UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
or
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ______to ______.
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
(IRS Employer Identification No.) |
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incorporation or organization) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, no par value –
KIRKLAND’S, INC.
TABLE OF CONTENTS
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KIRKLAND’S, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data)
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October 30, |
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January 30, |
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October 31, |
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2021 |
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2021 |
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2020 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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$ |
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Inventories, net |
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Income taxes receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment: |
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Equipment |
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Furniture and fixtures |
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Leasehold improvements |
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Computer software and hardware |
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Projects in progress |
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Property and equipment, gross |
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Accumulated depreciation |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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$ |
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Accrued expenses |
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Operating lease liabilities |
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Total current liabilities |
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Operating lease liabilities |
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Other liabilities |
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Total liabilities |
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Shareholders’ equity: |
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Preferred stock, par value, |
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Common stock, par value; |
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Accumulated deficit |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
3
KIRKLAND’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share data)
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13-Week Period Ended |
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39-Week Period Ended |
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October 30, |
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October 31, |
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October 30, |
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October 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Operating expenses: |
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Compensation and benefits |
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Other operating expenses |
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Depreciation (exclusive of depreciation included in cost of sales) |
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Asset impairment |
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Total operating expenses |
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Operating income (loss) |
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Interest expense |
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Other income |
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Income (loss) before income taxes |
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Income tax expense (benefit) |
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Net income (loss) |
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$ |
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$ |
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$ |
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$ |
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Earnings (loss) per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these financial statements.
4
KIRKLAND’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
(in thousands, except share data)
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Common Stock |
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Accumulated |
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Total Shareholders’ |
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Shares |
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Amount |
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Deficit |
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Equity |
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Balance at January 30, 2021 |
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$ |
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$ |
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$ |
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Exercise of stock options |
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— |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of stock options and restricted stock units |
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( |
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— |
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Stock-based compensation expense |
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— |
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— |
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Repurchase and retirement of common stock |
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— |
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( |
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Net income |
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— |
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— |
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Balance at May 1, 2021 |
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( |
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Exercise of stock options |
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— |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of stock options and restricted stock units |
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( |
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( |
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— |
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Stock-based compensation expense |
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— |
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— |
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Repurchase and retirement of common stock |
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( |
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— |
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( |
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Net income |
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— |
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— |
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Balance at July 31, 2021 |
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( |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
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( |
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— |
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Stock-based compensation expense |
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— |
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— |
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Repurchase and retirement of common stock |
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( |
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— |
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Net income |
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— |
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— |
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Balance at October 30, 2021 |
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$ |
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$ |
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$ |
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Common Stock |
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Accumulated |
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Total Shareholders’ |
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Shares |
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Amount |
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Deficit |
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Equity |
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Balance at February 1, 2020 |
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$ |
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$ |
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$ |
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Employee stock purchases |
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— |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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— |
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Stock-based compensation expense |
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— |
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Net loss |
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— |
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— |
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Balance at May 2, 2020 |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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— |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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Balance at August 1, 2020 |
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Exercise of stock options |
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— |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
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( |
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— |
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Stock-based compensation expense |
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— |
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— |
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Net income |
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— |
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— |
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Balance at October 31, 2020 |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
5
KIRKLAND’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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39-Week Period Ended |
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October 30, |
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October 31, |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: |
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Depreciation and amortization of property and equipment |
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Amortization of debt issue costs |
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Asset impairment |
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(Gain) loss on disposal of property and equipment |
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( |
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Stock-based compensation expense |
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Deferred income taxes |
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Changes in assets and liabilities: |
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Inventories, net |
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( |
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Prepaid expenses and other current assets |
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( |
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( |
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Accounts payable |
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( |
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Accrued expenses |
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( |
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( |
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Income taxes receivable |
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( |
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( |
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Operating lease assets and liabilities |
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( |
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( |
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Other assets and liabilities |
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( |
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Net cash (used in) provided by operating activities |
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Cash flows from investing activities: |
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Proceeds from sale of property and equipment |
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Capital expenditures |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Borrowings on revolving line of credit |
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Repayments on revolving line of credit |
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( |
) |
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Refinancing costs |
|
|
|
|
|
|
( |
) |
|
Cash used in net share settlement of stock options and restricted stock units |
|
|
( |
) |
|
|
( |
) |
|
Proceeds received from employee stock option exercises |
|
|
|
|
|
|
|
|
|
Employee stock purchases |
|
|
|
|
|
|
|
|
|
Repurchase and retirement of common stock |
|
|
( |
) |
|
|
|
|
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents: |
|
|
|
|
|
|
|
|
|
Net (decrease) increase |
|
|
( |
) |
|
|
|
|
|
Beginning of the period |
|
|
|
|
|
|
|
|
|
End of the period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental schedule of non-cash activities: |
|
|
|
|
|
|
|
|
|
Non-cash accruals for purchases of property and equipment |
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of these financial statements.
6
KIRKLAND’S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 – Description of Business and Basis of Presentation
Nature of Business — Kirkland’s, Inc. (the “Company”) is a specialty retailer of home décor in the United States operating
Principles of consolidation — The condensed consolidated financial statements of the Company include the accounts of Kirkland’s, Inc. and its wholly-owned subsidiaries, Kirkland’s Stores, Inc., Kirkland’s DC, Inc., and Kirkland’s Texas, LLC. Significant intercompany accounts and transactions have been eliminated.
Basis of presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and pursuant to the reporting and disclosure rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 26, 2021.
Impact of the novel coronavirus (“COVID-19”) pandemic — The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility, which has affected the Company’s business operations in fiscal 2020 and fiscal 2021. The Company continues to closely monitor the impact of the COVID-19 pandemic on all facets of its business, which includes the impact on its employees, customers, suppliers, vendors, business partners and supply chain networks. While the duration and extent of the COVID-19 pandemic and its impact on the global economy remains uncertain, the Company expects that its business operations and results of operations, including its net sales, earnings and cash flows will continue to be materially impacted.
Currently, the COVID-19 pandemic and macroeconomic factors are impacting the Company’s supply chain and staffing strategies. While inventory levels improved through the 39-week period ended October 30, 2021, the Company continues to run under its budgeted inventory levels with shortages in specific inventory categories due to global supply chain constraints and shipping delays. The Company prioritized the shipment of harvest and Christmas merchandise to increase inventory levels in order to meet anticipated customer demand during the fourth quarter of fiscal 2021. As of October 31, 2020, inventory levels were significantly lower than prior years due to the Company cancelling purchase orders in its efforts to manage inventory levels at the outset of the COVID-19 pandemic and having lower inventory receipts due to the temporary store closures in fiscal 2020, while experiencing an increase in demand for home furnishings. The Company has also implemented new incentive programs and recruiting practices to hire and retain qualified workers at its stores and distribution centers for the harvest and Christmas selling seasons during the 13-week period ended October 30, 2021.
Seasonality — The results of the Company’s operations for the 13 and 39-week periods ended October 30, 2021 are not indicative of the results to be expected for any other interim period or for the entire fiscal year due to seasonality factors.
Fiscal year — The Company’s fiscal year ends on the Saturday closest to January 31, resulting in years of either 52 or 53 weeks. Accordingly, fiscal 2021 represents the 52 weeks ending on January 29, 2022 and fiscal 2020 represents the 52 weeks ended on January 30, 2021.
