Kirkland's (KIRK) 10-Q 11 Sep 14 2014 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Aug. 02, 2014	Sep. 04, 2014
Document And Entity Information [Abstract]	'	'
Document Type	'10-Q	'
Amendment Flag	'false	'
Document Period End Date	2-Aug-14	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q2	'
Entity Registrant Name	'KIRKLAND'S, INC	'
Entity Central Index Key	'0001056285	'
Current Fiscal Year End Date	'--01-31	'
Entity Filer Category	'Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	17,294,831

CONDENSED_CONSOLIDATED_BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
In Thousands, unless otherwise specified
Current assets:	'	'	'
Cash and cash equivalents	$68,468	$89,050	$63,489
Inventories, net	57,364	52,637	53,979
Deferred income taxes	2,828	2,777	1,630
Prepaid expenses and other current assets	12,534	8,817	12,258
Total current assets	141,194	153,281	131,356
Property and equipment, net	86,201	80,329	77,537
Other assets	2,065	1,838	1,757
Total assets	229,460	235,448	210,650
Current liabilities:	'	'	'
Accounts payable	22,434	23,102	21,442
Income taxes payable	0	5,875	0
Accrued expenses	22,440	23,670	21,470
Total current liabilities	44,874	52,647	42,912
Deferred rent	39,519	38,976	38,222
Non-current deferred income taxes	3,274	3,337	3,074
Other liabilities	5,416	5,259	5,425
Total liabilities	93,083	100,219	89,633
Shareholders' equity:	'	'	'
Preferred stock, no par value, 10,000,000 shares authorized; no shares issued or outstanding at August 2, 2014, February 1, 2014, or August 3, 2013, respectively	0	0	0
Common stock, no par value; 100,000,000 shares authorized; 17,317,777; 17,304,285; and 17,229,536 shares issued and outstanding at August 2, 2014, February 1, 2014, and August 3, 2013, respectively	157,576	156,193	155,315
Accumulated deficit	-21,199	-20,964	-34,298
Total shareholders' equity	136,377	135,229	121,017
Total liabilities and shareholders' equity	$229,460	$235,448	$210,650

CONDENSED_CONSOLIDATED_BALANCE1

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Aug. 02, 2014	Feb. 01, 2014	Aug. 03, 2013
Statement Of Financial Position [Abstract]	'	'	'
Preferred stock, par value	'	'	'
Preferred stock, shares authorized	10,000,000	10,000,000	10,000,000
Preferred stock, issued	0	0	0
Preferred stock, outstanding	0	0	0
Common stock, par value	'	'	'
Common stock, shares authorized	100,000,000	100,000,000	100,000,000
Common stock, shares issued	17,317,777	17,304,285	17,229,536
Common stock, shares outstanding	17,317,777	17,304,285	17,229,536

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Income Statement [Abstract]	'	'	'	'
Net sales	$103,485	$97,123	$211,740	$198,356
Cost of sales (exclusive of depreciation as shown below)	65,612	61,480	131,265	123,307
Gross profit	37,873	35,643	80,475	75,049
Operating expenses:	'	'	'	'
Compensation and benefits	21,087	19,926	42,366	39,854
Other operating expenses	14,226	12,841	27,890	25,692
Depreciation	4,431	3,950	8,731	7,741
Total operating expenses	39,744	36,717	78,987	73,287
Operating income (loss)	-1,871	-1,074	1,488	1,762
Interest expense, net	67	72	136	139
Other income, net	-226	-53	-308	-114
Income (loss) before income taxes	-1,712	-1,093	1,660	1,737
Income tax expense (benefit)	-657	-516	660	541
Net income (loss)	($1,055)	($577)	$1,000	$1,196
Earnings (loss) per share:	'	'	'	'
Basic	($0.06)	($0.03)	$0.06	$0.07
Diluted	($0.06)	($0.03)	$0.06	$0.07
Weighted average shares for basic earnings (loss) per share	17,335	17,174	17,321	17,129
Effect of dilutive stock equivalents	'	'	510	406
Adjusted weighted average shares for diluted earnings (loss) per share	17,335	17,174	17,831	17,535

