x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Tennessee | 62-1287151 |
(State or other jurisdiction of | (IRS Employer Identification No.) |
incorporation or organization) | |
5310 Maryland Way | |
Brentwood, Tennessee | 37027 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | ||
Non-accelerated filer | ¨(Do not check if a smaller reporting company) | Smaller reporting company | ¨ | ||
Emerging growth company | ¨ |
Page | ||
October 28, | January 28, | October 29, | |||||||||
2017 | 2017 | 2016 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 27,885 | $ | 63,937 | $ | 28,260 | |||||
Inventories, net | 107,322 | 75,447 | 99,989 | ||||||||
Prepaid expenses and other current assets | 23,063 | 13,656 | 19,503 | ||||||||
Total current assets | 158,270 | 153,040 | 147,752 | ||||||||
Property and equipment: | |||||||||||
Equipment | 20,618 | 19,525 | 19,321 | ||||||||
Furniture and fixtures | 79,481 | 78,492 | 77,390 | ||||||||
Leasehold improvements | 116,251 | 109,494 | 107,640 | ||||||||
Computer software and hardware | 57,683 | 52,740 | 51,158 | ||||||||
Projects in progress | 9,046 | 5,520 | 6,932 | ||||||||
Property and equipment, gross | 283,079 | 265,771 | 262,441 | ||||||||
Accumulated depreciation | (167,952 | ) | (154,901 | ) | (148,508 | ) | |||||
Property and equipment, net | 115,127 | 110,870 | 113,933 | ||||||||
Deferred income taxes | 968 | 1,198 | — | ||||||||
Other assets | 6,552 | 5,038 | 3,135 | ||||||||
Total assets | $ | 280,917 | $ | 270,146 | $ | 264,820 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 44,030 | $ | 32,890 | $ | 44,062 | |||||
Accounts payable to related party vendor | 7,671 | 5,008 | 8,614 | ||||||||
Income taxes payable | — | 6,273 | — | ||||||||
Accrued expenses | 34,699 | 30,270 | 29,711 | ||||||||
Total current liabilities | 86,400 | 74,441 | 82,387 | ||||||||
Deferred rent | 54,196 | 52,656 | 53,846 | ||||||||
Deferred income taxes | 2,561 | 479 | 1,689 | ||||||||
Other liabilities | 9,916 | 8,757 | 8,347 | ||||||||
Total liabilities | 153,073 | 136,333 | 146,269 | ||||||||
Shareholders’ equity: | |||||||||||
Preferred stock, no par value, 10,000,000 shares authorized; no shares issued or outstanding at October 28, 2017, January 28, 2017, or October 29, 2016, respectively | — | — | — | ||||||||
Common stock, no par value; 100,000,000 shares authorized; 16,002,387; 15,906,635; and 15,899,840 shares issued and outstanding at October 28, 2017, January 28, 2017, and October 29, 2016, respectively | 167,063 | 165,245 | 164,526 | ||||||||
Accumulated deficit | (39,219 | ) | (31,432 | ) | (45,975 | ) | |||||
Total shareholders’ equity | 127,844 | 133,813 | 118,551 | ||||||||
Total liabilities and shareholders’ equity | $ | 280,917 | $ | 270,146 | $ | 264,820 |
13-Week Period Ended | 39-Week Period Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Net sales | $ | 144,979 | $ | 138,240 | $ | 409,503 | $ | 391,168 | |||||||
Cost of sales | 82,773 | 78,637 | 234,068 | 224,127 | |||||||||||
Cost of sales related to merchandise purchased from related party vendor | 11,668 | 9,125 | 32,278 | 24,753 | |||||||||||
Cost of sales (exclusive of depreciation as shown below) | 94,441 | 87,762 | 266,346 | 248,880 | |||||||||||
Gross profit | 50,538 | 50,478 | 143,157 | 142,288 | |||||||||||
Operating expenses: | |||||||||||||||
Compensation and benefits | 28,072 | 27,050 | 80,556 | 77,507 | |||||||||||
Other operating expenses | 19,427 | 18,601 | 54,501 | 52,057 | |||||||||||
Depreciation | 6,806 | 6,435 | 19,841 | 18,703 | |||||||||||
Total operating expenses | 54,305 | 52,086 | 154,898 | 148,267 | |||||||||||
Operating loss | (3,767 | ) | (1,608 | ) | (11,741 | ) | (5,979 | ) | |||||||
Interest expense | 69 | 67 | 195 | 206 | |||||||||||
Other income | (229 | ) | (61 | ) | (448 | ) | (172 | ) | |||||||
Loss before income taxes | (3,607 | ) | (1,614 | ) | (11,488 | ) | (6,013 | ) | |||||||
Income tax benefit | (1,245 | ) | (768 | ) | (3,919 | ) | (2,516 | ) | |||||||
Net loss | $ | (2,362 | ) | $ | (846 | ) | $ | (7,569 | ) | $ | (3,497 | ) | |||
Loss per share: | |||||||||||||||
Basic | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.48 | ) | $ | (0.22 | ) | |||
Diluted | $ | (0.15 | ) | $ | (0.05 | ) | $ | (0.48 | ) | $ | (0.22 | ) | |||
Weighted average shares outstanding: | |||||||||||||||
Basic | 16,013 | 15,897 | 15,932 | 15,844 | |||||||||||
Diluted | 16,013 | 15,897 | 15,932 | 15,844 |
Common Stock | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||
Shares | Amount | |||||||||||||