Use of estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from the estimates and assumptions used. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than those at fiscal year-end.
Changes in estimates are recognized in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include, but are not limited to, impairment assessments of long-lived assets, inventory reserves, self-insurance reserves and deferred tax asset valuation allowances.
Note 2 – Revenue Recognition
Net sales — Net sales includes the sale of merchandise, net of returns, shipping revenue, gift card breakage revenue and revenue earned from our private label credit card program and excludes sales taxes.
7
Sales returns reserve — The Company had a liability of approximately $
Deferred e-commerce revenue — Deferred revenue related to e-commerce orders that have been shipped but not estimated to be received by customers included in accrued expenses on the condensed consolidated balance sheets was approximately $
Gift cards — The Company uses the redemption recognition method to account for breakage for unused gift card amounts where breakage is recognized as gift cards are redeemed for the purchase of goods based upon a historical breakage rate. In these circumstances, to the extent the Company determines there is no requirement for remitting card balances to government agencies under unclaimed property laws, such amounts are recognized in the condensed consolidated statements of operations as a component of net sales.
The table below sets forth selected gift card liability information (in thousands) for the periods indicated:
|
|
|
October 30, 2021 |
|
|
January 30, 2021 |
|
|
October 31, 2020 |
|
|||
|
Gift card liability, net of estimated breakage (included in accrued expenses) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The table below sets forth selected gift card breakage and redemption information (in thousands) for the periods indicated:
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Gift card breakage revenue (included in net sales) |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Gift card redemptions recognized in the current period related to amounts included in the gift card contract liability balance as of the prior period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer loyalty program — The Company has a loyalty program called the K-club that was redesigned in fiscal 2020 to allow members to receive points based on qualifying purchases that are converted into certificates that may be redeemed on future purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer under ASC 606 Revenue from Contracts with Customers. The related loyalty program deferred revenue included in accrued expenses on the condensed consolidated balance sheets was approximately $
Note 3 – Income Taxes
For the 13-week periods ended October 30, 2021 and October 31, 2020, the Company recorded an income tax expense of
For the 39-week periods ended October 30, 2021 and October 31, 2020, the Company recorded an income tax expense of
8
The Company recognizes deferred tax assets and liabilities using estimated future tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities, including net operating loss carry forwards. Management assesses the realizability of deferred tax assets and records a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance. Adjustments could be required in the future if the Company estimates that the amount of deferred tax assets to be realized is more than the net amount recorded. Any change in the valuation allowance could have the effect of increasing or decreasing the income tax provision in the statement of operations based on the nature of the deferred tax asset deemed realizable in the period in which such determination is made. As of October 30, 2021, January 30, 2021 and October 31, 2020, the Company recorded a full valuation allowance against deferred tax assets.
Note 4 – Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding during each period presented. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares outstanding plus the dilutive effect of stock equivalents outstanding during the applicable periods using the treasury stock method. Diluted earnings (loss) per share reflects the potential dilution that could occur if options to purchase stock were exercised into common stock and if outstanding grants of restricted stock were vested. Stock options and restricted stock units that were not included in the computation of diluted earnings (loss) per share, because to do so would have been antidilutive, were approximately
Note 5 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. The carrying amounts of cash and cash equivalents, accounts receivable, other current assets and accounts payable approximate fair value because of their short maturities.
The Company measures certain assets at fair value on a non-recurring basis, including the evaluation of long-lived assets for impairment using Company-specific assumptions, including forecasts of projected financial information that would fall within Level 3 of the fair value hierarchy. The Company uses market participant rents (Level 2 input) to calculate the fair value of right-of-use assets and discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant (Level 2 input) to quantify fair value for other long-lived assets. See Note 10 – Impairment for further discussion.
Note 6 – Commitments and Contingencies
The Company was named as a defendant in a putative class action filed in April 2017 in the United States District Court for the Western District of Pennsylvania, Gennock v. Kirkland’s, Inc. The complaint alleged that the Company, in violation of federal law, published more than the last five digits of a credit or debit card number on customers’ receipts and sought statutory and punitive damages and attorneys’ fees and costs. On October 21, 2019, the District Court dismissed the matter and ruled that the Plaintiffs did not have standing based on the Third Circuit’s recent decision in Kamal v. J. Crew Group, Inc., 918 F.3d 102 (3d. Cir. 2019). Following the dismissal in federal court, on October 25, 2019, the Plaintiffs filed a Praecipe to Transfer the case to Pennsylvania state court, and on August 20, 2020, the court ruled that the Plaintiffs have standing. However, the court also certified the standing issue for an interlocutory appeal, and the Company has filed a petition for allowance of appeal with the Pennsylvania Supreme Court. The Company continues to believe that the case is without merit and intends to continue to vigorously defend itself against the allegations. The matter is covered by insurance, and the Company does not believe that the case will have a material adverse effect on its consolidated financial condition, operating results or cash flows.
The Company was named as a defendant in a putative class action filed in May 2018 in the Superior Court of California, Miles v. Kirkland’s Stores, Inc. The case has been removed to United States District Court for the Central District of California. The complaint alleges, on behalf of Miles and all other hourly Kirkland’s employees in California, various wage and hour violations and seeks unpaid wages, statutory and civil penalties, monetary damages and injunctive relief. Kirkland’s denies the material allegations in the complaint and believes that its employment policies are generally compliant with California law. The Court has scheduled a hearing on the class certification motion for January 14, 2022, and has set a case management conference for February 11, 2022, at which time the Court will set trial and related dates. The Company continues to believe the case is without merit and intends to vigorously defend itself against the allegations.
9
The Company is also party to other pending legal proceedings and claims that arise in the normal course of business. Although the outcome of such proceedings and claims cannot be determined with certainty, the Company’s management is of the opinion that it is unlikely that such proceedings and any claims in excess of insurance coverage will have a material effect on its consolidated financial condition, operating results or cash flows.
Note 7 – Stock-Based Compensation
The Company maintains equity incentive plans under which it may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units, or stock appreciation rights to employees, non-employee directors and consultants. Compensation expense is recognized on a straight-line basis over the vesting periods of each grant. There have been no material changes in the assumptions used to compute compensation expense during the current year.
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Stock-based compensation expense (included in compensation and benefits on the condensed consolidated statements of operations) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Restricted stock units granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Performance-based restricted stock units granted(a) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
(a)Assumes
During the 39-week period ended October 30, 2021, the Company granted performance-based restricted stock units (“PSUs”) that are subject to the achievement of specified performance goals. The performance metrics for the PSUs are earnings before interest, taxes, depreciation and amortization (“EBITDA”) compared to budgeted EBITDA and also include a relative shareholder return modifier. The number of PSUs presented in the foregoing table represent the shares that can be achieved at the target-level of achievement of the applicable performance metrics. The actual number of shares that will be issued under the performance awards, which may be higher or lower than target, will be determined by the level of achievement of the performance goals and the total shareholder return modifier. As of October 30, 2021, the Company has recorded compensation expense related to the PSUs between their minimum and target value, as the Company currently estimates that the performance metric based on EBITDA for fiscal 2021 will be achieved, but it will be below its target level. If the performance targets are achieved, the PSUs will be issued based on the achievement level, including the relative shareholder return modifier, and will cliff vest in full on February 3, 2024.
