Kirkland's Reports Second Quarter 2015 Results

Aug 20, 2015, 06:30 ET from Kirkland's, Inc.

NASHVILLE, Tenn., Aug. 20, 2015 /PRNewswire/ -- Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 26-week periods ended August 1, 2015.

Net sales for the 13 weeks ended August 1, 2015, increased 11.4% to $115.3 million compared with $103.5 million for the 13 weeks ended August 2, 2014. Comparable store sales for the second quarter of fiscal 2015, including e-commerce sales, increased 6.7% compared with a comparable store sales increase of 3.6% in the prior-year quarter. Kirkland's opened nine stores and did not close any stores during the second quarter, bringing the total number of stores to 351 at quarter end.

Net sales for the 26 weeks ended August 1, 2015, increased 10.3% to $233.6 million compared with $211.7 million for the 26 weeks ended August 2, 2014. Comparable store sales, including e-commerce, for the 26 weeks ended August 1, 2014, increased 4.8% compared with an increase of 4.3% in the prior-year period. Kirkland's opened ten stores and closed three during the 26-week period.

For the 13 weeks ended August 1, 2015, the Company reported a net loss of $2.3 million, or ($0.13) per diluted share, compared with a net loss of $1.1 million, or ($0.06) per diluted share, for the 13 weeks ended August 2, 2014. Results for the second quarter of 2015 include an operating expense of $0.02 per diluted share related to an isolated data processing issue involving the receipt of credit card funds for one specific day during the last week of the quarter.  The issue, which has been addressed, did not compromise data integrity or affect any of the Company's other systems.     

For the 26 weeks ended August 1, 2015, the Company reported net income of $0.2 million, or $0.01 per diluted share, compared with net income of $1.0 million, or $0.06 per diluted share for the 26 weeks ended August 2, 2014. Adjusted net income for the 26 weeks ended August 1, 2015 was $0.6 million, or $0.03 per diluted share.  Adjusted net income for the first 26 weeks of 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, "Our sales trend was solid during the quarter, driven primarily by strong in-store conversion rates and a higher average ticket.  Like the first quarter, traffic remained somewhat uneven, but we were able to repeat a strong merchandise margin performance from last year and ended the quarter with fresh and current inventories.  We are pleased with the progress we are making in our e-commerce channel and encouraged by the strong early performance from this year's class of new stores."

Stock Repurchase Plan

During the quarter, the Company repurchased 30,758 shares of common stock for a total of $772,000, or an average price of $25.09 per share.  Year-to-date, the Company repurchased 105,504 shares of common stock for a total of $2.5 million, or an average price of $23.81 per share.  As of the end of the second quarter, the Company had $22.7 million remaining under its current share repurchase authorization.

Fiscal 2015 Outlook

Store Growth:

For the 52-week period ending January 30, 2016 ("fiscal 2015"), the Company expects to achieve approximately 8% to 10% square footage growth with approximately 40 new store openings and 10 to 15 store closings. The bulk of the remaining new store openings are expected to occur during the third quarter, and most of the remaining store closings are expected to happen at the end of the fiscal year.

Sales:

Total sales for fiscal 2015 are expected to increase approximately 11% to 12% compared with fiscal 2014. This level of sales performance would imply a comparable store sales increase of approximately 3% to 5% for fiscal 2015.

Margin & Expenses:

The Company expects gross profit margin to increase slightly year-over-year as a slight improvement in the merchandise margin and leverage in e-commerce outbound shipping expense are expected to be partially offset by increases in supply chain costs. Operating expenses are expected to decrease as a percent of sales.

Earnings:

Based on the above assumptions, the Company expects adjusted fiscal 2015 earnings per diluted share to be in the range of $1.16 to $1.23, excluding a $0.02 per diluted share charge related to the retirement of the Company's previous CEO. The Company expects its full year tax rate to be approximately 39%.

Cash Flow:

Capital expenditures in fiscal 2015 are estimated to range between $29 million and $31 million compared with $30 million in fiscal 2014. Based on the above assumptions, the Company expects to generate positive cash flow in fiscal 2015 excluding the special dividend and share repurchases.

Third Quarter Fiscal 2015 Outlook

The Company issued guidance for the third quarter ending October 31, 2015, for net income of $0.02 to $0.05 per diluted share. Net sales are expected to be in the range of $130 million to $132 million with a comparable store sales increase in the range of 3% to 4%.

Investor Conference Call and Web Simulcast

Kirkland's will host a conference call today, August 20, 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, August 28, 2015, by dialing (412) 317-0088 and entering the confirmation number, 10070521.

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/957/9889 on August 20, 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 356 stores in 35 states, as well as an e-commerce enabled website. 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

August 1,

August 2,

2015

2014

Net sales 

$     115,289

$        103,485

Cost of sales

72,777

65,612

Gross profit 

42,512

37,873

Operating expenses:

Operating expenses

40,904

35,313

Depreciation

5,310

4,431

Operating loss

(3,702)

(1,871)

Other expense (income), net

14

(159)

Loss before income taxes 

(3,716)

(1,712)

Income tax benefit

(1,428)

(657)

Net loss

$        (2,288)

$          (1,055)

Loss per share:

Basic 

$          (0.13)

$            (0.06)

Diluted 

$          (0.13)

$            (0.06)

Shares used to calculate loss per share:

Basic 

17,277

17,335

  Diluted

17,277

17,335

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands, except per share data) 

26-Week Period Ended

26-Week Period Ended

August 1,

August 2,

2015

2014

Net sales 

$     233,599

$        211,740

Cost of sales

143,424

131,265

Gross profit 

90,175

80,475

Operating expenses:

Operating expenses

79,241

70,256

Depreciation

10,539

8,731

Operating income

395

1,488

Other expense (income), net

29

(172)

Income before income taxes 

366

1,660

Income tax expense

125

660

Net income

$            241

$            1,000

Earnings per share:

Basic 

$           0.01

$              0.06

Diluted 

$           0.01

$              0.06

Shares used to calculate earnings per share:

Basic 

17,257

17,321

  Diluted

17,755

17,831

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

August 1,

January 31,

August 2,

2015

2015

2014

ASSETS

Current assets:

  Cash and cash equivalents

$              49,126

$              99,138

$              68,468

  Inventories, net

65,895

55,775

57,364

  Deferred income taxes

3,548

3,538

2,828

  Other current assets

14,501

8,878

12,534

       Total current assets

133,070

167,329

141,194

Property and equipment, net

94,904

90,992

86,201

Other assets

2,565

2,166

2,065

Total assets

$            230,539

$            260,487

$            229,460

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

  Accounts payable

$              27,951

$              24,705

$              22,434

  Income taxes payable

-

5,648

-

  Other current liabilities

25,319

27,027

22,440

     Total current liabilities

53,270

57,380

44,874

Non-current deferred income taxes

4,126

4,138

3,274

Deferred rent and other long-term liabilities

48,851

47,907

44,935

     Total liabilities

106,247

109,425

93,083

Net shareholders' equity

124,292

151,062

136,377

Total liabilities and shareholders' equity

$            230,539

$            260,487

$            229,460

 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands) 

26-Week Period Ended

26-Week Period Ended

August 1,

August 2,

2015

2014

 Net cash used in: 

 Operating activities 

$      (10,195)

$        (4,518)

 Investing activities 

(10,755)

(14,827)

 Financing activities 

(29,062)

(1,237)

 Cash and cash equivalents: 

 Net decrease 

(50,012)

(20,582)

 Beginning of the period 

99,138

89,050

 End of the period 

$       49,126

$       68,468

 

 

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