Kirkland's Reports Fourth Quarter and Fiscal 2012 Results
Kirkland's Reports Fourth Quarter and Fiscal 2012 Results
NASHVILLE, Tenn.--(BUSINESS WIRE)-- Kirkland's, Inc. (NAS: KIRK) today reported financial results for the 14-week and 53-week periods ended February 2, 2013.
Due to a shift in the Company's retail calendar, the fourth quarter of fiscal 2012 contained 14 weeks compared with the typical 13 weeks in fiscal 2011. As such, comparisons of total sales for the fourth quarter, as well as for the full fiscal year, with the same periods in fiscal 2011 are affected by an extra week of sales. Comparable store sales results for the fourth quarter have been calculated using sales for the 13 weeks ended January 26, 2013, compared with the 13 weeks ended January 28, 2012. Comparable store sales results for the full fiscal year have been calculated using sales for the 52 weeks ended January 26, 2013, compared with the 52 weeks ended January 28, 2012.
Net sales, including gift card breakage revenue, for the 14 weeks ended February 2, 2013, increased 9.2% to $162.9 million compared with $149.1 million for the 13 weeks ended January 28, 2012. On a 13-week basis, comparable store sales, including e-commerce sales, for the fourth quarter of fiscal 2012 decreased 2.6% compared with an increase of 1.4% in the prior-year quarter. Kirkland's opened 17 stores and closed 2 during the fourth quarter, bringing the total number of stores to 323 at quarter end.
Net sales, including gift card breakage revenue, for the 53 weeks ended February 2, 2013, increased 4.2% to $448.4 million compared with $430.3 million for the 52 weeks ended January 28, 2012. On a 52-week basis, comparable store sales for fiscal 2012, including e-commerce sales, decreased 3.0% compared with a 4.0% decrease in fiscal 2011. The Company opened 42 stores and closed 28 during fiscal 2012.
The Company reported net income of $14.3 million, or $0.82 per diluted share, for the 14 weeks ended February 2, 2013, compared with net income of $15.2 million, or $0.78 per diluted share, for the 13 weeks ended January 28, 2012. Results for the fourth quarter of fiscal 2012 included a year-over-year after-tax benefit of approximately $0.03 per diluted share resulting from a positive change in the actuarial estimate of the Company's general liability and workers' compensation reserves. For comparative purposes, during the fourth quarter of fiscal 2011, the Company recorded an after-tax benefit of approximately $0.04 per diluted share related to a change in the estimate of its loyalty program accrual due to the termination of the agreement with its prior private-label credit card service provider.
For the 53 weeks ended February 2, 2013, the Company reported net income of $13.8 million, or $0.77 per diluted share, compared with net income of $19.1 million, or $0.95 per diluted share, for the 52 weeks ended January 28, 2012.
Robert Alderson, Kirkland's President and Chief Executive Officer, noted, "The fourth quarter results were slightly better than our expectations with sales at the higher end of our guidance and margin on plan. We still have some work ahead of us to return some key categories to their previous levels, but our core merchandise assortment is improving. Consistent with broader retail trends to date, we have started the year off on a more cautious note and expect that outlook to continue in the first half of fiscal 2013. As the year progresses, we expect to see more improvement due to better merchandising, a more productive and better scheduled real estate plan and continued focus on tight expense controls."
Fiscal 2013 Outlook
Store Base: | For the 52-week period ending February 1, 2014 ("fiscal 2013"), the Company expects to open 25 to 35 new stores and close approximately 10 to 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. | ||||
Sales: | Total sales for fiscal 2013 are expected to increase approximately 5% to 7% compared with fiscal 2012. This level of sales performance would imply a nominal decrease to a nominal increase in comparable store sales for fiscal 2013. | ||||
Margins: | Based on the current outlook, inbound freight costs should be steadier for the full year, with higher year-over-year costs in the first half of fiscal 2013 pressuring merchandise margin comparisons and a moderation in these costs in the second half of the year lessening the 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 merchandising personnel, as well as modest increases in marketing and e-commerce expenses to offset some of the expense efficiencies. | ||||
Earnings: | Based on the above assumptions, the Company expects fiscal 2013 earnings per share to be in the range of $0.70 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 $22 million and $25 million. Based on the above assumptions, the Company expects to be cash flow positive in fiscal 2013. |
First Quarter Fiscal 2013 Outlook
The Company issued guidance for the first quarter ending May 4, 2013, of net income of $0.02 to $0.05 per diluted share. Net sales are expected to be in the range of $99 to $101 million with comparable store sales declining 3% to 5%. The Company expects to open approximately 1 store and close approximately 7 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 fourth 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, March 21, 2013, by dialing (402) 977-9140 and entering the confirmation number, 21646219.