Note 8 – Share Repurchase Plan
On September 24, 2018, the Company announced that its Board of Directors authorized a share repurchase plan providing for the purchase in the aggregate of up to $
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Shares repurchased and retired |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share repurchase cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note 9 – Senior Credit Facility
On December 6, 2019, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A. as administrative agent, collateral agent and lender. The Credit Agreement contains a $
10
of December 2024. Advances under the Credit Agreement bear interest at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from
Borrowings under the Credit Agreement are subject to certain conditions, and the Credit Agreement contains customary events of default, including, without limitation, failure to make payments, a cross-default to certain other debt, breaches of covenants, breaches of representations and warranties, a change in control, certain monetary judgments and bankruptcy and certain events under the Employee Retirement Income Security Act of 1974 (“ERISA”). Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the Credit Agreement may be declared immediately due and payable. The maximum availability under the Credit Agreement is limited by a borrowing base formula, which consists of a percentage of eligible inventory and eligible credit card receivables, less reserves.
The Company is subject to a Second Amended and Restated Security Agreement (the “Security Agreement”) with its lender. Pursuant to the Security Agreement, the Company pledged and granted to the administrative agent, for the benefit of itself and the secured parties specified therein, a lien on and security interest in all of the rights, title and interest in substantially all of the Company’s assets to secure the payment and performance of the obligations under the Credit Agreement.
As of October 30, 2021, the Company was in compliance with the covenants in the Credit Agreement. Under the Credit Agreement, there were
Note 10 – Impairment
The Company evaluates the recoverability of the carrying amounts of long-lived assets when events or changes in circumstances dictate that their carrying values may not be recoverable. This review includes the evaluation of individual under-performing retail stores and the assessment of the recoverability of the carrying value of the assets related to the stores. Future cash flows are projected for the remaining lease life. If the estimated future cash flows are less than the carrying value of the assets, the Company records an impairment charge equal to the difference between the assets’ fair value and carrying value. The fair value is estimated using a discounted cash flow approach, considering such factors as future sales levels, gross margins, changes in rent and other expenses as well as the overall operating environment specific to that store. The amount of the impairment charge is allocated proportionately to all assets in the asset group with no asset written down below its individual fair value.
The table below sets forth impairment information (in thousands, except store counts) for the periods indicated:
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Impairment of leasehold improvements, fixtures and equipment at stores |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Impairment of right-of-use-assets |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
Total impairment |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impairment, net of tax |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Number of stores with leasehold improvements, fixtures and equipment impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of stores with right-of-use-asset impairment |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
11
Note 11 – New Accounting Pronouncements
New Accounting Pronouncements Not Yet Adopted
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses. The new guidance applies to financial assets measured at amortized cost basis, including receivables that result from revenue transactions and held-to-maturity debt securities. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 for non-accelerated filers, and early adoption is permitted for fiscal years beginning after December 15, 2018. The Company anticipates adopting this guidance in the fourth quarter of fiscal 2021 and does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (“IBORs”), and, particularly, the risk of cessation of the LIBOR related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements and related disclosures.
12
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide an understanding of our financial condition, change in financial condition, cash flow, liquidity and results of operations. The following MD&A discussion should be read in conjunction with the condensed consolidated financial statements and notes to those statements that appear elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed with the SEC on March 26, 2021 (the “Annual Report”). The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed or referred to in the forward-looking statements. Factors that could cause or contribute to any differences include, but are not limited to, those discussed under the caption “Cautionary Statement for Purposes of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995” and under Part II, Item 1A - “Risk Factors.”
Introduction
We are a specialty retailer of home décor in the United States, operating 369 stores in 35 states as of October 30, 2021, as well as an e-commerce website, www.kirklands.com. Our stores present a curated selection of distinctive merchandise, including holiday décor, furniture, textiles, wall décor, decorative accessories, art, mirrors, fragrances and other home decorating items. Our stores offer an extensive assortment of holiday merchandise during seasonal periods. We provide our customers an engaging shopping experience characterized by affordable home décor and inspirational design ideas. We believe that this combination of quality and stylish merchandise, value pricing and a stimulating online and store experience allows our customers to furnish their home on a budget.
Impact of the COVID-19 Pandemic on Our Business
The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty and volatility, which has affected our business operations in fiscal 2020 and fiscal 2021. We continue to closely monitor the impact of the COVID-19 pandemic on all facets of our business, which includes the impact on our employees, customers, suppliers, vendors, business partners and supply chain networks. All of our stores and distribution centers are currently open with enhanced safety measures. The health and safety of our employees and customers are the primary concerns of our management team. We have taken numerous actions to promote health and safety, including providing personal protective equipment to our employees, establishing mask protocols in our facilities, rolling out additional functionality to support contactless shopping experiences, implementing additional cleaning and sanitation procedures and promoting social distancing. While the duration and extent of the COVID-19 pandemic and its impact on the global economy remains uncertain, we expect that our business operations and results of operations, including our net sales, earnings and cash flows will continue to be materially impacted.
Currently, the COVID-19 pandemic and macroeconomic factors are impacting our supply chain and staffing strategies. While inventory levels improved through the 39-week period ended October 30, 2021, we continue to run under our budgeted inventory levels with shortages in specific inventory categories due to global supply chain constraints and shipping delays. We prioritized the shipment of harvest and Christmas merchandise to increase inventory levels in order to meet anticipated customer demand during the fourth quarter of fiscal 2021. As of October 31, 2020, inventory levels were significantly lower than prior years due to our cancelling of purchase orders in our efforts to manage inventory levels at the outset of the COVID-19 pandemic and having lower inventory receipts due to the temporary store closures in fiscal 2020, while experiencing an increase in demand for home furnishings. We have also implemented new incentive programs and recruiting practices to hire and retain qualified workers at our stores and distribution centers for the harvest and Christmas selling seasons during the 13-week period ended October 30, 2021.
OVERVIEW OF KEY FINANCIAL MEASURES
Net sales and gross profit are the most significant drivers of our operating performance. Net sales consists of all merchandise sales to customers, net of returns, shipping revenue associated with e-commerce sales, and gift card breakage revenue and excludes sales taxes. We use comparable sales to measure sales increases or decreases from stores that have been open for at least 13 full fiscal months including our e-commerce sales. Closed stores are removed from the calculation the day after the store closes. Relocated stores remain in our comparable sales calculation. E-commerce store sales, including shipping revenue, are included in comparable sales. Increases in comparable sales are an important factor in maintaining or increasing our profitability.
Gross profit is the difference between net sales and cost of sales. Cost of sales has various distinct components including: landed product costs (including inbound freight), inventory damages, inventory shrinkage, store occupancy costs (including rent and depreciation of leasehold improvements and other property and equipment), outbound freight costs to stores, e-commerce shipping expenses and central distribution costs (including operational costs and depreciation of leasehold improvements and other property and equipment). Product and outbound freight costs are variable, while occupancy and central distribution costs are largely fixed.
13
Accordingly, gross profit expressed as a percentage of net sales can be influenced by many factors, including overall sales performance.
Store Optimization
As part of our store optimization strategy, which includes exiting unprofitable stores and continuing to reduce the store base over the next several years, we permanently closed six store locations and opened two new store locations during the 39-week period ended October 30, 2021. We are prioritizing sustained improvement in overall profitability and developing a future state plan for infrastructure that complements our omni-channel concept and improves the customer experience. We anticipate additional store closures and limited store openings as we continue to execute our store optimization strategy. We believe our ideal store count should be approximately 350 stores with additional opportunities for more favorable rent terms during ongoing lease renewals.
