NASHVILLE, Tenn., Aug. 23, 2016 /PRNewswire/ -- Kirkland's,
Inc. (NASDAQ: KIRK) today reported financial results for the
13-week and 26-week periods ended July 30,
2016.
Net sales for the 13 weeks ended July 30,
2016 increased 6.7% to $123.0
million compared with $115.3
million for the 13 weeks ended August
1, 2015. Comparable store sales for the second quarter of
fiscal 2016, including e-commerce sales, decreased 4.3% compared
with a comparable store sales increase of 6.7% in the prior-year
quarter. Kirkland's opened 13 stores and closed 4 stores during the
second quarter, bringing the total number of stores to 391 at
quarter end.
Net sales for the 26 weeks ended July 30,
2016, increased 8.3% to $252.9
million compared with $233.6
million for the 26 weeks ended August
1, 2015. Comparable store sales, including e-commerce, for
the 26 weeks ended July 30, 2016
decreased 1.8% compared with an increase of 4.8% in the prior-year
period. Kirkland's opened 27 stores and closed 12 during the
26-week period.
For the 13 weeks ended July 30,
2016, the Company reported a net loss of $3.6 million, or ($0.22) per diluted share compared with a net
loss of $2.3 million, or ($0.13) per diluted share, for the 13 weeks ended
August 1, 2015. For the 26
weeks ended July 30, 2016, the
Company reported a net loss of $2.7
million, or ($0.17) per
diluted share compared with net income of $0.2 million, or $0.01 per diluted share, for the 26 weeks ended
August 1, 2015.
"The second quarter was challenging as our retail locations
experienced weak traffic," said Mike
Madden, President and Chief Executive Officer. "E-commerce
revenue increased a strong 37% in the quarter, and we're on track
to meet our store opening plans for 2016. Operating costs as a
percentage of sales declined, reflecting efforts to tightly manage
store and corporate expenses. Gross margin was impacted by
deleverage of store occupancy and distribution costs."
"Traffic remains under pressure as we enter the second half and
we've adjusted our full-year guidance to incorporate a more
conservative outlook," continued Mr. Madden. "Our seasonal
merchandise is performing well thus far and we have planned deeper
buys in categories that are trending favorably. Our fall marketing
campaign reflects a better balance of value and inspiration, and
we're making improvements to our omni-channel delivery and
execution. We're confident these initiatives can improve our
sales performance and we'll continue to control our expenses and
inventories as traffic issues persist. With further execution on
our strategy, Kirkland's is well positioned to deliver stronger
sales and earnings growth over the long term."
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Fiscal 2016
Outlook
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Kirkland's is
updating its outlook for fiscal 2016 as follows:
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Store
Growth:
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For the 52-week
period ending January 28, 2017 ("fiscal 2016"), the Company expects
to achieve approximately 7% to 9% square footage growth with 40 to
42 new store openings and 15 to 18 store closings.
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Sales:
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Total sales for
fiscal 2016 are expected to increase approximately 7% to 8%
compared with fiscal 2015, driven primarily by new store openings.
This level of sales performance assumes that brick & mortar
traffic trends remain challenging, resulting in low-single-digit
negative to flat comparable store sales for the balance of
2016.
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Margin &
Expenses:
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The Company expects
its gross profit margin to decline year-over-year given an increase
in supply chain and store occupancy costs, slightly offset by a
higher merchandise margin. Operating expenses are expected to
increase slightly as a percent of sales. For the full year, the
Company expects a contraction in its operating margin.
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Earnings:
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Based on the above
assumptions, the Company expects fiscal 2016 earnings per share to
be in the range of $0.70 to $0.80. The full year earnings
projection assumes a tax rate of approximately 38.5% and excludes
any potential share repurchases.
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Cash
Flow:
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Capital expenditures
in fiscal 2016, which we expect to be driven primarily by new store
openings and continued investments in omni-channel and supply chain
initiatives, are estimated to range between $28 million and $31
million compared with $35 million in fiscal 2015.
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This updated performance outlook is based on current information
as of August 23, 2016. The
information on which this outlook is based is subject to change and
the Company may update its full year business outlook or any
portion thereof at any time for any reason.
Investor Conference Call and Web Simulcast
Kirkland's
will host a conference call today, August
23, 2016, at 11:00 a.m. ET.
The number to call for the interactive teleconference is (412)
542-4163. A replay of the conference call will be available through
Tuesday, August 30, 2016, by dialing
(412) 317-0088 and entering the confirmation number, 10090828.
A live broadcast of Kirkland's quarterly conference call will be
available online at ir.kirklands.com or
https://www.webcaster4.com/Webcast/Page/957/16514 on
August 23, 2016, 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 392 stores in 36 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, fluctuations in cost and
availability of products, interruptions in supply chain and
distribution systems, the ability to control employment, and other
operating costs, availability of suitable retail locations and
other growth opportunities, disruptions in information technology
systems including the potential for security breaches of Kirkland's
or its customers' information, seasonal fluctuations in consumer
spending, 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 8,
2016. 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.