Balance at January 28, 2017 | 15,906,635 | $ | 165,245 | $ | (31,432 | ) | $ | 133,813 | ||||||
Issuance of common stock under employee stock purchase plan | 28,179 | 253 | — | 253 | ||||||||||
Exercise of stock options | 28,346 | — | — | — | ||||||||||
Restricted stock issued | 101,979 | — | — | — | ||||||||||
Net share settlement of stock options and restricted stock units | (43,851 | ) | (201 | ) | — | (201 | ) | |||||||
Repurchase and retirement of common stock | (18,901 | ) | — | (218 | ) | (218 | ) | |||||||
Stock-based compensation expense | — | 1,766 | — | 1,766 | ||||||||||
Net loss | — | — | (7,569 | ) | (7,569 | ) | ||||||||
Balance at October 28, 2017 | 16,002,387 | $ | 167,063 | $ | (39,219 | ) | $ | 127,844 |
39-Week Period Ended | |||||||
October 28, 2017 | October 29, 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (7,569 | ) | $ | (3,497 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Depreciation of property and equipment | 19,841 | 18,703 | |||||
Amortization of deferred rent | (5,784 | ) | (3,856 | ) | |||
Amortization of debt issue costs | 40 | 70 | |||||
Loss on disposal of property and equipment | 157 | 295 | |||||
Stock-based compensation expense | 1,766 | 2,521 | |||||
Deferred income taxes | 2,312 | 205 | |||||
Changes in assets and liabilities: | |||||||
Inventories, net | (31,875 | ) | (31,767 | ) | |||
Prepaid expenses and other current assets | (2,071 | ) | 708 | ||||
Other noncurrent assets | (1,554 | ) | (1,000 | ) | |||
Accounts payable | 10,502 | 18,307 | |||||
Accounts payable to related party vendor | 2,663 | 6,356 | |||||
Income taxes refundable | (13,609 | ) | (9,915 | ) | |||
Accrued expenses and other current and noncurrent liabilities | 12,912 | 15,093 | |||||
Net cash (used in) provided by operating activities | (12,269 | ) | 12,223 | ||||
Cash flows from investing activities: | |||||||
Proceeds from sale of property and equipment | — | 4 | |||||
Capital expenditures | (23,617 | ) | (28,069 | ) | |||
Net cash used in investing activities | (23,617 | ) | (28,065 | ) | |||
Cash flows from financing activities: | |||||||
Refinancing costs | — | (271 | ) | ||||
Cash used in net share settlement of stock options and restricted stock | (201 | ) | (263 | ) | |||
Employee stock purchases | 253 | 284 | |||||
Repurchase and retirement of common stock | (218 | ) | — | ||||
Net cash used in financing activities | (166 | ) | (250 | ) | |||
Cash and cash equivalents: | |||||||
Net decrease | (36,052 | ) | (16,092 | ) | |||
Beginning of the period | 63,937 | 44,352 | |||||
End of the period | $ | 27,885 | $ | 28,260 | |||
Supplemental schedule of non-cash activities: | |||||||
Non-cash accruals for purchases of property and equipment | $ | 1,997 | $ | 1,896 |
13-Week Period Ended | 39-Week Period Ended | |||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | |||||||||
Stock-based compensation expense | $ | 582 | $ | 817 | $ | 1,766 | $ | 2,521 | ||||
Stock options granted | — | — | 245,000 | 189,000 | ||||||||
Restricted stock units granted | 2,000 | — | 148,500 | 126,500 |
13-Week Period Ended | 39-Week Period Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Related Party Vendor: | |||||||||||||||
Purchases | $ | 17,684 | $ | 16,318 | $ | 41,743 | $ | 33,257 | |||||||
Purchases as a percent of total merchandise purchases | 20.4 | % | 19.8 | % | 21.5 | % | 17.5 | % |
October 28, 2017 | October 29, 2016 | ||||
Number of stores | 415 | 401 | |||
Square footage | 3,275,638 | 3,130,780 | |||
Average square footage per store | 7,893 | 7,807 |
13-Week Period Ended | ||||||||||||||||||||
October 28, 2017 | October 29, 2016 | Change | ||||||||||||||||||
$ | % | $ | % | $ | % | |||||||||||||||
Net sales | $ | 144,979 | 100.0 | % | $ | 138,240 | 100.0 | % | $ | 6,739 | 4.9 | % | ||||||||
Cost of sales (exclusive of depreciation as shown below) | 94,441 | 65.1 | 87,762 | 63.5 | 6,679 | 7.6 | ||||||||||||||
Gross profit | 50,538 | 34.9 | 50,478 | 36.5 | 60 | 0.1 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Compensation and benefits | 28,072 | 19.4 | 27,050 | 19.6 | 1,022 | 3.8 | ||||||||||||||
Other operating expenses | 19,427 | 13.4 | 18,601 | 13.5 | 826 | 4.4 | ||||||||||||||
Depreciation | 6,806 | 4.7 | 6,435 | 4.6 | 371 | 5.8 | ||||||||||||||
Total operating expenses | 54,305 | 37.5 | 52,086 | 37.7 | 2,219 | 4.3 | ||||||||||||||
Operating loss | (3,767 | ) | (2.6 | ) | (1,608 | ) | (1.2 | ) | (2,159 | ) | 134.3 | |||||||||
Interest expense | 69 | — | 67 | — | 2 | 3.0 | ||||||||||||||
Other income | (229 | ) | (0.1 | ) | (61 | ) | — | (168 | ) | 275.4 | ||||||||||