The following table summarizes our store openings and closings during the periods indicated:
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
New store openings |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
Permanent store closures |
|
|
— |
|
|
|
6 |
|
|
|
6 |
|
|
|
51 |
|
|
Store relocations |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
Decrease in store units |
|
0.0% |
|
|
|
(1.6 |
)% |
|
|
(1.1 |
)% |
|
|
(11.8 |
)% |
|
The following table summarizes our open stores and square footage under lease as of the dates indicated:
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||
|
Number of stores |
|
|
369 |
|
|
|
381 |
|
|
Square footage |
|
|
2,956,731 |
|
|
|
3,039,097 |
|
|
Average square footage per store |
|
|
8,013 |
|
|
|
7,977 |
|
13-Week Period Ended October 30, 2021 Compared to the 13-Week Period Ended October 31, 2020
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
|
|
|
13-Week Period Ended |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
Change |
|
|||||||||||||||
|
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
Net sales |
|
$ |
143,630 |
|
|
|
100.0 |
% |
|
$ |
146,609 |
|
|
|
100.0 |
% |
|
$ |
(2,979 |
) |
|
|
(2.0 |
)% |
|
Cost of sales |
|
|
93,817 |
|
|
|
65.3 |
|
|
|
93,738 |
|
|
|
63.9 |
|
|
|
79 |
|
|
|
0.1 |
|
|
Gross profit |
|
|
49,813 |
|
|
|
34.7 |
|
|
|
52,871 |
|
|
|
36.1 |
|
|
|
(3,058 |
) |
|
|
(5.8 |
) |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
19,549 |
|
|
|
13.6 |
|
|
|
21,343 |
|
|
|
14.6 |
|
|
|
(1,794 |
) |
|
|
(8.4 |
) |
|
Other operating expenses |
|
|
19,145 |
|
|
|
13.3 |
|
|
|
16,682 |
|
|
|
11.4 |
|
|
|
2,463 |
|
|
|
14.8 |
|
|
Depreciation (exclusive of depreciation included in cost of sales) |
|
|
1,655 |
|
|
|
1.2 |
|
|
|
1,613 |
|
|
|
1.1 |
|
|
|
42 |
|
|
|
2.6 |
|
|
Asset impairment |
|
|
444 |
|
|
|
0.3 |
|
|
|
177 |
|
|
|
0.1 |
|
|
|
267 |
|
|
|
150.8 |
|
|
Total operating expenses |
|
|
40,793 |
|
|
|
28.4 |
|
|
|
39,815 |
|
|
|
27.2 |
|
|
|
978 |
|
|
|
2.5 |
|
|
Operating income |
|
|
9,020 |
|
|
|
6.3 |
|
|
|
13,056 |
|
|
|
8.9 |
|
|
|
(4,036 |
) |
|
|
(30.9 |
) |
|
Interest expense |
|
|
79 |
|
|
|
0.1 |
|
|
|
95 |
|
|
|
0.1 |
|
|
|
(16 |
) |
|
|
(16.8 |
) |
|
Other income |
|
|
(88 |
) |
|
|
(0.1 |
) |
|
|
(86 |
) |
|
|
(0.1 |
) |
|
|
(2 |
) |
|
|
2.3 |
|
|
Income before income taxes |
|
|
9,029 |
|
|
|
6.3 |
|
|
|
13,047 |
|
|
|
8.9 |
|
|
|
(4,018 |
) |
|
|
(30.8 |
) |
|
Income tax expense |
|
|
1,800 |
|
|
|
1.3 |
|
|
|
691 |
|
|
|
0.5 |
|
|
|
1,109 |
|
|
|
160.5 |
|
|
Net income |
|
$ |
7,229 |
|
|
|
5.0 |
% |
|
$ |
12,356 |
|
|
|
8.4 |
% |
|
$ |
(5,127 |
) |
|
|
(41.5 |
)% |
Net sales. Net sales decreased 2.0% to $143.6 million for the third 13 weeks of fiscal 2021 compared to $146.6 million for the prior year period driven by 3% fewer stores and a decline in in-store traffic, partially offset by an increase in order value due to increased sales of larger ticket items, including furniture. Comparable sales, including e-commerce sales, decreased 0.7%, or $945,000 for the third 13 weeks of fiscal 2021 compared to the prior year period. Comparable sales, including e-commerce sales, increased
14
8.9% in the prior year period. For the third 13 weeks of fiscal 2021, e-commerce comparable sales increased 7.3% compared to the prior year period because of an increase in average ticket and higher conversion.
Gross profit. Gross profit as a percentage of net sales decreased 140 basis points from 36.1% in the third 13 weeks of fiscal 2020 to 34.7% in the third 13 weeks of fiscal 2021. The overall decrease in gross profit margin was due to unfavorable landed product margin, e-commerce shipping expenses and inventory damages, partially offset by favorable inventory shrink, distribution center costs, store occupancy costs, store outbound freight costs and other costs. Landed product margin decreased approximately 300 basis points from 61.1% in the third 13 weeks of fiscal 2020 to 58.1% in the third 13 weeks of fiscal 2021 mainly due to an increase in discounts and inbound freight costs due to supply chain cost increases, partially offset by direct import savings. E-commerce shipping costs increased approximately 80 basis points as a percentage of net sales due to a lower percentage of e-commerce orders being fulfilled in store compared to the prior year period and shipping rate increases. Inventory damages increased approximately 60 basis points as a percentage of net sales due to increased inventory levels. Inventory shrinkage decreased 110 basis points as a percentage of net sales due to unfavorable annual physical inventory results in the prior year period. Distribution center costs decreased approximately 90 basis points as a percentage of net sales due to a favorable warehouse expense capitalization adjustment because of the increase in inventory. Store occupancy and depreciation costs decreased approximately 60 basis points as a percentage of net sales due to store closures and negotiated rent reductions along with lower depreciation expense. Outbound freight costs decreased approximately 20 basis points as a percentage of net sales due to reduced routes from the distribution centers to the stores. Other costs were favorable by 20 basis points as a percentage of net sales due to minor deferred revenue adjustments.
Compensation and benefits. Compensation and benefits as a percentage of net sales decreased approximately 100 basis points from 14.6% in the third 13 weeks of fiscal 2020 to 13.6% in the third 13 weeks of fiscal 2021 primarily due to a decrease in corporate bonus expense.
Other operating expenses. Other operating expenses as a percentage of net sales increased approximately 190 basis points from 11.4% in the third 13 weeks of fiscal 2020 to 13.3% in the third 13 weeks of fiscal 2021. The increase as a percentage of net sales was primarily related to an increase in advertising expenses due to intentional funding of incremental advertising related to customer acquisition in the current year period compared to a reduction in advertising expenses in the prior year period when natural demand was higher, which was partially offset by favorable insurance claims adjustments.
Asset impairment. During the third 13 weeks of fiscal 2021, we recorded an impairment charge of approximately $444,000 compared to an impairment charge of approximately $177,000 in the prior year period. See Note 10 – Impairment in the condensed consolidated financial statements for discussion of impairment.