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=92067 on March 14, 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 317 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 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 INCOME | ||||||||||
(dollars in thousands, except per share amounts) | ||||||||||
14-Week Period Ended | 13-Week Period Ended | |||||||||
February 2, | January 28, | |||||||||
2013 | 2012 | |||||||||
Net sales | $ | 162,885 | $ | 149,110 | ||||||
Cost of sales | 96,751 | 84,982 | ||||||||
Gross profit | 66,134 | 64,128 | ||||||||
Operating expenses: | ||||||||||
Operating expenses | 39,245 | 36,551 | ||||||||
Depreciation | 3,833 | 3,522 | ||||||||
Operating income | 23,056 | 24,055 | ||||||||
Other income, net | 4 | 64 | ||||||||
Income before income taxes | 23,060 | 24,119 | ||||||||
Income tax expense | 8,807 | 8,941 | ||||||||
Net income | $ | 14,253 | $ | 15,178 | ||||||
Earnings per share: | ||||||||||
Basic | $ | 0.83 | $ | 0.80 | ||||||
Diluted | $ | 0.82 | $ | 0.78 | ||||||
Shares used to calculate earnings per share: | ||||||||||
Basic | 17,076 | 19,037 | ||||||||
Diluted | 17,440 | 19,413 | ||||||||
KIRKLAND'S, INC. | |||||||||||
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME | |||||||||||
(dollars in thousands, except per share amounts) | |||||||||||
53-Week Period Ended | 52-Week Period Ended | ||||||||||
February 2, | January 28, | ||||||||||
2013 | 2012 | ||||||||||
Net sales | $ | 448,365 | $ | 430,285 | |||||||
Cost of sales | 279,749 | 261,091 | |||||||||
Gross profit | 168,616 | 169,194 | |||||||||
Operating expenses: | |||||||||||
Operating expenses | 133,913 | 126,279 | |||||||||
Depreciation | 13,175 | 12,410 | |||||||||
Operating income | 21,528 | 30,505 | |||||||||
Other income (expense), net | (34 | ) | 65 | ||||||||
Income before income taxes | 21,494 | 30,570 | |||||||||
Income tax expense | 7,699 | 11,455 | |||||||||
Net income | $ | 13,795 | $ | 19,115 | |||||||
Earnings per share: | |||||||||||
Basic | $ | 0.79 | $ | 0.97 | |||||||
Diluted | $ | 0.77 | $ | 0.95 | |||||||
Shares used to calculate earnings per share: | |||||||||||
Basic | 17,463 | 19,707 | |||||||||
Diluted | 17,856 | 20,227 | |||||||||
KIRKLAND'S, INC. | |||||||||
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||||
(dollars in thousands) | |||||||||
February 2, | January 28, | ||||||||
2013 | 2012 | ||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 67,797 | $ | 83,123 | |||||
Inventories, net | 49,577 | 47,306 | |||||||
Deferred income taxes | 1,602 | 1,657 | |||||||
Other current assets | 9,370 | 7,784 | |||||||
Total current assets | 128,346 | 139,870 | |||||||
Property and equipment, net | 78,499 | 60,315 | |||||||
Non-current deferred income taxes | - | 1,108 | |||||||
Other assets | 1,559 | 1,296 | |||||||
Total assets | $ | 208,404 | $ | 202,589 | |||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 21,642 | $ | 21,592 | |||||
Income taxes payable | 520 | 3,146 | |||||||
Other current liabilities | 21,009 | 21,805 | |||||||
Total current liabilities | 43,171 | 46,543 | |||||||
Non-current deferred income taxes | 3,128 | - | |||||||
Deferred rent and other long-term liabilities | 44,230 | 38,384 | |||||||
Total liabilities | 90,529 | 84,927 | |||||||
Net shareholders' equity | 117,875 | 117,662 | |||||||
Total liabilities and shareholders' equity | $ | 208,404 | $ | 202,589 | |||||
KIRKLAND'S, INC. | ||||||||
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
(dollars in thousands) | ||||||||
53-Week Period Ended | 52-Week Period Ended | |||||||
February 2, | January 28, | |||||||
2013 | 2012 | |||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | 32,347 | $ | 41,765 | ||||
Investing activities | (31,373 | ) | (26,652 | ) | ||||
Financing activities | (16,300 | ) | (23,212 | ) | ||||
Cash and cash equivalents: | ||||||||
Net decrease | (15,326 | ) | (8,099 | ) | ||||
Beginning of the period | 83,123 | 91,222 | ||||||
End of the period | $ | 67,797 | $ | 83,123 | ||||
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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