Loss before income taxes | (3,607 | ) | (2.5 | ) | (1,614 | ) | (1.2 | ) | (1,993 | ) | 123.5 | |||||||||
Income tax benefit | (1,245 | ) | (0.9 | ) | (768 | ) | (0.6 | ) | (477 | ) | 62.1 | |||||||||
Net loss | $ | (2,362 | ) | (1.6 | )% | $ | (846 | ) | (0.6 | )% | $ | (1,516 | ) | 179.2 | % |
39-Week Period Ended | |||||||||||||||||||
October 28, 2017 | October 29, 2016 | Change | |||||||||||||||||
$ | % | $ | % | $ | % | ||||||||||||||
Net sales | $ | 409,503 | 100.0% | $ | 391,168 | 100.0 | % | $ | 18,335 | 4.7 | % | ||||||||
Cost of sales (exclusive of depreciation as shown below) | 266,346 | 65.0 | 248,880 | 63.6 | 17,466 | 7.0 | |||||||||||||
Gross profit | 143,157 | 35.0 | 142,288 | 36.4 | 869 | 0.6 | |||||||||||||
Operating expenses: | |||||||||||||||||||
Compensation and benefits | 80,556 | 19.7 | 77,507 | 19.8 | 3,049 | 3.9 | |||||||||||||
Other operating expenses | 54,501 | 13.3 | 52,057 | 13.3 | 2,444 | 4.7 | |||||||||||||
Depreciation | 19,841 | 4.9 | 18,703 | 4.8 | 1,138 | 6.1 | |||||||||||||
Total operating expenses | 154,898 | 37.9 | 148,267 | 37.9 | 6,631 | 4.5 | |||||||||||||
Operating loss | (11,741 | ) | (2.9) | (5,979 | ) | (1.5 | ) | (5,762 | ) | 96.4 | |||||||||
Interest expense | 195 | — | 206 | — | (11 | ) | (5.3 | ) | |||||||||||
Other income | (448 | ) | (0.1) | (172 | ) | — | (276 | ) | 160.5 | ||||||||||
Loss before income taxes | (11,488 | ) | (2.8) | (6,013 | ) | (1.5 | ) | (5,475 | ) | 91.1 | |||||||||
Income tax benefit | (3,919 | ) | (1.0) | (2,516 | ) | (0.6 | ) | (1,403 | ) | 55.8 | |||||||||
Net loss | $ | (7,569 | ) | (1.8)% | $ | (3,497 | ) | (0.9 | )% | $ | (4,072 | ) | 116.4 | % |
13-Week Period Ended | 39-Week Period Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Related Party Vendor: | |||||||||||||||
Purchases | $ | 17,684 | $ | 16,318 | $ | 41,743 | $ | 33,257 | |||||||
Purchases as a percent of total merchandise purchases | 20.4 | % | 19.8 | % | 21.5 | % | 17.5 | % |
• | If we do not generate sufficient cash flow, we may not be able to implement our growth strategy. |
• | If we are unable to profitably open and operate new stores at a rate that exceeds planned store closings, we may not be able to adequately execute our growth strategy, resulting in a decrease in net sales and net income. |
• | Our success depends upon our marketing, advertising and promotional efforts. 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 anticipate consumer trends, and our failure to do so may lead to loss of consumer acceptance of our products resulting in reduced net sales. |
• | 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. |
• | Inventory loss and theft and the inability to anticipate inventory needs may result in reduced net sales. |
• | Inability to successfully develop and maintain a relevant and reliable omni-channel experience for our customers could adversely affect our sales, results of operations and reputation. |
• | Our results could be negatively impacted if our merchandise offering suffers a substantial impediment to its reputation due to real or perceived quality issues. |
• | 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. |
• | 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. |
• | 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 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. |
• | 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. |
• | Our freight costs and thus our cost of goods sold are impacted by changes in fuel prices. |
• | New tax policies could adversely affect our operating results. |
• | New legal requirements could adversely affect our operating results. |
• | Litigation may adversely affect our business, financial condition, results of operations or liquidity. |
• | 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. |
• | 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 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. |
• | 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. |
• | 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. |
• | 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. |
• | The market price for our common stock might be volatile and could result in a decline in the value of your investment. |
Issuer Repurchases of Equity Securities | ||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Dollar Value of Shares that May Yet be Purchased Under the Program (in 000s) | ||||||
July 30, 2017 to August 26, 2017 | — | $ | — | — | $ | 10,000 | ||||
August 27, 2017 to September 30, 2017 | 7,000 | $ | 11.03 | 7,000 | $ | 9,923 | ||||