Income tax expense. We recorded an income tax expense of approximately $1.8 million, or 19.9% of income before income taxes, during the third 13 weeks of fiscal 2021 compared to an income tax expense of approximately $691,000 or 5.3% of the income before income taxes, during the prior year period. The change in income taxes for the 13-week period ended October 30, 2021, compared to the prior year period, was primarily due to calculating the tax provision under the discrete method instead of the annual effective tax rate method in the prior year period.
Net income and earnings per share. We reported net income of $7.2 million, or $0.51 per diluted share, for the third 13 weeks of fiscal 2021 as compared to net income of $12.4 million, or $0.82 per diluted share, for the third 13 weeks of fiscal 2020.
15
39-Week Period Ended October 30, 2021 Compared to the 39-Week Period Ended October 31, 2020
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
|
|
|
39-Week Period Ended |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
Change |
|
|||||||||||||||
|
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
Net sales |
|
$ |
381,989 |
|
|
|
100.0 |
% |
|
$ |
348,578 |
|
|
|
100.0 |
% |
|
$ |
33,411 |
|
|
|
9.6 |
% |
|
Cost of sales |
|
|
252,223 |
|
|
|
66.0 |
|
|
|
249,751 |
|
|
|
71.6 |
|
|
|
2,472 |
|
|
|
1.0 |
|
|
Gross profit |
|
|
129,766 |
|
|
|
34.0 |
|
|
|
98,827 |
|
|
|
28.4 |
|
|
|
30,939 |
|
|
|
31.3 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
60,326 |
|
|
|
15.8 |
|
|
|
60,157 |
|
|
|
17.3 |
|
|
|
169 |
|
|
|
0.3 |
|
|
Other operating expenses |
|
|
52,491 |
|
|
|
13.7 |
|
|
|
44,843 |
|
|
|
12.9 |
|
|
|
7,648 |
|
|
|
17.1 |
|
|
Depreciation (exclusive of depreciation included in cost of sales) |
|
|
4,898 |
|
|
|
1.3 |
|
|
|
4,683 |
|
|
|
1.3 |
|
|
|
215 |
|
|
|
4.6 |
|
|
Asset impairment |
|
|
754 |
|
|
|
0.2 |
|
|
|
9,027 |
|
|
|
2.6 |
|
|
|
(8,273 |
) |
|
|
(91.6 |
) |
|
Total operating expenses |
|
|
118,469 |
|
|
|
31.0 |
|
|
|
118,710 |
|
|
|
34.1 |
|
|
|
(241 |
) |
|
|
(0.2 |
) |
|
Operating income (loss) |
|
|
11,297 |
|
|
|
3.0 |
|
|
|
(19,883 |
) |
|
|
(5.7 |
) |
|
|
31,180 |
|
|
|
(156.8 |
) |
|
Interest expense |
|
|
240 |
|
|
|
0.1 |
|
|
|
484 |
|
|
|
0.1 |
|
|
|
(244 |
) |
|
|
(50.4 |
) |
|
Other income |
|
|
(243 |
) |
|
|
(0.1 |
) |
|
|
(272 |
) |
|
|
— |
|
|
|
29 |
|
|
|
(10.7 |
) |
|
Income (loss) before income taxes |
|
|
11,300 |
|
|
|
3.0 |
|
|
|
(20,095 |
) |
|
|
(5.8 |
) |
|
|
31,395 |
|
|
|
(156.2 |
) |
|
Income tax expense (benefit) |
|
|
1,726 |
|
|
|
0.5 |
|
|
|
(15,650 |
) |
|
|
(4.5 |
) |
|
|
17,376 |
|
|
|
(111.0 |
) |
|
Net income (loss) |
|
$ |
9,574 |
|
|
|
2.5 |
% |
|
$ |
(4,445 |
) |
|
|
(1.3 |
)% |
|
$ |
14,019 |
|
|
|
(315.4 |
)% |
Net sales. Net sales increased 9.6% to $382.0 million for the first 39 weeks of fiscal 2021 compared to $348.6 million for the prior year period. Comparable sales, including e-commerce sales, increased 13.7%, or $45.6 million for the first 39 weeks of fiscal 2021 compared to the prior year period, which was partly offset by a $12.2 million decrease in sales due to permanently closed stores. Comparable sales, including e-commerce sales, decreased 6.7% in the prior year period. For the first 39 weeks of fiscal 2021, e-commerce comparable sales increased 9.2% compared to the prior year period mainly due to an increase in average ticket. For stores, the comparable sales mainly improved due to significant temporary store closures due to the COVID-19 pandemic in the prior year period.
Gross profit. Gross profit as a percentage of net sales increased 560 basis points from 28.4% in the first 39 weeks of fiscal 2020 to 34.0% in the first 39 weeks of fiscal 2021. The overall increase in gross profit margin was due to favorable store occupancy costs, landed product margin, distribution center costs, inventory shrinkage and store outbound freight costs, partially offset by unfavorable e-commerce shipping expenses, inventory damages and other costs. Store occupancy and depreciation costs decreased approximately 330 basis points as a percentage of net sales due to the leverage of increased sales, store closures and negotiated rent reductions and lower depreciation expense. Landed product margin increased approximately 110 basis points from 57.3% in the first 39 weeks of fiscal 2020 to 58.4% in the first 39 weeks of fiscal 2021 mainly due to the continued benefit from direct sourcing, partially offset by higher inbound freight costs. Distribution center costs decreased approximately 90 basis points in the first 39 weeks of fiscal 2021 due to sales leverage and a favorable warehouse expense capitalization adjustment driven by higher inventory levels compared to the prior year period. Inventory shrinkage decreased approximately 80 basis points as a percentage of net sales due to favorable annual physical inventory results. Outbound freight costs decreased approximately 30 basis points as a percentage of net sales in the first 39 weeks of fiscal 2021 due to sales leverage. E-commerce shipping costs increased approximately 40 basis points as a percentage of net sales due to a lower percentage of e-commerce orders being fulfilled in store compared to the prior year period. Inventory damages increased approximately 20 basis points as a percentage of net sales. Other costs were unfavorable 20 basis points as a percentage of net sales due to minor deferred revenue adjustments.
Compensation and benefits. Compensation and benefits as a percentage of net sales decreased approximately 150 basis points from 17.3% in the first 39 weeks of fiscal 2020 to 15.8% in the first 39 weeks of fiscal 2021, primarily due to sales leverage of both store and corporate payroll expenses because of the temporary COVID-19 store closures, which reduced sales in the prior year period.
Other operating expenses. Other operating expenses as a percentage of net sales increased approximately 80 basis points from 12.9% in the first 39 weeks of fiscal 2020 to 13.7% in the first 39 weeks of fiscal 2021. The increase as a percentage of net sales was primarily related to an increase in advertising expenses due to intentional funding of incremental advertising in the current year period compared to a reduction in advertising expenses in the prior year period when natural demand was higher, which was partially offset by favorable insurance claims adjustments.
16
Asset impairment. During the first 39 weeks of fiscal 2021, we recorded an impairment charge of approximately $754,000 compared to an impairment charge of approximately $9.0 million in the prior year period. See Note 10 – Impairment in the condensed consolidated financial statements for discussion of impairment.
Income tax expense (benefit). We recorded an income tax expense of approximately $1.7 million, or 15.3% of income before income taxes, during the first 39 weeks of fiscal 2021 compared to an income tax benefit of $15.7 million, or 77.9% of the loss before income taxes, during the prior year period. The change in income taxes for the 39-week period ended October 30, 2021, compared to the prior year period, was primarily due to recording a $12.3 million income tax benefit during the prior year period related to the carryback of the 2019 federal net operating loss to prior periods pursuant to the CARES Act and recording an additional income tax benefit of $2.0 million related to the carry back of the projected fiscal 2020 loss to years with a 35% statutory tax rate.
