Kirkland's Reports Third Quarter 2020 Results
December 03, 2020 at 07:00 AM EST
NASHVILLE, Tenn., Dec. 3, 2020 /PRNewswire/ -- Kirkland's, Inc. (NASDAQ: KIRK) today announced financial results for its third fiscal quarter ended October 31, 2020 and the authorization of a new share repurchase plan.
"The momentum we established late last year has continued through the third quarter with positive comparable sales in both the store and e-commerce channels exceeding our expectations, significant year-over-year margin improvement and permanent cost reductions driving earnings growth and cash generation," noted Woody Woodward, Chief Executive Officer. "While home furnishing is currently receiving the benefit of the reallocation of customer spending, there is much within this transformation of Kirkland's that is a direct result of our own actions and investments. We have elevated the merchandise assortment with improved quality and design while maintaining our value proposition, improved our customer experience both in store and online and adapted our financial and operating infrastructure to maximize profitability. We are pleased with the impact these changes have had on our performance and are even more encouraged by the fact that the benefits have become very evident at these early stages of our evolution."
Mr. Woodward added, "The increased demand driven by our e-commerce channel and the strong performance in both our harvest and Christmas season merchandise more than offset the 51 fewer stores in the base from a year ago. The late October re-launch of our loyalty program has already added hundreds of thousands of new members in a few weeks' time, and we are pleased with the response to Black Friday and Cyber Monday. Similar to others in our sector, we continued to experience a shift to online during the month of November with Black Friday shopping spread out over a longer period. We believe we have established a good start to the fourth quarter by growing profitability with year-over-year margin gains and a solid comparable sales improvement, particularly in e-commerce."
Strategic Priorities and Financial Goals
Kirkland's key strategic initiatives include:
Kirkland's annual financial goals for the next two to three years include:
The key strategic initiatives and financial goals are based on current information as of December 3, 2020, and are dependent on, among other things, consumer preferences, economic conditions and our own successful execution of these initiatives. The information on which these initiatives and financial goals is based is subject to change, and investors are cautioned that the Company may update the initiatives and goals, or any portion thereof, at any time for any reason.
Board Authorizes $20 Million Share Repurchase Plan
Kirkland's also announced today that its Board of Directors has authorized a new share repurchase plan providing for the purchase in the aggregate of $20 million of the Company's outstanding common stock. Repurchases of shares will be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including stock price, regulatory limitations and other market and economic factors. The share repurchase plan does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase plan at any time.
Investor Conference Call and Web Simulcast
Kirkland's will hold its earnings call for the third quarter later today at 9:00 a.m. ET. Participating on the call will be Steve Woodward, Chief Executive Officer and Nicole Strain, Chief Financial Officer. The number to call for the interactive teleconference is (412) 542-4163. A replay of the conference call will be available through Thursday, December 10, 2020 by dialing (412) 317-0088 and entering the confirmation number 10149811.
A live webcast of Kirkland's quarterly conference call will be available online on the Company's Investor Relations Page on December 3, 2020, beginning at 9:00 a.m. ET. The online replay will follow shortly after the call and continue for one year.
About Kirkland's, Inc.
Kirkland's, Inc. is a specialty retailer of home décor in the United States, currently operating 381 stores in 35 states as well as an e-commerce website, www.kirklands.com. The Company's stores present a curated selection of distinctive merchandise, including holiday décor, furniture, wall décor, art, textiles, mirrors, fragrances, lamps and other home decorating items. The Company's stores offer an extensive assortment of holiday merchandise during seasonal periods. The Company provides its customers an engaging shopping experience characterized by casual, comfortable merchandise with a southern feel and a modern flair at a discernible value. This combination of quality and stylish merchandise, value pricing and a stimulating online and store experience has led the Company to develop a loyal customer base. More information can be found at www.kirklands.com.
Except for historical information contained herein, the statements in this release, including all statements related to future initiatives, financial goals and expectations regarding any future period, are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the Company's quarterly financial and accounting procedures. 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, risks associated with the Company's progress and anticipated progress towards its long-term objective and the success of its plans in response to the novel coronavirus ("COVID-19"), the spread of COVID-19 and its impact on the Company's revenues and supply chain, risks associated with COVID-19 and the governments responses to it, the impact of store closures in 2020, the effectiveness of the Company's marketing campaigns, risks related to changes in U.S. policy related to imported merchandise, particularly with regard to the impact of tariffs on goods imported from China and strategies undertaken to mitigate such impact, the Company's ability to retain its senior management team, continued volatility in the price of the Company's common stock, 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, including our e-commerce systems and channels, 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 10, 2020 and subsequent reports. Forward-looking statements included in this release are made as of the date of this release. Any changes in assumptions or factors on which such statements are based could produce materially different results. 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.
Non-GAAP Financial Measures
To supplement our unaudited consolidated condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the related earnings conference call contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted operating income (loss), adjusted net income (loss) and adjusted diluted income (loss) per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP. The Company uses these non-GAAP financial measures internally in analyzing our financial results and believes that they provide useful information to analysts and investors, as a supplement to GAAP measures, in evaluating our operational performance.
The Company defines EBITDA as net income or loss before interest, provision for income tax, and depreciation and amortization, adjusted EBITDA as EBITDA with non-GAAP adjustments and adjusted operating income (loss) as operating income (loss) with non-GAAP adjustments. The Company defines adjusted net income (loss) and adjusted diluted income (loss) per share by adjusting the applicable GAAP measure for non-GAAP adjustments.
Non-GAAP measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Each non-GAAP measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP.
The following table shows a reconciliation of operating income (loss) to EBITDA, adjusted EBITDA and adjusted operating income (loss) for the 13 weeks and 39 weeks ended October 31, 2020 and November 2, 2019 and a reconciliation of net income (loss) and diluted income (loss) per share to adjusted net income (loss) and adjusted diluted income (loss) per share for the 13 weeks and 39 weeks ended October 31, 2020 and November 2, 2019:
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SOURCE Kirkland's, Inc.