Kirkland's Reports Third Quarter 2012 Results

NASHVILLE, Tenn.--()--Kirkland's, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 39-week periods ended October 27, 2012.

Net sales for the 13 weeks ended October 27, 2012, was $96.7 million compared with $97.1 million for 13-week period ended October 29, 2011. Comparable store sales, including e-commerce, for the third quarter of fiscal 2012 decreased 4.7% compared with a decrease of 3.6% in the prior-year quarter. Kirkland’s opened 10 stores and closed 4 during the third quarter of 2012, bringing the total number of stores to 308 at quarter end.

Net sales for the 39-week period ended October 27, 2012, increased 1.5% to $285.5 million compared with $281.2 million for the 39-week period ended October 29, 2011. Comparable store sales, including e-commerce, for the 39 weeks ended October 27, 2012, decreased 3.2% compared with a decrease of 6.7% in the prior-year period. The Company opened 25 stores and closed 26 stores during the 39-week period.

The Company reported a net loss of $0.4 million, or $0.02 per diluted share, for the third quarter of fiscal 2012 compared with net income of $1.2 million, or $0.06 per diluted share, for the third quarter of fiscal 2011.

For the 39-week period ended October 27, 2012, the Company reported a net loss of $0.5 million, or $0.03 per diluted share, compared with net income of $3.9 million, or $0.19 per diluted share, for the 39-week period ended October 29, 2011.

Robert Alderson, Kirkland's President and Chief Executive Officer, noted, “Overall results for the third quarter were in line with our previously issued guidance. We successfully implemented our merchandise management system as scheduled. Although our outlook remains conservative and somewhat cautious due to limited visibility less than a month into the quarter, we are focused on maximizing fourth quarter performance. As we approach fiscal 2013, our priorities for driving future sales and earnings results continue to be elevating our brand awareness, expanding our e-commerce business and improving our merchandising process and execution.”

Fourth Quarter and Fiscal 2012 Outlook

   

Store Growth:

For the 14-week period ending February 2, 2013 (“the fourth quarter”), the Company expects to open 17 new stores and close approximately 2 stores. For fiscal 2012, this represents 42 new store openings and 28 closings, a unit increase of approximately 4.5% and a square footage increase of approximately 10%.

 

Sales:

The Company expects total sales for the fourth quarter to range between $160 million and $163 million, inclusive of the additional week in the retail calendar this year. This implies a comparable store sales decrease of 2% to 5% using a 13-week to 13-week comparison. Total sales for fiscal 2012 are expected to be in the range of $445.5 million to $448.5 million, implying a comparable store sales decrease of 3% to 4% on a 52-week to 52-week comparative basis.

 

Earnings:

The Company expects earnings per share for the fourth quarter to be in the range of $0.71 to $0.76, which would equate to earnings per share for fiscal 2012 of $0.67 to $0.72. The Company expects its effective tax rate for fiscal 2012 to range between 38% and 38.5%.

 

Cash Flow:

Capital expenditures in fiscal 2012 are estimated to range between $30 million and $32 million. Based on the above assumptions, the Company expects to have approximately $61 million to $64 million in cash and cash equivalents at year-end fiscal 2012.

 

Investor Conference Call and Web Simulcast

Kirkland’s will host a conference call at 11:00 a.m. ET today to discuss the third quarter results. The number to call for the interactive teleconference is (212) 231-2919. A replay of the conference call will be available through Tuesday, November 27, 2012, by dialing (402) 977-9140 and entering the confirmation number, 21575900.

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=90209 on November 20, 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 décor in the United States. Although originally focused in the Southeast, the Company has grown beyond that region and currently operates 313 stores in 33 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 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
October 27,     October 29,
2012 2011
 
Net sales $ 96,688 $ 97,071
Cost of sales   62,669     60,938
Gross profit 34,019 36,133
 
Operating expenses:
Operating expenses 31,643 31,295
Depreciation   3,122     2,914
Operating income (loss) (746 ) 1,924
 
Other expense, net   19     4
Income (loss) before income taxes (765 ) 1,920
Income tax provision (benefit)   (349 )   673
Net income (loss) $ (416 ) $ 1,247
 
Earnings (loss) per share:
Basic $ (0.02 ) $ 0.06
Diluted $ (0.02 ) $ 0.06
 
Shares used to calculate earnings (loss) per share:
Basic   17,067     19,918
Diluted   17,067     20,204
 
 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(numbers in thousands, except per share amounts)
 
 
    39 Week Period Ended
October 27,     October 29,
2012 2011
 
Net sales $ 285,480 $ 281,175
Cost of sales   182,998     176,109  
Gross profit 102,482 105,066
 
Operating expenses:
Operating expenses 94,668 89,728
Depreciation   9,342     8,888  
Operating income (loss) (1,528 ) 6,450
 
Other expense (income), net   38     (1 )
Income (loss) before income taxes (1,566 ) 6,451
Income tax provision (benefit)   (1,108 )   2,514  
Net income (loss) $ (458 ) $ 3,937  
 
Earnings (loss) per share:
Basic $ (0.03 ) $ 0.20  
Diluted $ (0.03 ) $ 0.19  
 
Shares used to calculate earnings (loss) per share:
Basic   17,602     19,930  
Diluted   17,602     20,498  
 
 
KIRKLAND'S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
 
    October 27,     January 28,     October 29,
2012 2012 2011
ASSETS
 
Current assets:
Cash and cash equivalents $ 34,339 $ 83,123 $ 60,343
Inventories, net 64,191 47,306 59,940
Income taxes receivable 4,479 - 2,664
Deferred income taxes 1,497 1,657 2,174
Other current assets   9,917   7,784   11,176
Total current assets 114,423 139,870 136,297
 
Property and equipment, net 76,004 60,315 58,366
Non-current deferred income taxes 803 1,108 2,412
Other assets   1,457   1,296   1,176
 
Total assets $ 192,687 $ 202,589 $ 198,251
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 27,793 $ 21,592 $ 24,975
Income taxes payable - 3,146 -
Other current liabilities   19,874   21,805   21,145
Total current liabilities 47,667 46,543 46,120
 
Deferred rent and other long-term liabilities   42,083   38,384   35,023
Total liabilities   89,750   84,927   81,143
 
Net shareholders' equity   102,937   117,662   117,108
 
Total liabilities and shareholders' equity $ 192,687 $ 202,589 $ 198,251
 
 

KIRKLAND'S, INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
 
    39 Week Period Ended
October 27,     October 29,
2012 2011

Net cash provided by (used in):

 
Operating activities $ (7,430 ) $ (1,917 )
Investing activities (24,996 ) (21,175 )
Financing activities   (16,358 )   (7,787 )
 
Cash and cash equivalents:
Net decrease (48,784 ) (30,879 )
Beginning of the period   83,123     91,222  
End of the period $ 34,339   $ 60,343  
 

Contacts

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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Contacts

Kirkland's, Inc.
W. Michael Madden, 615-872-4800
Senior Vice President & CFO
or
Corporate Communications, Inc.
Tripp Sullivan, 615-324-7335