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8-K - LIVE FILING - KIRKLAND'S, INC | htm_41070.htm |
EX-99.2 - EX-99.2 - KIRKLAND'S, INC | exhibit2.htm |
News Release
Contact: | W. Michael Madden Senior Vice President & CFO (615) 872-4800 |
Tripp Sullivan Corporate Communications, Inc. (615) 324-7335 |
KIRKLANDS REPORTS FOURTH QUARTER AND ANNUAL RESULTS
NASHVILLE, Tenn. (March 10, 2011) Kirklands, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 52-week periods ended January 29, 2011.
Net sales for the 13-week period ended January 29, 2011, were $139.6 million compared with $142.8 million for the 13-week period ended January 30, 2010. Comparable store sales for the fourth quarter of fiscal 2010 decreased 7.9% compared with a 10.2% increase in the prior-year quarter. The Company opened 10 stores and closed 6 stores during the fourth quarter to end the period with 300 stores.
Net sales for the 52-week period ended January 29, 2011, were $415.3 million compared with $406.2 million for the 52-week period ended January 30, 2010. Comparable store sales for fiscal 2010 decreased 0.5% compared with an 8.4% increase in fiscal 2009. The Company opened 38 stores and closed 17 during fiscal 2010.
The Company reported net income of $14.4 million, or $0.70 per diluted share, for the fourth quarter of fiscal 2010 compared with net income of $22.1 million, or $1.08 per diluted share, for the fourth quarter of fiscal 2009. For fiscal 2010, the Company reported net income of $26.4 million, or $1.28 per share, compared with net income of $34.6 million, or $1.71 per diluted share, in the prior year.
Income tax expense for the fourth quarter of fiscal 2010 included a net benefit of $0.8 million related to an adjustment to the Companys prior year income tax provision partially offset by an adjustment to the state tax rate applied to the Companys deferred tax assets. Excluding the impact of these items, adjusted net income for the fourth quarter of fiscal 2010 was $13.6 million, or $0.66 per diluted share (adjusted). Income tax expense for the fourth quarter of fiscal 2009 included a benefit of approximately $3.3 million related to the reversal of the valuation allowance on the Companys deferred tax assets established in prior periods. Excluding the impact of this item, adjusted net income for the fourth quarter of fiscal 2009 was $18.8 million, or $0.92 per diluted share (adjusted).
The Company believes that presenting adjusted net income and earnings per share for its 2009 and 2010 periods to reflect more normalized tax rates is instrumental in evaluating the Companys performance. See Reconciliation of Non-GAAP Financial Information below.
Robert Alderson, Kirklands President and Chief Executive Officer, said, Our fourth quarter results were in line with the sales we previously reported and certainly affected by the tough comparisons we faced this year. We managed the promotional environment well during the quarter, had a strong performance from our Christmas merchandise, and finished the year with inventory levels on plan. Our store base
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2501 McGavock Pike, Suite 1000 ¦ Nashville, Tennessee 37214 ¦ (615) 872-4800
KIRK Reports Fourth Quarter Results
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March 10, 2011
growth resulted in an increase in total square footage of 14%, and we are encouraged about the early results from our 2010 store class.
As we enter fiscal 2011, comparable store sales trends continue to be challenging given that comparable store sales were up 19% at this time last year. Based on quarter-to-date sales and merchandise margin trends, we are cautiously optimistic about our prospects for the first quarter. We are also encouraged by early signs of improvement in our all-important framed art category.