Net income (loss) and earnings (loss) per share. We reported net income of $9.6 million, or $0.64 per diluted share, for the first 39 weeks of fiscal 2021 as compared to a net loss of $4.4 million, or $0.31 per diluted share, for the first 39 weeks of fiscal 2020.
Non-GAAP Financial Measures
To supplement our unaudited consolidated condensed financial statements presented in accordance with GAAP, we provide certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted operating income (loss), adjusted net income (loss) and adjusted diluted earnings (loss) per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP financial measures. We use these non-GAAP financial measures internally in analyzing our financial results and believe that they provide useful information to analysts and investors, as a supplement to GAAP financial measures, in evaluating our operational performance.
We define 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. We define adjusted net income (loss) and adjusted diluted earnings (loss) per share by adjusting the applicable GAAP financial measures for non-GAAP adjustments.
Non-GAAP financial 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 financial measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP.
17
The following table shows a reconciliation of operating income (loss) to EBITDA, adjusted EBITDA and adjusted operating income (loss) for the 13-week and 39-week periods ended October 30, 2021 and October 31, 2020 and a reconciliation of net income (loss) and diluted earnings (loss) per share to adjusted net income (loss) and adjusted diluted earnings (loss) per share for the 13-week and 39-week periods ended October 30, 2021 and October 31, 2020:
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Operating income (loss) |
|
$ |
9,020 |
|
|
$ |
13,056 |
|
|
$ |
11,297 |
|
|
$ |
(19,883 |
) |
|
Depreciation and amortization |
|
|
5,049 |
|
|
|
5,824 |
|
|
|
15,535 |
|
|
|
17,810 |
|
|
EBITDA |
|
|
14,069 |
|
|
|
18,880 |
|
|
|
26,832 |
|
|
|
(2,073 |
) |
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed store and lease termination costs in cost of sales(1) |
|
|
(126 |
) |
|
|
(752 |
) |
|
|
(1,632 |
) |
|
|
(695 |
) |
|
Asset impairment(2) |
|
|
444 |
|
|
|
177 |
|
|
|
754 |
|
|
|
9,027 |
|
|
Stock-based compensation expense(3) |
|
|
438 |
|
|
|
276 |
|
|
|
1,321 |
|
|
|
912 |
|
|
Severance charges(4) |
|
|
2 |
|
|
|
10 |
|
|
|
293 |
|
|
|
890 |
|
|
Other costs included in operating expenses(5) |
|
|
— |
|
|
|
70 |
|
|
|
— |
|
|
|
204 |
|
|
Total adjustments in operating expenses |
|
|
884 |
|
|
|
533 |
|
|
|
2,368 |
|
|
|
11,033 |
|
|
Total non-GAAP adjustments |
|
|
758 |
|
|
|
(219 |
) |
|
|
736 |
|
|
|
10,338 |
|
|
Adjusted EBITDA |
|
|
14,827 |
|
|
|
18,661 |
|
|
|
27,568 |
|
|
|
8,265 |
|
|
Depreciation and amortization |
|
|
5,049 |
|
|
|
5,824 |
|
|
|
15,535 |
|
|
|
17,810 |
|
|
Adjusted operating income (loss) |
|
$ |
9,778 |
|
|
$ |
12,837 |
|
|
$ |
12,033 |
|
|
$ |
(9,545 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
7,229 |
|
|
$ |
12,356 |
|
|
$ |
9,574 |
|
|
$ |
(4,445 |
) |
|
Non-GAAP adjustments, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed store and lease termination costs in cost of sales(1) |
|
|
(90 |
) |
|
|
(577 |
) |
|
|
(1,229 |
) |
|
|
(533 |
) |
|
Asset impairment(2) |
|
|
334 |
|
|
|
121 |
|
|
|
568 |
|
|
|
6,927 |
|
|
Stock-based compensation expense, including tax impact(3) |
|
|
277 |
|
|
|
196 |
|
|
|
427 |
|
|
|
1,082 |
|
|
Severance charges(4) |
|
|
— |
|
|
|
6 |
|
|
|
220 |
|
|
|
683 |
|
|
Other costs included in operating expenses(5) |
|
|
— |
|
|
|
54 |
|
|
|
— |
|
|
|
155 |
|
|
Total adjustments in operating expenses |
|
|
611 |
|
|
|
377 |
|
|
|
1,215 |
|
|
|
8,847 |
|
|
Tax valuation allowance(6) |
|
|
(409 |
) |
|
|
(2,431 |
) |
|
|
(519 |
) |
|
|
3,040 |
|
|
CARES Act - net operating loss carry back(7) |
|
|
— |
|
|
|
268 |
|
|
|
— |
|
|
|
(14,328 |
) |
|
Total non-GAAP adjustments, net of tax |
|
|
112 |
|
|
|
(2,363 |
) |
|
|
(533 |
) |
|
|
(2,974 |
) |
|
Adjusted net income (loss) |
|
$ |
7,341 |
|
|
$ |
9,993 |
|
|
$ |
9,041 |
|
|
$ |
(7,419 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
|
$ |
0.51 |
|
|
$ |
0.82 |
|
|
$ |
0.64 |
|
|
$ |
(0.31 |
) |
|
Adjusted diluted earnings (loss) per share |
|
$ |
0.51 |
|
|
$ |
0.66 |
|
|
$ |
0.60 |
|
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares outstanding |
|
|
14,268 |
|
|
|
15,075 |
|
|
|
14,953 |
|
|
|
14,121 |
|
|
(1) |
Costs associated with closed stores and lease termination costs, including gains on lease terminations, amounts paid to third parties for rent reduction negotiations and lease termination fees paid to landlords for store closings. |
|
(2) |
Impairment charges include both right-of-use asset and property and equipment impairment charges. |
|
(3) |
Stock-based compensation expense includes amounts expensed related to equity incentive plans. |
|
(4) |
Severance charges include expenses related to severance agreements. This also includes permanent store closure compensation costs. |
|
(5) |
Other costs include lease negotiation fees associated with corporate rent reduction. |
|
(6) |
To remove the change in our valuation allowance against deferred tax assets. |
|
(7) |
To remove the impact of the income tax benefit recorded in fiscal 2020 related to the carry back of fiscal 2019 and estimated fiscal 2020 federal net operating losses to prior periods as permitted under the CARES Act. |
Liquidity and Capital Resources
Our principal capital requirements are for working capital and capital expenditures. Working capital consists mainly of merchandise inventories offset by accounts payable, which typically reach their peak by the early portion of the fourth quarter of each fiscal year. Capital expenditures primarily relate to technology and omni-channel projects, distribution center and supply chain
18
enhancements, new stores and existing store remodels. Historically, we have funded our working capital and capital expenditure requirements with internally-generated cash and borrowings under our revolving credit facility.