October 1, 2017 to October 28, 2017 | 11,901 | $ | 11.81 | 11,901 | $ | 9,782 | ||||
Total | 18,901 | $ | 11.52 | 18,901 | $ | 9,782 |
(a) | Exhibits. |
Exhibit No. | Description of Document | |
101 | Interactive Data File (Quarterly Report on Form 10-Q, for the quarter ended October 28, 2017, furnished in XBRL (eXtensible Business Reporting Language)) |
KIRKLAND’S, INC. | |
Date: November 30, 2017 | /s/ W. Michael Madden |
W. Michael Madden President and Chief Executive Officer | |
Date: November 30, 2017 | /s/ Nicole A. Strain |
Nicole A. Strain Interim Chief Financial Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Kirkland’s, Inc. (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(a) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 30, 2017 | /s/ W. Michael Madden |
W. Michael Madden | |
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Kirkland’s, Inc. (“registrant”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(a) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 30, 2017 | /s/ Nicole A. Strain |
Nicole A. Strain | |
Interim Chief Financial Officer |
/s/ W. Michael Madden |
President and Chief Executive Officer |
November 30, 2017 |
/s/ Nicole A. Strain |
Interim Chief Financial Officer |
November 30, 2017 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Oct. 28, 2017 |
Nov. 15, 2017 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Oct. 28, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | KIRK | |
Entity Registrant Name | KIRKLAND'S, INC | |
Entity Central Index Key | 0001056285 | |
Current Fiscal Year End Date | --02-03 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,994,457 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Oct. 28, 2017 |
Jan. 28, 2017 |
Oct. 29, 2016 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (usd per share) | $ 0 | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 |
Common stock, par value (usd per share) | $ 0 | $ 0 | $ 0 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 16,002,387 | 15,906,635 | 15,899,840 |
Common stock, shares outstanding (in shares) | 16,002,387 | 15,906,635 | 15,899,840 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017 |
Oct. 29, 2016 |
Oct. 28, 2017 |
Oct. 29, 2016 |
|
Income Statement [Abstract] | ||||
Net sales | $ 144,979 | $ 138,240 | $ 409,503 | $ 391,168 |
Cost of sales | 82,773 | 78,637 | 234,068 | 224,127 |
Cost of sales related to merchandise purchased from related party vendor | 11,668 | 9,125 | 32,278 | 24,753 |
Cost of sales (exclusive of depreciation as shown below) | 94,441 | 87,762 | 266,346 | 248,880 |
Gross profit | 50,538 | 50,478 | 143,157 | 142,288 |
Operating expenses: | ||||
Compensation and benefits | 28,072 | 27,050 | 80,556 | 77,507 |
Other operating expenses | 19,427 | 18,601 | 54,501 | 52,057 |
Depreciation | 6,806 | 6,435 | 19,841 | 18,703 |
Total operating expenses | 54,305 | 52,086 | 154,898 | 148,267 |
Operating loss | (3,767) | (1,608) | (11,741) | (5,979) |
Interest expense | 69 | 67 | 195 | 206 |
Other income | (229) | (61) | (448) | (172) |
Loss before income taxes | (3,607) | (1,614) | (11,488) | (6,013) |
Income tax benefit | (1,245) | (768) | (3,919) | (2,516) |
Net loss | $ (2,362) | $ (846) | $ (7,569) | $ (3,497) |
Loss per share: | ||||
Basic (usd per share) | $ (0.15) | $ (0.05) | $ (0.48) | $ (0.22) |
Diluted (usd per share) | $ (0.15) | $ (0.05) | $ (0.48) | $ (0.22) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 16,013 | 15,897 | 15,932 | 15,844 |
Diluted (in shares) | 16,013 | 15,897 | 15,932 | 15,844 |
Basis of Presentation |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Kirkland’s, Inc. (the “Company”) is a specialty retailer of home décor and gifts in the United States operating 415 stores in 36 states as of October 28, 2017, as well as an e-Commerce enabled website, www.kirklands.com. 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. All 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 are presented in accordance with the requirements of 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 March 31, 2017. 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 and 39-week periods ended October 28, 2017 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. 