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KIRKLAND'S,
INC.
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UNAUDITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
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(In thousands,
except per share data)
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13-Week
Period Ended
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13-Week
Period Ended
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July
30,
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August
1,
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2016
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2015
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Net
sales
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$
123,017
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$
115,289
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Cost of
sales
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80,744
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72,777
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Gross
profit
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42,273
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42,512
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Operating
expenses:
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Operating
expenses
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41,873
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40,904
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Depreciation
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6,295
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5,310
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Operating
loss
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(5,895)
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(3,702)
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Other expense,
net
|
14
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14
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Loss before income
taxes
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(5,909)
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(3,716)
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Income tax
benefit
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(2,342)
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(1,428)
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Net loss
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$
(3,567)
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$
(2,288)
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Loss per
share:
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Basic
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$
(0.22)
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$
(0.13)
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Diluted
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$
(0.22)
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$
(0.13)
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Shares used to
calculate loss per share:
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Basic
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15,854
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17,277
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Diluted
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15,854
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17,277
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KIRKLAND'S,
INC.
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UNAUDITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
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(In thousands,
except per share data)
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26-Week
Period Ended
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26-Week
Period Ended
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July
30,
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August
1,
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2016
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2015
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Net
sales
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$
252,928
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$
233,599
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Cost of
sales
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161,118
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143,424
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Gross
profit
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91,810
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90,175
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Operating
expenses:
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Operating
expenses
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83,913
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79,241
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Depreciation
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12,268
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10,539
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Operating (loss)
income
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(4,371)
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395
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Other expense,
net
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28
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29
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(Loss) income before
income taxes
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(4,399)
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366
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Income tax (benefit)
expense
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(1,748)
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125
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Net (loss)
income
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$
(2,651)
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$
241
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(Loss) earnings per
share:
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Basic
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$
(0.17)
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$
0.01
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Diluted
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$
(0.17)
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$
0.01
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Shares used to
calculate (loss) earnings per share:
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Basic
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15,817
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17,257
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Diluted
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15,817
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17,755
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KIRKLAND'S,
INC.
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UNAUDITED
CONSOLIDATED CONDENSED BALANCE SHEETS
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(In
thousands)
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July
30,
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January
30,
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August
1,
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2016
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2016
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2015
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ASSETS
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Current
assets:
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Cash and cash
equivalents
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$
29,581
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$
44,352
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$
49,126
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Inventories,
net
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74,166
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68,222
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65,895
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Other current
assets
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19,874
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15,206
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14,501
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Total current
assets
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123,621
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127,780
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129,522
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Property and
equipment, net
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112,157
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105,542
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94,904
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Other
assets
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3,184
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1,934
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2,565
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Total
assets
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$
238,962
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$
235,256
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$
226,991
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LIABILITIES AND
SHAREHOLDERS' EQUITY
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Current
liabilities:
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Accounts
payable
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$
32,384
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$
28,689
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$
27,951
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Income taxes
payable
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-
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4,863
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-
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Other current
liabilities
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26,446
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25,943
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25,319
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Total current
liabilities
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58,830
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59,495
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53,270
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Non-current deferred
income taxes
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1,784
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1,342
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578
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Deferred rent and
other long-term liabilities
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59,795
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54,724
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48,851
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Total liabilities
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120,409
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115,561
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102,699
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Net shareholders'
equity
|
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118,553
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119,695
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124,292
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Total liabilities and
shareholders' equity
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$
238,962
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$
235,256
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$
226,991
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KIRKLAND'S,
INC.
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UNAUDITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
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(In
thousands)
|
|
|
|
|
|
|
|
26-Week
Period Ended
|
|
26-Week
Period Ended
|
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July
30,
|
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August
1,
|
|
|
2016
|
|
2015
|
|
Net cash
provided by (used in):
|
|
|
|
|
|
|
|
|
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Operating
activities
|
$
5,125
|
|
$
(10,195)
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Investing
activities
|
(19,629)
|
|
(10,755)
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Financing
activities
|
(267)
|
|
(29,062)
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|
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|
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Cash and
cash equivalents:
|
|
|
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Net
decrease
|
(14,771)
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|
(50,012)
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Beginning of
the period
|
44,352
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|
99,138
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End of the
period
|
$
29,581
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$
49,126
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Contact:
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Kirkland's
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SCR
Partners
|
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Adam
Holland
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Jeff Black: (615)
760-3679
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(615)
872-4800
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Tripp Sullivan: (615)
760-1104
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IR@Kirklands.com
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SOURCE Kirkland's, Inc.