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED) (USD $)	Total	Common Stock [Member]	Accumulated Deficit [Member]
Beginning Balance at Feb. 01, 2014	$135,229,000	$156,193,000	($20,964,000)
Beginning Balance, shares at Feb. 01, 2014	'	17,304,285	'
Exercise of employee stock options and employee stock purchases	183,000	183,000	'
Exercise of employee stock options and employee stock purchases, shares	'	25,722	'
Tax benefit from exercise of stock options	130,000	130,000	'
Net share settlement of stock options and restricted stock units	-315,000	-315,000	'
Net share settlement of stock options and restricted stock units, shares	'	-26,343	'
Issuance of restricted stock	'	'	'
Issuance of restricted stock, shares	'	82,000	'
Stock-based compensation expense	1,385,000	1,385,000	'
Repurchase and retirement of common stock	-1,235,000	'	-1,235,000
Repurchase and retirement of common stock, shares	-68,000	-67,887	'
Net income	1,000,000	'	1,000,000
Ending Balance at Aug. 02, 2014	$136,377,000	$157,576,000	($21,199,000)
Ending Balance, shares at Aug. 02, 2014	'	17,317,777	'

CONDENSED_CONSOLIDATED_STATEME2

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013
Cash flows from operating activities:	'	'
Net income	$1,000	$1,196
Adjustments to reconcile net income to net cash provided by (used in) operating activities:	'	'
Depreciation of property and equipment	8,731	7,741
Amortization of landlord construction allowances	-3,038	-2,804
Amortization of debt issue costs	38	38
Loss on disposal of property and equipment	224	62
Cash received for landlord construction allowances	4,354	3,558
Stock-based compensation expense	1,385	1,392
Excess tax benefits from exercise of stock options and restricted stock	-130	-922
Deferred income taxes	-114	-82
Changes in assets and liabilities:	'	'
Inventories, net	-4,727	-4,402
Prepaid expenses and other current assets	-608	-570
Other noncurrent assets	-265	-236
Accounts payable	-668	-200
Income taxes receivable / payable	-9,635	-3,762
Accrued expenses and other current and noncurrent liabilities	-1,065	970
Net cash provided by (used in) operating activities	-4,518	1,979
Cash flows from investing activities:	'	'
Capital expenditures	-14,827	-6,841
Net cash used in investing activities	-14,827	-6,841
Cash flows from financing activities:	'	'
Excess tax benefits from exercise of stock options and restricted stock	130	922
Employee stock purchases	183	138
Repurchase and retirement of common stock	-1,235	'
Cash used to settle withholding taxes on the vesting of restricted stock	-315	-506
Net cash provided by (used in) financing activities	-1,237	554
Cash and cash equivalents:	'	'
Net decrease	-20,582	-4,308
Beginning of the period	89,050	67,797
End of the period	$68,468	$63,489

Basis_of_Presentation

Basis of Presentation	6 Months Ended
	Aug. 02, 2014
Accounting Policies [Abstract]	'
Basis of Presentation	'
	Note 1 — Basis of Presentation
	Kirkland’s, Inc. (the “Company”) is a specialty retailer of home décor and gifts with 328 stores in 35 states as of August 2, 2014. 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., Kirkland’s Texas, LLC, and Kirklands.com, LLC. Significant intercompany accounts and transactions have been eliminated.
	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. 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 Securities and Exchange Commission on April 17, 2014.
	It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than those at fiscal year-end. In addition, because of seasonality factors, the results of the Company’s operations for the 13-week period ended August 2, 2014 are not indicative of the results to be expected for any other interim period or for the entire fiscal year. The Company’s fiscal year ends on the Saturday closest to January 31, resulting in years of either 52 or 53 weeks. All references to a fiscal year refer to the fiscal year ending on the Saturday closest to January 31 of the following year.
	The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States 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.
	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 on long-lived assets, asset retirement obligations, inventory reserves, self-insurance reserves, income tax liabilities, stock-based compensation, employee bonus accruals, gift card breakage, customer loyalty program accruals and contingent liabilities.