Cash flows from operating activities. Net cash used in operating activities was approximately $38.7 million during the first 39 weeks of fiscal 2021 compared to net cash provided by operating activities of approximately $14.5 million for the first 39 weeks of fiscal 2020. Cash flows from operating activities depend heavily on operating performance, changes in working capital and the timing and amount of payments for income taxes. The increase in the amount of cash used in operations as compared to the prior year period was mainly due to an unfavorable change in working capital as we increased inventory purchases in order to rebuild our inventory levels from our decreased inventory levels in fiscal 2020 as a result of action taken in connection with the COVID-19 pandemic, which was partially offset by increased accounts payable.
Cash flows from investing activities. Net cash used in investing activities for the first 39 weeks of fiscal 2021 consisted mainly of $5.2 million in capital expenditures as compared to $7.6 million in capital expenditures for the prior year period. The table below sets forth capital expenditures by category (in thousands) for the periods indicated:
|
|
|
39-Week Period Ended |
|
|||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||
|
Technology and omni-channel projects |
|
$ |
2,328 |
|
|
$ |
1,974 |
|
|
Distribution center and supply chain enhancements |
|
|
1,124 |
|
|
|
4,496 |
|
|
New and relocated stores |
|
|
772 |
|
|
|
— |
|
|
Existing stores |
|
|
635 |
|
|
|
758 |
|
|
Corporate |
|
|
303 |
|
|
|
352 |
|
|
Total capital expenditures |
|
$ |
5,162 |
|
|
$ |
7,580 |
|
The capital expenditures in the current year period related primarily to technology and omni-channel projects, distribution center and supply chain enhancements and the opening of two new stores and two store relocations during the period. Capital expenditures in the prior year period related primarily to distribution center and supply chain enhancements including consolidating the e-commerce distribution center into the store distribution center in Jackson, Tennessee, standing up new e-commerce hubs and upgrading the warehouse management system.
Cash flows from financing activities. During the first 39 weeks of fiscal 2021, net cash used in financing activities of $30.1 million was primarily related to the repurchase and retirement of common stock pursuant to our share repurchase plan of $29.8 million. During the first 39 weeks of fiscal 2020, net cash used in financing activities was approximately $20,000, as we borrowed and made repayments of $40.0 million under our revolving credit facility.
Senior credit facility. On December 6, 2019, we entered into the Credit Agreement with Bank of America, N.A. as administrative agent, collateral agent and lender. The Credit Agreement contains a $75 million senior secured revolving credit facility, a swingline availability of $10 million, a $25 million incremental accordion feature and a maturity date of December 2024. Advances under the Credit Agreement bear interest at an annual rate equal to LIBOR plus a margin ranging from 125 to 175 basis points with no LIBOR floor, and the fee paid to the lender on the unused portion of the credit facility is 25 basis points per annum.
Borrowings under the Credit Agreement are subject to certain conditions, and the Credit Agreement contains customary events of default, including, without limitation, failure to make payments, a cross-default to certain other debt, breaches of covenants, breaches of representations and warranties, a change in control, certain monetary judgments and bankruptcy and certain events under ERISA. Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the Credit Agreement may be declared immediately due and payable. The maximum availability under the Credit Agreement is limited by a borrowing base formula, which consists of a percentage of eligible inventory and eligible credit card receivables, less reserves.
We are subject to a Security Agreement with our lender. Pursuant to the Security Agreement, we pledged and granted to the administrative agent, for the benefit of itself and the secured parties specified therein, a lien on and security interest in all of the rights, title and interest in substantially all of our assets to secure the payment and performance of the obligations under the Credit Agreement.
As of October 30, 2021, we were in compliance with the covenants in the Credit Agreement. Under the Credit Agreement, there were no outstanding borrowings and a $600,000 letter of credit outstanding with approximately $74.4 million available for borrowing as of October 30, 2021.
As of October 30, 2021, our balance of cash and cash equivalents was approximately $26.5 million. We believe that the combination of our cash balances, cash flow from operations and availability under our Credit Agreement will be sufficient to fund our planned capital expenditures and working capital requirements for at least the next twelve months.
19
Share repurchase plan. On September 24, 2018, we announced that our Board of Directors authorized a share repurchase plan providing for the purchase in the aggregate of up to $10 million of our outstanding common stock. This share repurchase plan was completed during the fourth quarter of fiscal 2020. On December 3, 2020, we announced that our Board of Directors authorized a new share repurchase plan providing for the purchase in the aggregate of $20 million of the Company’s outstanding common stock. This share repurchase plan was completed during the 13-week period ended October 30, 2021. On September 2, 2021, the Company announced that its Board of Directors authorized a new share repurchase plan providing for the purchase in the aggregate of $20 million of the Company’s outstanding common stock. As of October 30, 2021, we had approximately $10.0 million remaining under the current share repurchase plan. The table below sets forth selected share repurchase plan information (in thousands, except share amounts) for the periods indicated:
|
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
|
October 30, 2021 |
|
|
October 31, 2020 |
|
||||
|
Shares repurchased and retired |
|
|
805,744 |
|
|
|
— |
|
|
|
1,414,642 |
|
|
|
— |
|
|
Share repurchase cost |
|
$ |
16,457 |
|
|
$ |
— |
|
|
$ |
29,821 |
|
|
$ |
— |
|
Repurchases of shares under all Company repurchase plans 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 us to repurchase any specific number of shares, and we may terminate the repurchase plan at any time.
Contractual Obligations
Not applicable to smaller reporting companies.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies during the first 39 weeks of fiscal 2021. Refer to our Annual Report for a summary of our critical accounting policies.
New Accounting Pronouncements
See Note 11 – New Accounting Pronouncements in the condensed consolidated financial statements for accounting pronouncements not yet adopted.
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995
The following information is provided pursuant to the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Certain statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q are “forward-looking statements” made pursuant to these provisions. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Words such as “should,” “likely to,” “forecasts,” “strategy,” “goal,” “anticipates,” “believes,” “expects,” “estimates,” “intends,” “plans,” “projects” and similar expressions may identify such forward-looking statements. Such statements are subject to certain risks and uncertainties, including, without limitation, the impact of public health issues, such as the current global pandemic of COVID-19, which could cause actual results to differ materially from the results projected in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.
20
The risk factors listed below and in the other sections of this Form 10-Q provide examples of risks, uncertainties and events that could cause our actual results to differ materially from the expectations expressed in our forward-looking statements. These forward-looking statements speak only as of the date of this report, and, except as required by law, we undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report.
We caution readers that the following important risk factors, among others, have in the past, in some cases, affected and could in the future affect our actual results of operations and cause our actual results to differ materially from the results expressed in any forward-looking statements made by us or on our behalf.
