Kirkland's Reports First Quarter 2013 Results

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Kirkland's Reports First Quarter 2013 Results

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Kirkland's, Inc. (NAS: KIRK) today reported financial results for the 13-week period ended May 4, 2013.

Net sales for the 13 weeks ended May 4, 2013, increased 3.5% to $101.2 million compared with $97.8 million for the prior-year quarter. Comparable store sales, including e-commerce sales, for the first quarter of fiscal 2013 decreased 2.3% compared with a decrease of 1.2% in the prior-year quarter. Kirkland's opened 1 store and closed 7 during the first quarter of fiscal 2013, bringing the total number of stores to 317 at quarter end.

The Company reported net income of $1.8 million, or $0.10 per diluted share, for the first quarter of fiscal 2013 compared with net income of $2.0 million, or $0.10 per diluted share, for the first quarter of fiscal 2012 and previous net income guidance of $0.02 to $0.05 per diluted share.

Robert Alderson, Kirkland's President and Chief Executive Officer, said, "Although we had a slow start to February consistent with our cautious outlook for the first half of the year, we experienced an improvement in trends later in the quarter. The better sales and margin performance in the latter weeks of the quarter exceeded our expectations and has modestly improved our outlook. However, there is still much work to do in firmly establishing a positive merchandising trend as well as leveraging our ongoing investments in technology, growing e-commerce, improving traffic, focusing on tight expense controls and executing our new branding initiatives."

Updated Fiscal 2013 Outlook


Store Base:

For the 52-week period ending February 1, 2014 ("fiscal 2013"), the Company expects to open approximately 25 new stores and close approximately 15 stores. New store openings will be weighted more toward the second and third quarters of the year, while closings will be weighted more toward the first half of the year.


Total sales for the 52-week fiscal 2013 are expected to increase approximately 3% to 5% compared with 53-week fiscal 2012. This level of total sales performance implies comparable store sales results of flat to a slight increase for fiscal 2013.


Based on the current outlook, inbound freight costs should be higher for the second quarter, but improve in the second half of the year offsetting the negative first half margin impact. A strict focus on operating expense controls, combined with a more conservative store opening plan, should position the Company to better leverage any upside to its current revenue projections. However, the Company expects investments in key personnel, as well as modest increases in marketing and e-commerce expenses to offset some of the expense efficiencies.


Based on the above assumptions, the Company expects fiscal 2013 earnings per share to be in the range of $0.75 to $0.85. The Company expects its full year effective tax rate to be approximately 38.5%.

Cash Flow:

Capital expenditures in fiscal 2013 are estimated to range between $20 million and $23 million. Based on the above assumptions, the Company expects to be cash flow positive in fiscal 2013.

Second Quarter Fiscal 2013 Outlook

For the second quarter ending August 3, 2013, the Company expects a net loss of $0.08 to $0.11 per diluted share compared with a net loss of $0.11 per share in the prior-year quarter. Net sales are expected to be $97 million to $98 million, with a nominal decrease to a nominal increase in comparable store sales. The Company expects to open approximately 6 stores and close approximately 5 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 first quarter results. The number to call for the interactive teleconference is (212) 231-2919. A replay of the conference call will be available through Thursday, May 30, 2013, by dialing (402) 977-9140 and entering the confirmation number, 21646240.

A live broadcast of Kirkland's quarterly conference call will be available online at the Company's website under Investor Relations or on May 23, 2013, 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 315 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

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 18, 2013. 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.

(dollars in thousands, except per share amounts)
    13-Week Period Ended
May 4,     April 28,
2013 2012
Net sales $ 101,233 $ 97,788
Cost of sales   61,827   59,319  
Gross profit 39,406 38,469
Operating expenses:
Operating expenses 32,779 32,284
Depreciation   3,791   3,015  
Operating income 2,836 3,170
Other (income) expense, net   6   (3 )
Income before income taxes 2,830 3,173
Income tax expense   1,057   1,218  
Net income $ 1,773 $ 1,955  
Earnings per share:
Basic $ 0.10 $ 0.11  
Diluted $ 0.10 $ 0.10  
Shares used to calculate earnings per share:
Basic   17,083   18,269  
Diluted   17,433   18,772  
(dollars in thousands)
    May 4,     February 2,     April 28,
2013 2013 2012


Current assets:
Cash and cash equivalents $ 74,111 $ 67,797 $ 73,162
Inventories, net 47,889 49,577 47,484
Income taxes receivable 1,015 - -
Deferred income taxes 1,638 1,602 1,725
Other current assets   6,576   9,370   8,118
Total current assets 131,229 128,346 130,489
Property and equipment, net 76,964 78,499 61,414
Non-current deferred income taxes - - 1,150
Other assets   1,680   1,559   1,496
Total assets $ 209,873 $ 208,404 $ 194,549
Current liabilities:
Accounts payable $ 20,933 $ 21,642 $ 18,050
Income taxes payable - 520 1,931
Other current liabilities   21,719   21,009   18,637
Total current liabilities 42,652 43,171 38,618
Non-current deferred income taxes 3,057 3,128 -
Deferred rent and other long-term liabilities   43,778   44,230   38,633
Total liabilities   89,487   90,529   77,251
Net shareholders' equity   120,386   117,875   117,298
Total liabilities and shareholders' equity $ 209,873 $ 208,404 $ 194,549
(dollars in thousands)
    13-Week Period Ended
May 4,     April 28,
2013 2012
Net cash provided by (used in):
Operating activities $ 8,561 $ (2,733 )
Investing activities (2,322 ) (4,109 )
Financing activities   75     (3,119 )
Cash and cash equivalents:
Net increase (decrease) 6,314 (9,961 )
Beginning of the period   67,797     83,123  
End of the period $ 74,111   $ 73,162  

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

KEYWORDS:   United States  North America  Tennessee


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