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, sales return reserves, customer loyalty program accruals and contingent liabilities. In the fourth quarter of fiscal 2016, the Company concluded that it was appropriate to classify related party transactions separately in the consolidated financial statements. In fiscal 2016, this information was provided in the notes to the consolidated financial statements. See “Note 6 - Related Party Transactions” for further discussion. In the first quarter of fiscal 2017, the Company adopted accounting guidance which affected the presentation in the statement of cash flows of excess tax benefits or deficiencies from the exercise of stock options. See “Note 8 - New Accounting Pronouncements” for further discussion. The Company has elected to apply the amendments using a retrospective transition method for all periods presented and therefore the presentation of previously reported excess tax benefits on the unaudited condensed consolidated statements of cash flows has been changed to conform to the presentation used in the current period. As a result, approximately $78,000 of excess tax benefits related to share-based awards which were previously classified as cash flows from financing activities in the 39-week period ended October 29, 2016 have been reclassified as cash flows from operating activities. Certain other amounts in the fiscal 2016 operating activities section of the condensed consolidated statement of cash flows have been reclassified to conform to the fiscal 2017 presentation. These reclassifications had no effect on reported net income. For the 39-week period ended October 28, 2017, the Company recorded a $1.2 million one-time out-of-period adjustment of ancillary rent payments to prepaid expenses and other current assets from cost of sales. |
Income Taxes |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 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 periods ended October 28, 2017 and October 29, 2016, the Company recorded an income tax benefit of 34.5% and 47.6% of the loss before income taxes, respectively. For the 39-week periods ended October 28, 2017 and October 29, 2016, the Company recorded an income tax benefit of 34.1% and 41.8% of the loss before income taxes, respectively. The decrease in the tax rates for both the 13-week and 39-week periods ended October 28, 2017 was primarily due to new accounting guidance related to share-based compensation, which requires the inclusion of excess tax benefits and deficiencies as a component of income taxes. |
Loss Per Share |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during each period presented, which excludes non-vested restricted stock units. Diluted loss per share is computed by dividing net 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 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 loss per share, because to do so would have been antidilutive, were approximately 1.6 million and 1.5 million shares for the 13-week periods ended October 28, 2017 and October 29, 2016, respectively, and 1.5 million and 1.4 million shares for the 39-week periods ended October 28, 2017 and October 29, 2016, respectively. |
Commitments and Contingencies |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 alleges 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. The Company denies the material allegations of the complaint and has filed a motion to dismiss. On November 29, 2017, the Magistrate Judge recommended that the Company’s motion to dismiss be denied. The Company will file objections to the recommendation and plans to appeal if the recommendation is adopted by the Court. The Company continues to believe that the case is without merit and intends 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 the Company’s consolidated financial condition, operating results or cash flows. 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 the Company’s consolidated financial condition, operating results or cash flows. |
Stock-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 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 quarter. The table below sets forth selected stock-based compensation information (in thousands, except share amounts) for the periods indicated:
|
Related Party Transactions |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | ng purposes because its principal owner is the spouse of one of the Company’s two Vice Presidents of Merchandising. The table below sets forth selected results to this vendor in dollars (in thousands) and percentages for the periods indicated:
|
Stock Repurchase Program (Notes) |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Treasury Stock Transactions [Abstract] | |