|
|
• |
If we fail to identify, develop and successfully implement immediate action plans and longer-term strategic initiatives, our financial performance could be negatively impacted. |
|
|
• |
If we are unable to successfully maintain, improve and grow a best-in-class omni-channel experience for our customers, it could adversely affect our sales, results of operations and reputation. |
|
|
• |
If we are unable to profitably operate our existing stores, grow e-commerce sales and effectively execute our store closing strategy, we may not be able to execute our business strategy, resulting in a decrease in net sales and profitability. |
|
|
• |
We may not be able to successfully anticipate consumer trends, and our failure to do so may lead to loss of consumer acceptance of our products, resulting in reduced net sales. |
|
|
• |
Our success depends upon our marketing, advertising and promotional efforts, and loyalty programs. If we are unable to implement them successfully, or if our competitors market, advertise or promote more effectively than we do, our revenue may be adversely affected. |
|
|
• |
We may not be able to successfully respond to technological change, our website could become obsolete and our financial results and conditions could be adversely affected. |
|
|
• |
If we fail to maintain a positive social media brand perception, it could have a negative impact on our operations, financial results and reputation. |
|
|
• |
If we do not generate sufficient cash flow from operations, we may not be able to implement our business strategies and fund our obligations. |
|
|
• |
Insufficient cash flows from operations could result in the substantial utilization of our secured revolving credit facility or similar financing, which may limit our ability to conduct certain activities. |
|
|
• |
We face an extremely competitive specialty retail business market, and such competition could result in a reduction of our prices and a loss of our market share. |
|
|
• |
Our results could be negatively impacted if our merchandise offering suffers a substantial impediment to its reputation due to real or perceived quality issues. |
|
|
• |
Our business depends upon hiring, training and retaining qualified employees. |
|
|
• |
Weather conditions could adversely affect our sales and/or profitability by affecting consumer shopping patterns. |
|
|
• |
We are exposed to the risk of natural disasters, pandemic outbreaks, global political events, war and terrorism that could disrupt our business and result in lower sales, increased operating costs and capital expenditures. |
|
|
• |
The COVID-19 global pandemic has had and is expected to continue to have a material impact on our business and results of operations. |
|
|
• |
Our performance may be affected by general economic conditions. |
|
|
• |
Our profitability is vulnerable to inflation and cost increases. |
|
|
• |
Our business is highly seasonal and our fourth quarter contributes to a disproportionate amount of our net sales, net income and cash flow, and any factors negatively impacting us during our fourth quarter could reduce our net sales, net income and cash flow, leaving us with excess inventory and making it more difficult for us to finance our capital requirements. |
|
|
• |
Inventory loss and theft and the inability to anticipate inventory needs may result in reduced net sales. |
|
|
• |
Failure to control merchandise returns could negatively impact the business. |
|
|
• |
We may experience significant variations in our quarterly results. |
|
|
• |
Our comparable store net sales fluctuate due to a variety of factors. |
21
|
|
• |
Our freight costs and thus our cost of goods sold are impacted by changes in fuel prices. |
|
|
• |
New legal requirements could adversely affect our operating results. |
|
|
• |
Our business could be negatively impacted by corporate citizenship and sustainability matters. |
|
|
• |
Product liability claims could adversely affect our reputation. |
|
|
• |
If we fail to protect our brand name, competitors may adopt trade names that dilute the value of our brand name. |
|
|
• |
We are dependent on foreign imports for a significant portion of our merchandise, and any changes in the trading relations and conditions between the United States and the relevant foreign countries may lead to a decline in inventory resulting in a decline in net sales, or an increase in the cost of sales resulting in reduced gross profit. |
|
|
• |
We depend on a number of vendors to supply our merchandise, and any delay in merchandise deliveries from certain vendors may lead to a decline in inventory, which could result in a loss of net sales. |
|
|
• |
Our success is highly dependent on our planning and control processes and our supply chain, and any disruption in or failure to continue to improve these processes may result in a loss of net sales and net income. |
|
|
• |
Our business could suffer if a manufacturer fails to use acceptable labor and environmental practices. |
|
|
• |
Failure to protect the integrity and security of individually identifiable data of our customers and employees could expose us to litigation and damage our reputation; the expansion of our e-commerce business has inherent cybersecurity risks that may result in business disruptions. |
|
|
• |
Our hardware and software systems are vulnerable to damage that could harm our business. |
|
|
• |
We depend on key personnel, and, if we lose the services of any member of our senior management team, we may not be able to run our business effectively. |
|
|
• |
Our charter and bylaw provisions and certain provisions of Tennessee law may make it difficult in some respects to cause a change in control of Kirkland’s and replace incumbent management. |
|
|
• |
If we fail to maintain an effective system of internal control, we may not be able to accurately report our financial results. |
|
|
• |
Litigation may adversely affect our business, financial condition, results of operations or liquidity. |
|
|
• |
The market price for our common stock might be volatile and could result in a decline in the value of your investment. |
|
|
• |
The uncertainty regarding the potential phase-out of the LIBOR could adversely impact our results of operations and cash flows. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of October 30, 2021 and October 31, 2020, we had no outstanding borrowings under our Credit Agreement. We are exposed to interest rate changes, primarily as a result of borrowings under our revolving credit facility as discussed in Note 9 — Senior Credit Facility in the notes to the condensed consolidated financial statements, which bear interest based on variable rates. A 1% increase or decrease in the interest rate on borrowings under our revolving credit facility at our recent borrowing levels would not have a material impact to our results of operations.
We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we may purchase investments not guaranteed by the Federal Deposit Insurance Company. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished.
We were not engaged in any foreign exchange contracts, hedges, interest rate swaps, derivatives or other financial instruments with significant market risk as of October 30, 2021.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. Both our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), after the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) was performed by management with the participation of our Chief Executive Officer and Chief Financial Officer, have concluded that, as of October 30, 2021, our disclosure controls and procedures were effective as of the end of the period covered by this report.
Change in internal controls over financial reporting. There have been no changes in internal control over financial reporting that have occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
22
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of the Company’s legal proceedings, refer to Note 6 — Commitments and Contingencies in the notes to the condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
In addition to factors set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Cautionary Statement for Purposes of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995,” in Part I - Item 2 of this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended January 30, 2021, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report are not the only risks facing our Company. There have been no material changes to our risk factors as previously disclosed in the Annual Report. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Repurchases of Equity Securities
Shares of common stock repurchased by the Company during the 13-week period ended October 30, 2021 were as follows:
|
Period |
Total Number of Shares Purchased |
|
Average Price Paid per Share |
|
Total Number of Shares Purchased as Part of Publicly Announced Plan |
|
Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plan (in 000s) |
|
||||
|
August 1, 2021 to August 28, 2021 |
|
336,420 |
|
$ |
19.26 |
|
|
336,420 |
|
$ |
20,002 |
|
|
August 29, 2021 to October 2, 2021 |
|
145,000 |
|
|
19.60 |
|
|
145,000 |
|
|
17,161 |
|
|
October 3, 2021 to October 30, 2021 |
|
324,324 |
|
|
22.01 |
|
|
324,324 |
|
|
10,023 |
|
|
|
|
805,744 |
|
$ |
20.42 |
|
|
805,744 |
|
$ |
10,023 |
|
On December 3, 2020, the Company announced that its Board of Directors authorized a new share repurchase plan providing for the purchase in the aggregate of $20 million of the Company’s outstanding common stock, which was completed during the 13-week period ended October 30, 2021. On September 2, 2021, the Company announced that its Board of Directors 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 under all Company repurchase plans 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.
ITEM 6. EXHIBITS
|
(a) |
Exhibits. |
|
Exhibit No. |
|
Description of Document |
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
|
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 |
|
|
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 |
|
|
101.INS |
|
Inline XBRL Instance Document |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
104 |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
|
* |
Incorporated by reference. |
|
+ |
Management contract or compensatory plan or arrangement. |
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
KIRKLAND’S, INC. |
|
Date: December 2, 2021 |
|
/s/ Steve C. Woodward |
|
|
|
Steve C. Woodward President and Chief Executive Officer |
|
Date: December 2, 2021 |
|
/s/ Nicole A. Strain |
|
|
|
Nicole A. Strain Executive Vice President and Chief Financial Officer |
24