Nashville-based specialty retailer of home décor Kirkland’s Inc. (KIRK) is already reaping the benefits of its strategic initiatives to boost comps. After posting negative comps for four consecutive quarters in fiscal 2012, the specialty retailer has turned around in fiscal 2013 and has posted single-digit comp gain in the last three quarters of fiscal 2013.
However, during the fourth quarter fiscal 2013, Kirkland’s reported flat comps against a decline of 2.6% in the prior-year quarter. The flat sales were led by the unsuccessful execution of the company’s strategic initiatives, owing to bad weather and reduced consumer spending during the holiday season. Same-store sales also fell short of management’s guidance of a comp growth of 2% to 4% announced during the third-quarter earnings conference call.
Total sales during the period declined 4.2% to $156.1 million compared with $162.9 million for the fourth quarter of fiscal 2013. Sales fell short of management’s expectation of a range of $159–$162 million. Although the company witnessed a strong start to the quarter with strong November and record sales during the Black Friday weekend, bad weather and frequent declines in comps during December and January, offset the initial gains.
During fourth-quarter fiscal 2013, Kirkland’s opened 8 stores and closed 7, in line with its guidance.
Fiscal 2013 Results
For fiscal 2013, Kirkland’s’ same store sales inched up 0.5% compared with a 3.0% decline in fiscal 2012, much below management’s guidance of a range of 2% to 4% growth. Net sales for the period increased 2.7% to $460.6 million compared with $448.4 million in the previous year.
Net sales growth exceeded management’s guidance of a growth range of 1% to 2%. Kirkland’s opened 24 stores and shut down 23 during fiscal 2013 which were in line with management’s guidance provided during the third quarter conference call.
Guidance Lowered
Kirkland’s is expected to report its fourth-quarter and full-year fiscal 2013 earnings results on Mar 13, 2014 before the bell. Based on the fourth-quarter sales results, Kirkland’s lowered the fourth-quarter earnings guidance range to 66 cents to 68 cents from the 77 cents to 82 cents range announced previously.
It also lowered full-year earnings per share guidance to a range of 79 cents to 81 cents from 80 cents to 90 cents announced previously.
The Zacks Consensus Estimate for fourth quarter is pegged at 67 cents and for fiscal 2013 it is pegged at 80 cents.
Kirkland’s is facing difficult retail conditions in the form of reduced spending of customers that is restricting traffic in its stores. It carries a Zacks Rank #5 (Strong sell). Some better ranked stocks worth considering in the retail sector include Constellation Brands Inc. (STZ), Lorillard Inc. (LO) and Green Mountain Coffee Roasters Inc. (GMCR). While Green Mountain and Constellation Brand carry a Zacks Rank #1 (Strong Buy), Lorillard carries a Zacks Rank #2.
Be the first to comment