Kirkland's Reports Third Quarter 2012 Results

Kirkland's Reports Third Quarter 2012 Results

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Kirkland's, Inc. (NAS: 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



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

KEYWORDS: United States North America Tennessee

INDUSTRY KEYWORDS:

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