Income_Taxes

Income Taxes	6 Months Ended
	Aug. 02, 2014
Income Tax Disclosure [Abstract]	'
Income Taxes	'
	Note 2 — Income Taxes
	An estimate of the annual effective tax rate is used at each interim period based on the facts and circumstances available at that time, while the actual effective tax rate is calculated at year-end. For the 13-week period ended August 2, 2014, the Company recorded an income tax benefit of 38.4% of the loss before income taxes. In the prior year period, the Company recorded an income tax benefit of 47.2% of the loss before income taxes. The decrease in the rate from prior year reflects discrete tax credits received in the second quarter of fiscal 2013 that related to prior years. For the 26-week period ended August 2, 2014, the Company recorded an income tax expense of 39.8% of pre-tax income. In the prior year period, the Company recorded an income tax expense of 31.1% of pre-tax income.

Earnings_Per_Share

Earnings Per Share	6 Months Ended
	Aug. 02, 2014
Earnings Per Share [Abstract]	'
Earnings Per Share	'
	Note 3 — Earnings Per Share
	Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during each period presented, which excludes non-vested restricted stock units. Diluted earnings per share is computed by dividing net income 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 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 per share, because to do so would have been antidilutive, were 1.6 million and 1.7 million shares for the 13-week periods ended August 2, 2014, and August 3, 2013, respectively, and 487,000 and 596,000 shares for the 26-week periods ended August 2, 2014, and August 3, 2013, respectively.

Commitments_and_Contingencies

Commitments and Contingencies	6 Months Ended
	Aug. 02, 2014
Commitments And Contingencies Disclosure [Abstract]	'
Commitments and Contingencies	'
	Note 4 — Commitments and Contingencies
	The Company is party to pending legal proceedings and claims. 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 these proceedings and any claims in excess of insurance coverage will have a material effect on the financial condition, operating results or cash flows of the Company.

StockBased_Compensation

Stock-Based Compensation	6 Months Ended
	Aug. 02, 2014
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]	'
Stock-Based Compensation	'
	Note 5 — 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.
	The Company granted 182,500 stock options and 97,000 restricted stock units during the 13-week and 26-week periods ended August 2, 2014. This compares to 200,000 stock options and 104,000 restricted stock units granted in the 13-week and 26-week periods ended August 3, 2013. Total stock-based compensation expense (a component of compensation and benefits) was $748,000 for the 13-week period ended August 2, 2014, and $1.4 million for the 26-week period ended August 2, 2014, compared to $729,000 and $1.4 million, respectively, for the comparable prior year periods. 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 quarter.

Related_Party_Transactions

Related Party Transactions	6 Months Ended
	Aug. 02, 2014
Related Party Transactions [Abstract]	'
Related Party Transactions	'
	Note 6 — Related Party Transactions
	In July 2009, the Company entered into an agreement with a related party vendor to purchase merchandise inventory. The vendor is considered a related party for financial reporting purposes because its principal is the spouse of the Company’s Vice President of Merchandising. During the 13-week periods ended August 2, 2014 and August 3, 2013, purchases from this vendor totaled approximately $6.3 million, or 12% of total merchandise purchases, and $7.0 million, or 14% of merchandise purchases, respectively. During the 26-week periods ended August 2, 2014 and August 3, 2013, purchases from this vendor totaled approximately $12.0 million, or 12% of total merchandise purchases, and $13.4 million, or 14% of merchandise purchases, respectively. Included in cost of sales for the 13-week periods ended August 2, 2014 and August 3, 2013 were $5.7 million and $6.0 million, respectively, related to this vendor. Included in cost of sales for the 26-week periods ended August 2, 2014 and August 3, 2013 were $11.5 million and $12.2 million, respectively, related to this vendor. Payable amounts outstanding to this vendor were approximately $1.7 million and $2.4 million as of August 2, 2014 and August 3, 2013, respectively. The Company’s payable terms with this vendor are consistent with the terms offered by other vendors in the ordinary course of business.

