Kirkland's Earnings Beat but Remain Flat - Analyst Blog

Kirkland Inc. 's ( KIRK ) first-quarter 2013 earnings of 10 cents per share surpassed the Zacks Consensus Estimate of 5 cents. Earnings were, however, flat compared to the corresponding year-ago quarter. The first-quarter 2013 results exceeded management's expectations of its being at the higher end of the range of 2 cents to 5 cents in the quarter.

Quarter in Detail

Kirkland's net sales climbed 3.5% to $101.2 million from $97.8 million in the year-ago quarter due to strong online sales. Comparable store sales, including e-commerce, declined 2.3% compared with a decrease of 1.2% in the year-ago quarter.

While comparable store sales at brick and mortar stores went down by 3.1%, e-commerce sales shot up by 19.1% from the year-ago level. Decline in same-store sales in the brick and mortar stores was the result of a 4% decline in transactions.

Positive comparative sales results in the Gulf Coast states were offset by weakness in the far West and some areas of the upper Midwest and South. Strong sales of merchandise like mirrors, lamps, wall decors and candles were offset by a decline in the sales of art, furniture and frames.

The company opened one store but closed seven during the quarter. Kirkland had a total of 317 stores at the end of first-quarter 2013.

On a year-over-year basis, gross profit climbed 2.4% to $39.4 million, while gross margin contracted 41 basis points to 38.9% due to the decline in merchandise margin.

Balance Sheet

Kirkland exited the quarter with cash and cash equivalents of $74.1 million compared with $67.8 million in the prior quarter. Deferred rent and other long-term liabilities stood at $43.8 million compared with $44.2 million in the last quarter.


Management narrowed its fiscal 2013 earnings guidance range and now expects earnings per share between 75 cents and 85 cents instead of the previous guidance of 70 cents to 85 cents. Kirkland expects fiscal 2013 total sales to increase approximately 3% to 5% instead of the previous expectation of a range of 5% to 7% compared with fiscal 2012.

Kirkland expects to open 25 new stores and close approximately 15 stores in the fiscal year. Store openings will be skewed toward the second and third quarters of 2013. The company expects capital expenditure in a range of $20 million to $23 million in fiscal 2013 instead of the previous guidance of $22 million to $25 million.

The Zacks Consensus Estimates for the second quarter and fiscal 2013 are pegged at a loss of 10 cents and earnings of 81 cents, respectively.

Kirkland currently holds a Zacks Rank #2 (Buy). Other stocks in the retail and wholesale sector that are worth considering include Fortune Brands Home & Security Inc. ( FBHS ), Haverty Furniture Companies Inc. ( HVT ), both carrying a Zacks Rank #1 (Strong Buy), and The Buckle Inc. ( BKE ), carrying a Zacks Rank #2 (Buy).

BUCKLE INC (BKE): Free Stock Analysis Report

FORTUNE BRD H&S (FBHS): Free Stock Analysis Report

HAVERTY FURNIT (HVT): Free Stock Analysis Report

KIRKLANDS INC (KIRK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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