,352

$       99,138

 

 

 

Contact: 

Kirkland's 

SCR Partners   

Adam Holland 

Jeff Black: (615) 760-3679

(615) 872-4800

Tripp Sullivan: (615) 760-1104

IR@Kirklands.com                

 

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SOURCE Kirkland's, Inc.



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