Treasury Stock [Text Block] | Stock Repurchase Program On August 22, 2017, the Company announced that its Board of Directors authorized a stock repurchase plan providing for the purchase in the aggregate of up to $10 million of the Company’s outstanding common stock. Repurchases of shares will be made in accordance with applicable securities laws and may be made from time to time in the open market or by negotiated transactions. The amount and timing of repurchases will be based on a variety of factors, including stock acquisition price, regulatory limitations and other market and economic factors. The stock repurchase program does not require the Company to repurchase any specific number of shares, and the Company may terminate the repurchase program at any time. For the 13-week and 39-week periods ended October 28, 2017, the Company repurchased and retired 18,901 shares of common stock at an aggregate cost of approximately $218,000 under this repurchase plan. As of October 28, 2017, the Company had approximately $9.8 million remaining under the plan. |
New Accounting Pronouncements |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements New Accounting Pronouncements Recently Adopted In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This update requires an entity that determines the cost of inventory by methods other than last-in, first-out and the retail inventory method to measure inventory at the lower of cost and net realizable value. The Company adopted this guidance in the first quarter of fiscal 2017 using a prospective application. The adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-04, “Liabilities - Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products.” This update requires that liabilities related to the sale of prepaid stored-value products (gift cards) be adjusted periodically to reflect breakage. The Company adopted this guidance in the first quarter of fiscal 2017. The Company was recording gift card breakage prior to the adoption of this guidance; therefore, the adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 addresses several aspects of the accounting for share-based compensation transactions including: (a) income tax consequences when awards vest or are settled, (b) classification of awards as either equity or liabilities, (c) a policy election to account for forfeitures as they occur rather than on an estimated basis and (d) classification of excess tax impacts on the statement of cash flows. The Company adopted this guidance in the first quarter of fiscal 2017, which did not have a material impact on its condensed consolidated financial statements and related disclosures. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement have been applied prospectively. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the awards are exercised or settled. The Company does not expect the impact to be material to the consolidated results of operations; however, such determination is subject to change based on facts and circumstances at the time when awards vest or settle. The Company accounts for forfeitures of share-based awards when they occur. The Company has applied the amendments related to the presentation of excess tax benefits on the statement of cash flows using a retrospective transition method, and as a result, excess tax benefits related to share-based awards which had been previously classified as cash flows from financing activities have been reclassified as cash flows from operating activities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by U.S. generally accepted accounting principles and thereby reduces the current and potential future diversity in practice. The Company adopted this guidance in the first quarter of fiscal 2017. The adoption of this guidance did not impact the classification of any of the Company’s cash flow activity and therefore did not have a material impact on its condensed consolidated financial statements and related disclosures. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). 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. In July 2015, the FASB approved a one-year deferral of ASU 2014-09. As a result of the deferral, the amendments in ASU 2014-09 will be effective for the Company at the beginning of its fiscal 2018 year. Companies that transition to this new standard may either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the updates with an adjustment to retained earnings at the date of adoption. The Company plans to adopt this standard in the first quarter of fiscal 2018 using the modified retrospective method. The Company has identified its loyalty program and right of return as the areas that will most likely be affected by the new revenue recognition guidance. The Company is still in the process of evaluating the impact the adoption of ASU 2014-09 will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which supersedes the existing guidance for lease accounting, Leases (Topic 840) (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its condensed consolidated financial statements and is anticipating a material impact on the Company’s consolidated financial statements because the Company is party to a significant number of lease contracts. |