Fiscal 2011 Performance Goals
Store Growth: | At year end, the Company had 300 stores compared with 279 at the beginning of 2010 and 299 at the beginning of fiscal 2009. For fiscal 2011, the Company expects to open 40 to 45 new stores and close 15 to 20 stores. Store openings will be weighted toward the second half of the year, while store closings will be spread relatively evenly throughout the year. As always, net store growth will depend on the availability of the right deal for the right location. |
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Sales: | The Company expects total sales for fiscal 2011 to increase in the range of 9% to 12% compared with fiscal 2010. This level of sales growth would imply flat to slightly negative comparable store sales for the fiscal year. Comparisons are expected to remain challenging in the first half of the year as the Company is up against record results and then comparisons ease in the second half of the year. |
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Margins: | Based on the current outlook, the Company expects operating margin in fiscal 2011 to be slightly below that of fiscal 2010 due to an anticipated increase in sourcing and transportation costs and deleverage on the fixed components of operating expenses due to flat to slightly negative comparable store sales, offset by the expected strong performance of new store openings. We will update this outlook periodically, as we gain more transparency on product costs and some anticipated tightening in the commercial real estate markets. |
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Earnings: | Based on the above assumptions, the Company would expect earnings per share for fiscal 2011 to be at or slightly below adjusted earnings per share for fiscal 2010. The current assumption for the effective tax rate is in the range of 38.5% for fiscal 2011. |
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Cash Flow: | The Company expects to generate positive cash flow in fiscal 2011 and fully fund its new store growth and technology improvements through cash generated from operations. Capital expenditures in fiscal 2011 are estimated to range between $25 million and $28 million for fiscal 2011. |
First Quarter Fiscal 2011 Outlook
The Company issued guidance for the first quarter ending April 30, 2011, of net income of $0.10 to $0.14 per diluted share, compared with $0.32 per diluted share a year ago. Net sales are expected to be $94 million to $96 million, with a comparable store sales decrease in the high-single-digit range, compared with net sales of $93.5 million and a comparable store sales increase of 12.6% in the prior-year period. The Company expects to open approximately 3 stores during the quarter, and close 6 to 8 stores during the quarter.
Investor Conference Call and Web Simulcast
Kirklands will host a conference call today, at 11:00 a.m. ET to discuss its results of operations for the |
fourth quarter of fiscal 2010. The number to call for the interactive teleconference is (212) 231-2927. A |
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KIRK Reports Fourth Quarter Results |
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March 10, 2011 |
replay of the conference call will be available through Thursday, March 17, 2011, by dialing (402) 977-9140 and entering the confirmation number, 21510653.
A live broadcast of Kirklands quarterly conference call will be available online at the Companys website www.kirklands.com under Investor Relations or http://www.videonewswire.com/event.asp?id=76716 on March 10, 2011, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue for one year.
Reconciliation of Non-GAAP Information
This release includes certain financial information not derived in accordance with generally
accepted accounting principles (GAAP). The non-GAAP measures are adjusted net income and
adjusted diluted earnings per share and are equal to net income, and diluted earnings per share
excluding adjustments to the Companys valuation allowance for deferred tax assets, adjustments
related to the prior year tax provision, adjustments to the state tax rate applied to the Companys
deferred tax assets, and certain income tax credits related to prior periods. Management uses
these measures to focus on normalized operations, and believes that it is useful to investors
because it enables them to perform more meaningful comparisons of past, present and future
operating results. The Company believes that using this information, along with the corresponding
GAAP measures, provides for a more complete analysis of the results of operations by quarter. Net
income and earnings per share are the most directly comparable GAAP measures. Below is a
reconciliation of the non-GAAP measures to their most comparable GAAP measures:
Reconciliation of Non-GAAP Financial Information | ||||||||||||||||
(dollars in thousands, except per share amounts) | 13 Weeks Ended | 52 Weeks Ended | 13 Weeks Ended | 52 Weeks Ended | ||||||||||||
January 29, | January 29 , | January 30, | January 30, | |||||||||||||
2011 | 2011 | 2010 | 2010 | |||||||||||||
Net income |
||||||||||||||||
Net income in accordance with GAAP |
$ | 14,383 | $ | 26,431 | $ | 22,078 | $ | 34,570 | ||||||||
Adjustments to income tax expense |
($814 | ) | ($814 | ) | ($3,319 | ) | ($5,881 | ) | ||||||||
Adjusted net income |
$ | 13,569 | $ | 25,617 | $ | 18,759 | $ | 28,689 | ||||||||
Diluted earnings per share |
||||||||||||||||
Diluted EPS in accordance with GAAP |
$ | 0.70 | $ | 1.28 | $ | 1.08 | $ | 1.71 | ||||||||
Adjustments to income tax expense |
($0.04 | ) | ($0.04 | ) | ($0.16 | ) | ($0.29 | ) | ||||||||
Adjusted diluted earnings per share |
$ | 0.66 | $ | 1.24 | $ | 0.92 | $ | 1.42 | ||||||||
Kirklands, 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 296 stores in 30 states. The Companys 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 Companys stores also offer an extensive assortment of gifts, as well as seasonal merchandise. More information can be found at .
