Zacks_Analysts' Blog : Kirkland's Beats Estimates - Analyst Blog

Kirkland’s Inc. (KIRK) reported fourth-quarter 2010 earnings of 70 cents a share, which outpaced the Zacks Consensus Estimate by 6.1%. However, earnings were 35.2% below the year- ago levels.

Quarterly net sales were down 2.2% year-over-year to $139.6 million as against $142.8 million posted in the year-ago quarter. Consolidated comparable store sales declined 7.9% for the quarter compared with an increase of 10.2% in the prior-year quarter.

On a year-ago basis, gross profit contracted 9.1% to $59.1 million while quarterly operating income declined 27.2% to $22, 191 million.

Kirkland’s exited the year with cash and cash equivalents of $91.2 million and no debt.

The company ended the year with 300 stores and expects to open 40 to 45 new stores in fiscal 2011.

Guidance



Kirkland’s anticipates opening an additional 40 to 45 new stores and shutting down 15 to 20 stores in fiscal 2011. For fiscal 2011, Kirkland’s is targeting a net store unit growth of about 10% and net square footage growth of about 15%.

For fiscal 2011, Kirkland’s forecasts total sales to advance in the range of 9% to 12%. The company expects comparable store sales to be flat or marginally negative for the year. For the first quarter of 2011, the company expects sales to be in the range of $94 million to $96 million. Comparable same store sales are expected to decline in the high single-digit range. 

Earnings for fiscal 2011 are expected to down compared to that in fiscal 2010. For the first quarter, earnings are expected to be in the range of 10 cents to 14 cents a share.

The effective tax rate for fiscal 2011 is expected to be approximately 38.5% compared with 39% in fiscal 2010.

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 are estimated to range between $25 million to $28 million in fiscal 2011.

Kirkland’s Inc. currently has a Zacks #3 Rank, which translated into a short-term hold rating. On a long term basis also we are Neutral on the stock.