Senior Credit Facility |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Debt Disclosure [Abstract] | |
Senior Credit Facility | Senior Credit Facility During the period of August 19, 2011 through February 26, 2016, the Company was party to an Amended and Restated Credit Agreement (the “2011 Credit Agreement”) with Bank of America, N.A. as administrative agent and collateral agent, and the lenders named therein (the “Lenders”). The 2011 Credit Agreement included a senior secured revolving credit facility of $50 million, a swingline availability of $5 million and a maturity date of August 2016. Borrowings under the 2011 Credit Agreement bore interest at an annual rate equal to LIBOR plus a margin ranging from 175 to 225 basis points with no LIBOR floor, and the fee paid to the Lenders on the unused portion of the credit facility was 37.5 basis points per annum. On February 26, 2016, the Company entered into a Joinder and First Amendment to Amended and Restated Credit Agreement (the “2016 Credit Agreement”). The 2016 Credit Agreement increased the Company’s senior secured revolving credit facility from $50 million to $75 million, increased the swingline availability from $5 million to $10 million, extended the maturity date from August 2016 to February 2021 and added a $25 million incremental accordion feature. Borrowings under the 2016 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 Lenders on the unused portion of the credit facility is 25 basis points per annum. Borrowings under the 2011 and 2016 Credit Agreements are subject to certain conditions and contain 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 ERISA events. Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the Credit Agreements may be declared immediately due and payable. The maximum availability under the facility 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 an Amended and Restated Security Agreement (“Security Agreement”) with its Lenders. 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 Agreements. As of October 28, 2017, the Company was in compliance with the covenants in the 2016 Credit Agreement, and there were no outstanding borrowings under the credit facility, with approximately $75.0 million available for borrowing. |
New Accounting Pronouncements (Policies) |
9 Months Ended |
---|---|
Oct. 28, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements Recently Adopted | New Accounting Pronouncements Recently Adopted In July 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This update requires an entity that determines the cost of inventory by methods other than last-in, first-out and the retail inventory method to measure inventory at the lower of cost and net realizable value. The Company adopted this guidance in the first quarter of fiscal 2017 using a prospective application. The adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-04, “Liabilities - Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products.” This update requires that liabilities related to the sale of prepaid stored-value products (gift cards) be adjusted periodically to reflect breakage. The Company adopted this guidance in the first quarter of fiscal 2017. The Company was recording gift card breakage prior to the adoption of this guidance; therefore, the adoption of this guidance did not have a material impact on its condensed consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (“ASU 2016-09”). ASU 2016-09 addresses several aspects of the accounting for share-based compensation transactions including: (a) income tax consequences when awards vest or are settled, (b) classification of awards as either equity or liabilities, (c) a policy election to account for forfeitures as they occur rather than on an estimated basis and (d) classification of excess tax impacts on the statement of cash flows. The Company adopted this guidance in the first quarter of fiscal 2017, which did not have a material impact on its condensed consolidated financial statements and related disclosures. The amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement have been applied prospectively. