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Why Kirkland's Is Kicking It Higher Today

By Rich Duprey – Sep 2, 2021 at 1:04PM

Key Points

  • Kirkland's beat analyst expectations on the bottom line, but fell just short of top-line estimates.
  • A new $20 million buyback program is in the works.
  • The retailer reported especially strong EBITDA gains in the quarter.

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On the surface the specialty retailer's second-quarter earnings were nothing special.

What happened

Shares of Kirkland's (KIRK -0.54%) were soaring 16% higher heading into midday trading on Thursday after the home goods retailer reported second-quarter earnings that handily beat analyst estimates, though top-line results just missed expectations.

So what

The specialty retailer said revenue of $114.8 million was down 8% from the year-ago period as comparable-store sales fell 5.2% and e-commerce declined 12.6%. But adjusted losses of a penny per share were far less than the $0.05 per share Wall Street anticipated (analyst estimates typically don't include one-time items that adjusted results strip out).

The operator of 369 retail stores across 35 states and an e-commerce platform also announced it would be buying back up to $20 million worth of stock.

Pillows and home decor on store shelves.

Image source: Getty Images.

Now what

While those figures are hardly indicative of a stock rally, Kirkland's noted its gross margins widened 600 basis points to 34.6%, while earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to $5.4 million from $600,000 last year.

Being debt-free with $45 million in cash and $110 million in liquidity available to it, the retailer repurchased $12 million worth of stock in the quarter.

President and CEO ​​Steve "Woody" Woodward said in a statement that Kirkland's performance was "another step forward in our transformation efforts and achieving our long-term financial targets," which it was able to achieve despite global supply chain disruptions.

He also noted the second quarter is typically Kirkland's slowest period, indicating the EBITDA gains were especially remarkable.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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