Kirkland's Reports Third Quarter 2015 Results

Nov 19, 2015, 06:30 ET from Kirkland's, Inc.

NASHVILLE, Tenn., Nov. 19, 2015 /PRNewswire/ -- Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 39-week periods ended October 31, 2015.

Net sales for the 13 weeks ended October 31, 2015, increased 10.3% to $129.2 million compared with $117.2 million for the 13 weeks ended November 1, 2014. Comparable store sales for the third quarter of fiscal 2015, including e-commerce sales, increased 1.8% compared with a comparable store sales increase of 6.3% in the prior-year quarter. Kirkland's opened 21 stores and closed two during the third quarter of 2015, bringing the total number of stores to 370 at quarter end.

Net sales for the 39 weeks ended October 31, 2015, increased 10.3% to $362.8 million compared with $328.9 million for the 39 weeks ended November 1, 2014. Comparable store sales, including e-commerce sales, increased 3.7% for the 39 weeks ended October 31, 2015 compared with an increase of 5.0% in the prior-year period. Kirkland's opened 31 stores and closed five during the 39-week period.

For the 13 weeks ended October 31, 2015, the Company reported a net loss of $0.3 million, or ($0.02) per diluted share. The loss includes a tax benefit of $0.02 per diluted share relating to state employment and investment credits. The Company reported net income of $1.3 million, or $0.07 per diluted share, for the 13 weeks ended November 1, 2014.

For the 39 weeks ended October 31, 2015, the Company reported a net loss of $0.03 million, or ($0.00) per diluted share, compared with net income of $2.3 million, or $0.13 per diluted share, for the 39 weeks ended November 1, 2014. Adjusted net income for the 39 weeks ended October 31, 2015 was $0.3 million, or $0.02 per diluted share. Adjusted net income for the 39 weeks ended October 31, 2015 excludes a $0.02 per diluted share charge in the first quarter of 2015 related to the retirement of the Company's previous CEO.

Mike Madden, Kirkland's President and Chief Executive Officer, said, "While our fall seasonal merchandise performed well and e-commerce revenues exceeded our expectations, we were disappointed with our third quarter results. Comparable sales were impacted by soft traffic including weakness in Texas, where we have our highest concentration of stores. Merchandise margins were lower due primarily to an increase in promotional activity to stimulate traffic and manage inventory levels, as well as higher supply chain costs."

Mr. Madden continued, "Our revised guidance assumes traffic challenges persist. Yet the bulk of the holiday selling season is ahead of us and we believe we have a strong and engaging holiday assortment as evidenced by our continued strength in conversion. We're also encouraged by the performance of our 2015 class of stores and will enter Thanksgiving with 11% more stores open versus last year."

Updated Fiscal 2015 Outlook

Earnings:

Based on the Company's sales and earnings performance to date in fiscal 2015, the Company now expects adjusted fiscal 2015 earnings per diluted share to be in the range of $0.89 to $0.96, excluding a $0.02 per diluted share charge related to the retirement of the Company's previous CEO. This full year guidance implies an earnings expectation in the range of $0.88 to $0.95 per diluted share for the 13 weeks ending January 30, 2016 (the "fourth quarter"). The Company expects its full year tax rate to be approximately 38.5%.

Store Growth:

For the fourth quarter, the Company expects to open 11 stores and close six stores. This represents an 11% increase in total stores open by Thanksgiving compared with last year. For fiscal 2015, this totals 42 new store openings and 11 store closings.

Sales:

The Company expects total sales for the fourth quarter to range between $197 and $200 million. This implies a comparable store sales increase of flat to up 2%. Total sales for fiscal 2015 are expected to increase approximately 10% to 11% compared with fiscal 2014. This level of sales performance would imply a comparable store sales increase in the range of 2% to 3% for fiscal 2015.

Margin & Expenses:

The fourth quarter earnings forecast implies a decline in year-over-year gross profit margin. Operating expenses are expected to increase on a dollar basis due to the increase in stores, but decline as a percentage of sales for the fourth quarter. For the full year, the Company expects a modest decline in its operating margin due to lower merchandise margins and higher supply chain costs. 

Cash Flow:

Capital expenditures in fiscal 2015 are estimated to range between $32 million and $34 million compared with $30 million in fiscal 2014.

Investor Conference Call and Web Simulcast

Kirkland's will host a conference call today, November 19, 2015, 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, November 27, 2015, by dialing (412) 317-0088 and entering the confirmation number, 10075182.

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/957/11331 on November 19, 2015, 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 379 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 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 OPERATIONS

(In thousands, except per share data) 

13-Week Period Ended

13-Week Period Ended

October 31,

November 1,

2015

2014

Net sales 

$     129,238

$        117,198

Cost of sales

81,137

71,446

Gross profit 

48,101

45,752

Operating expenses:

Operating expenses

43,476

39,111

Depreciation

5,557

4,670

Operating income (loss)

(932)

1,971

Other expense, net

12

1

Income (loss) before income taxes 

(944)

1,970

Income tax expense (benefit)

(674)

710

Net income (loss)

$           (270)

$            1,260

Earnings (loss) per share:

Basic 

$          (0.02)

$              0.07

Diluted 

$          (0.02)

$              0.07

Shares used to calculate earnings (loss) per share:

Basic 

17,243

17,258

   Diluted

17,243

17,734

 

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share data) 

39-Week Period Ended

39-Week Period Ended

October 31,

November 1,

2015

2014

Net sales 

$     362,837

$        328,938

Cost of sales

224,561

202,711

Gross profit 

138,276

126,227

Operating expenses:

Operating expenses

122,717

109,367

Depreciation

16,096

13,401

Operating income (loss)

(537)

3,459

Other expense (income), net

41

(171)

Income (loss) before income taxes 

(578)

3,630

Income tax expense (benefit)

(549)

1,370

Net income (loss)

$             (29)

$            2,260

Earnings (loss) per share:

Basic 

$          (0.00)

$              0.13

Diluted 

$          (0.00)

$              0.13

Shares used to calculate earnings (loss) per share:

Basic 

17,252

17,300

   Diluted

17,252

17,799

 

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

October 31,

January 31,

November 1,

2015

2015

2014

ASSETS

Current assets:

  Cash and cash equivalents

$              32,358

$              99,138

$              56,642

  Inventories, net

95,460

55,775

77,456

  Deferred income taxes

3,522

3,538

2,969

  Other current assets

18,056

8,878

12,549

       Total current assets

149,396

167,329

149,616

Property and equipment, net

107,000

90,992

90,683

Other assets

2,107

2,166

2,125

Total assets

$            258,503

$            260,487

$            242,424

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$              53,962

$              24,705

$              32,049

  Income taxes payable

-

5,648

-

  Other current liabilities

26,927

27,027

25,296

     Total current liabilities

80,889

57,380

57,345

Non-current deferred income taxes

4,279

4,138

3,116

Deferred rent and other long-term liabilities

51,896

47,907

46,305

     Total liabilities

137,064

109,425

106,766

Net shareholders' equity

121,439

151,062

135,658

Total liabilities and shareholders' equity

$            258,503

$            260,487

$            242,424

 

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands) 

39-Week Period Ended

39-Week Period Ended

October 31,

November 1,

2015

2014

 Net cash used in: 

 Operating activities 

$        (8,584)

$        (4,473)

 Investing activities 

(25,721)

(24,049)

 Financing activities 

(32,475)

(3,886)

 Cash and cash equivalents: 

 Net decrease 

(66,780)

(32,408)

 Beginning of the period 

99,138

89,050

 End of the period 

$       32,358

$       56,642

 

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.



RELATED LINKS

http://www.kirklands.com