Kirkland’s Reports First Quarter 2015 Results
By PRN NewsWire
By PRN NewsWire
NASHVILLE, Tenn., May 21, 2015 /PRNewswire/ — Kirkland’s, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week period ended May 2, 2015.
Net sales for the 13 weeks ended May 2, 2015, increased 9.3% to $118.3 million compared with $108.3 million for the 13 weeks ended May 3, 2014. Comparable store sales for the first quarter of fiscal 2015, including e-commerce sales, increased 3.0% compared with a comparable store sales increase of 5.0% in the prior-year quarter. Kirkland’s opened one store and closed three during the first quarter, bringing the total number of stores to 342 at quarter end.
Net income for the 13 weeks ended May 2, 2015, increased 23% to $2.5 million, or $0.14 per diluted share. Adjusted net income for the 13 weeks ended May 2, 2015, increased 41% to $2.9 million, or $0.16 per diluted share. Adjusted net income for the first quarter of 2015 excludes a $0.02 per diluted share charge related to the retirement of the Company’s previous CEO. The Company reported net income of $2.1 million, or $0.12 per diluted share, for the 13 weeks ended May 3, 2014.
Mike Madden, Kirkland’s President and Chief Executive Officer, said, “We’re pleased with our sales and earnings growth for the quarter. Sales came in at the top end of our guidance range, and earnings exceeded our expectations driven by strong merchandise margins and expense leverage in stores and e-commerce. Weather and the West Coast port delays presented challenges in the quarter, but our teams executed extremely well.”
“We are encouraged by the current momentum in the business,” continued Mr. Madden. “Customer reaction to our assortments has been positive as indicated by strong conversion, and our real estate plans remain on track for the second half of the year. Our long-term confidence in the business is underscored by the announcement of a $1.50 per-share special dividend, made in a separate release this morning.”
Fiscal 2015 Outlook
For the 52-week period ending January 30, 2016 (“fiscal 2015”), the Company expects to achieve approximately 8% to 10% square footage growth with 35 to 40 new store openings and 10 to 15 store closings. New store openings are expected to be weighted toward the second and third quarters of the year, and store closings are expected to be spread evenly Store Growth: throughout the year. Total sales for fiscal 2015 are expected to increase approximately 10% to 12% compared with fiscal 2014. This level of sales performance would imply a comparable store sales increase of approximately 3% to 5% for Sales: fiscal 2015. The Company expects gross profit margin to remain relatively flat year-over-year as a slight improvement in the merchandise margin is expected to be offset by increases in supply chain costs. Operating expenses are expected to decrease as a percent Margin & Expenses: of sales. Based on the above assumptions, the Company now expects adjusted fiscal 2015 earnings per diluted share to be in the range of $1.18 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 Earnings: approximately 39%. Capital expenditures in fiscal 2015 are estimated to range between $27 million and $29 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 Cash Flow: repurchases.
Second Quarter Fiscal 2015 OutlookThe Company issued guidance for the second quarter ending August 1, 2015, for a loss of $(0.10) to $(0.13) per diluted share. Net sales are expected to be in the range of $115 million to $116 million with a comparable store sales increase in the range of 5% to 7%. Historically, the Company’s second quarter sales and margins are sequentially lower than the first quarter due to traffic patterns and typical promotional activity. We expect an unfavorable comparison to the second quarter of 2014 due to the reversal of a shrinkage accrual in the year ago quarter, which provided a benefit to that quarter amounting to $0.02 per diluted share. Additionally, during the second quarter of 2015, the Company plans to open a net total of 14 stores versus four in the prior-year quarter, which will result in higher pre-opening expenses for the quarter.
Special Cash DividendThe Company’s board of directors declared a special cash dividend of $1.50 per share on its common stock. The special dividend will be paid on June 19, 2015 to stockholders of record as of the close of business on June 5, 2015.
Investor Conference Call and Web SimulcastKirkland’s will host a conference call today, May 21, 2015, at 11:00 a.m. ET. The number to call for the interactive teleconference is (412) 317-0790. A replay of the conference call will be available through Friday, May 29, 2015, by dialing (412) 317-0088 and entering the confirmation number, 10065466.
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=102303 on May 21, 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 decor in the United States. Although originally focused in the Southeast, the Company has grown beyond that region and currently operates 342 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 StatementsExcept 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 decor 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 INCOME (In thousands, except per share data) 13-Week 13-Week Period Ended Period Ended May 2, May 3, 2015 2014 —- —- Net sales $118,310 $108,255 Cost of sales 70,647 65,653 —— —— Gross profit 47,663 42,602 Operating expenses: Operating expenses 38,337 34,943 Depreciation 5,229 4,300 —– —– Operating income 4,097 3,359 Other expense (income), net 15 (13) — — Income before income taxes 4,082 3,372 Income tax expense 1,553 1,317 —– —– Net income $2,529 $2,055 ====== ====== Earnings per share: Basic $0.15 $0.12 ===== ===== Diluted $0.14 $0.12 ===== ===== Shares used to calculate earnings per share: Basic 17,238 17,308 ====== ====== Diluted 17,805 17,825 ====== ======
KIRKLAND’S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) May 2, January 31, May 3, 2015 2015 2014 —- —- —- ASSETS Current assets: Cash and cash equivalents $93,437 $99,138 $82,418 Inventories, net 58,291 55,775 50,702 Deferred income taxes 3,614 3,538 2,857 Other current assets 8,343 8,878 8,595 —– —– —– Total current assets 163,685 167,329 144,572 Property and equipment, net 88,433 90,992 82,768 Other assets 2,283 2,166 2,028 —– —– —– Total assets $254,401 $260,487 $229,368 ======== ======== ======== LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $26,072 $24,705 $19,465 Income taxes payable 191 5,648 866 Other current liabilities 24,655 27,027 22,870 —— —— —— Total current liabilities 50,918 57,380 43,201 Non-current deferred income taxes 4,049 4,138 3,239 Deferred rent and other long-term liabilities 47,017 47,907 44,930 —— —— —— Total liabilities 101,984 109,425 91,370 ——- ——- —— Net shareholders’ equity 152,417 151,062 137,998 ——- ——- ——- Total liabilities and shareholders’ equity $254,401 $260,487 $229,368 ======== ======== ========
KIRKLAND’S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) 13-Week 13-Week Period Ended Period Ended May 2, May 3, 2015 2014 —- —- Net cash provided by (used in): Operating activities $(616) $221 Investing activities (2,675) (6,930) Financing activities (2,410) 77 ——- Cash and cash equivalents: Net decrease (5,701) (6,632) Beginning of the period 99,138 89,050 —— End of the period $93,437 $82,418 =======
Contact: Kirkland’s SCR Partners Adam Holland Jeff Black: (615) 760-3679 (615) 872-4996 Tripp Sullivan: (615) 760-1104 IR@Kirklands.com
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