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 Kirklands 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 Kirklands 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 Kirklands filings with the Securities and Exchange Commission, including the Companys Annual Report on Form 10-K filed on April 15, 2010. Kirklands 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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KIRK Reports Fourth Quarter Results
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March 10, 2011
KIRKLANDS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
13-Week Period Ended | ||||||||
January 29, | January 30, | |||||||
2011 | 2010 | |||||||
Net sales |
$ | 139,606 | $ | 142,797 | ||||
Cost of sales |
80,521 | 77,803 | ||||||
Gross profit |
59,085 | 64,994 | ||||||
Operating expenses: |
||||||||
Operating expenses |
33,371 | 31,015 | ||||||
Depreciation |
3,523 | 3,488 | ||||||
Operating income |
22,191 | 30,491 | ||||||
Other income (expense), net |
46 | (26 | ) | |||||
Income before income taxes |
22,237 | 30,465 | ||||||
Income tax expense |
7,855 | 8,387 | ||||||
Net income |
$ | 14,382 | $ | 22,078 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.72 | $ | 1.12 | ||||
Diluted |
$ | 0.70 | $ | 1.08 | ||||
Shares used to calculate earnings per share: |
||||||||
Basic |
19,902 | 19,731 | ||||||
Diluted |
20,549 | 20,450 | ||||||
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KIRK Reports Fourth Quarter Results
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March 11, 2011
KIRKLANDS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
52-Week Period Ended | ||||||||
January 29, | January 30, | |||||||
2011 | 2010 | |||||||
Net sales |
$ | 415,300 | $ | 406,194 | ||||
Cost of sales |
244,764 | 237,688 | ||||||
Gross profit |
170,536 | 168,506 | ||||||
Operating expenses: |
||||||||
Operating expenses |
115,745 | 107,063 | ||||||
Depreciation |
12,817 | 14,505 | ||||||
Operating income |
41,974 | 46,938 | ||||||
Other income, net |
194 | 47 | ||||||
Income before income taxes |
42,168 | 46,985 | ||||||
Income tax expense |
15,737 | 12,415 | ||||||
Net income |
$ | 26,431 | $ | 34,570 | ||||
Earnings per share: |
||||||||
Basic |
$ | 1.33 | $ | 1.76 | ||||
Diluted |
$ | 1.28 | $ | 1.71 | ||||
Shares used to calculate earnings per share: |
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Basic |
19,855 | 19,696 | ||||||
Diluted |
20,578 | 20,249 | ||||||
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KIRK Reports Fourth Quarter Results
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March 10, 2011
KIRKLANDS, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)
January 29, 2011 | January 30, 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 91,222 | $ | 76,412 | ||||
Inventories, net |
44,452 | 39,355 | ||||||
Deferred income taxes |
3,528 | 3,552 | ||||||
Other current assets |
7,468 | 4,331 | ||||||
Total current assets |
146,670 | 123,650 | ||||||
Property and equipment, net |
46,231 | 36,856 | ||||||
Non-current deferred income taxes |
1,440 | 4,395 | ||||||
Other assets |
736 | 640 | ||||||
Total assets |
$ | 195,077 | $ | 165,541 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 20,236 | $ | 15,589 | ||||
Income taxes payable |
1,289 | 7,087 | ||||||
Other current liabilities |
24,364 | 25,402 | ||||||
Total current liabilities |
45,889 | 48,078 | ||||||
Deferred rent and other long-term
liabilities |
30,899 | 28,978 | ||||||
Total liabilities |
76,788 | 77,056 | ||||||
Net shareholders equity |
118,289 | 88,485 | ||||||
Total liabilities and shareholders equity |
$ | 195,077 | $ | 165,541 | ||||
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KIRK Reports Fourth Quarter Results
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March 10, 2011
KIRKLANDS, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)
52-Week Period Ended | ||||||||
January 29, 2011 | January 30, 2010 | |||||||
Net cash provided by (used in): |
||||||||
Operating activities |
$ | 36,736 | $ | 49,972 | ||||
Investing activities |
(22,632 | ) | (10,246 | ) | ||||
Financing activities |
706 | 241 | ||||||
Cash and cash equivalents: |
||||||||
Net increase |
14,810 | 39,967 | ||||||
Beginning of period |
76,412 | 36,445 | ||||||
End of period |
$ | 91,222 | $ | 76,412 | ||||
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