Stock_Repurchase_Program

Stock Repurchase Program	6 Months Ended
	Aug. 02, 2014
Equity [Abstract]	'
Stock Repurchase Program	'
	Note 7 — Stock Repurchase Program
	On May 22, 2014, the Company announced that its Board of Directors authorized a stock repurchase plan providing for the purchase in the aggregate of up to $30 million of the Company’s outstanding common stock from time to time until May 2016. Through August 2, 2014, the Company repurchased and retired approximately 68,000 shares of common stock at an aggregate cost of approximately $1.2 million. As of August 2, 2014, the Company had $28.8 million remaining under the Board of Director’s current authorization to repurchase its common stock. Subsequent to August 2, 2014, the Company has repurchased and retired approximately 43,000 shares of common stock at an aggregate cost of $780,000.

New_Accounting_Pronouncement

New Accounting Pronouncement	6 Months Ended
	Aug. 02, 2014
Accounting Changes And Error Corrections [Abstract]	'
New Accounting Pronouncement	'
	Note 8 — New Accounting Pronouncement
	In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers.” Under ASU 2014-09, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. ASU 2014-09 also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company does not expect the provision of ASU 2014-09 to have a material impact on its consolidated financial statements. This update will be effective for the Company at the beginning of its fiscal 2017 year.

Basis_of_Presentation_Addition

Basis of Presentation - Additional Information (Detail)	Aug. 02, 2014
	State
	Store
Organization Consolidation And Presentation Of Financial Statements [Abstract]	'
Number of home decor and gifts store	328
Number of states	35

Income_Taxes_Additional_Inform

Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Income Tax Disclosure [Abstract]	'	'	'	'
Income tax expense/benefit as percentage of pre-tax income/loss	38.40%	47.20%	39.80%	31.10%

Earnings_Per_Share_Additional_

Earnings Per Share - Additional Information (Detail) (Equity Option [Member])	3 Months Ended		6 Months Ended
	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Equity Option [Member]	'	'	'	'
Dilutive Securities Included And Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]	'	'	'	'
Number of antidilutive stock options not included in computation of diluted earnings per share	1,600,000	1,700,000	487,000	596,000

StockBased_Compensation_Additi

Stock-Based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Share data, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Stock options granted	182,500	200,000	182,500	200,000
Total stock-based compensation expense	$748	$729	$1,385	$1,392
Restricted Stock Units (RSUs) [Member]	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Restricted stock units granted	97,000	104,000	97,000	104,000

Related_Party_Transactions_Add

Related Party Transactions - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
In Millions, unless otherwise specified	Aug. 02, 2014	Aug. 03, 2013	Aug. 02, 2014	Aug. 03, 2013
Related Party Transactions [Abstract]	'	'	'	'
Purchase from related party vendor	$6.30	$7	$12	$13.40
Purchase from related party vendor as percentage of total merchandise purchases	12.00%	14.00%	12.00%	14.00%
Cost of sale related to vendor	5.7	6	11.5	12.2
Payable amounts outstanding to vendor	$1.70	$2.40	$1.70	$2.40

Stock_Repurchase_Program_Addit

Stock Repurchase Program - Additional Information (Detail) (USD $)	6 Months Ended	1 Months Ended
	Aug. 02, 2014	Sep. 11, 2014	22-May-14
		Subsequent Event [Member]	Maximum [Member]
Stock Repurchase Program [Line Items]	'	'	'
Stock repurchase program, Authorized amount	$28,800,000	'	$30,000,000
Stock repurchase program, Expiration date	31-May-16	'	'
Stock repurchased and retired during period, Shares	68,000	43,000	'
Stock repurchased and retired during period, Value	$1,235,000	$780,000	'