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the awards are exercised or settled. The Company does not expect the impact to be material to the consolidated results of operations; however, such determination is subject to change based on facts and circumstances at the time when awards vest or settle. The Company accounts for forfeitures of share-based awards when they occur. The Company has applied the amendments related to the presentation of excess tax benefits on the statement of cash flows using a retrospective transition method, and as a result, excess tax benefits related to share-based awards which had been previously classified as cash flows from financing activities have been reclassified as cash flows from operating activities. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” This update clarifies and provides specific guidance on eight cash flow classification issues that are not currently addressed by U.S. generally accepted accounting principles and thereby reduces the current and potential future diversity in practice. The Company adopted this guidance in the first quarter of fiscal 2017. The adoption of this guidance did not impact the classification of any of the Company’s cash flow activity and therefore did not have a material impact on its condensed consolidated financial statements and related disclosures. New Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). 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. In July 2015, the FASB approved a one-year deferral of ASU 2014-09. As a result of the deferral, the amendments in ASU 2014-09 will be effective for the Company at the beginning of its fiscal 2018 year. Companies that transition to this new standard may either retrospectively restate each prior reporting period or reflect the cumulative effect of initially applying the updates with an adjustment to retained earnings at the date of adoption. The Company plans to adopt this standard in the first quarter of fiscal 2018 using the modified retrospective method. The Company has identified its loyalty program and right of return as the areas that will most likely be affected by the new revenue recognition guidance. The Company is still in the process of evaluating the impact the adoption of ASU 2014-09 will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which supersedes the existing guidance for lease accounting, Leases (Topic 840) (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases. Lessor accounting remains largely unchanged. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted for all entities. ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief. The Company is currently evaluating the impact of this new standard on its condensed consolidated financial statements and is anticipating a material impact on the Company’s consolidated financial statements because the Company is party to a significant number of lease contracts. |
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | The table below sets forth selected stock-based compensation information (in thousands, except share amounts) for the periods indicated:
|
Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Oct. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Selected Results to Vendor in Dollars and Percentages | The table below sets forth selected results to this vendor in dollars (in thousands) and percentages for the periods indicated:
|
Basis of Presentation (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017
USD ($)
store
state
|
Oct. 29, 2016
USD ($)
|
Oct. 28, 2017
USD ($)
store
state
|
Oct. 29, 2016
USD ($)
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Number of home decor and gifts store | store | 415 | 415 | ||
Number of states | state | 36 | 36 | ||
Reclassification from cost of sales | $ (82,773) | $ (78,637) | $ (234,068) | $ (224,127) |
Adjustments | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Reclassification from cost of sales | $ 1,200 | |||
Accounting Standards Update 2016-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Reclassification of cash flows from operating activities | 78 | |||
Reclassification of cash flows from financing activities | $ 78 |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017 |
Oct. 29, 2016 |
Oct. 28, 2017 |
Oct. 29, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 34.50% | 47.60% | 34.10% | 41.80% |
Loss Per Share (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017 |
Oct. 29, 2016 |
Oct. 28, 2017 |
Oct. 29, 2016 |
|
Earnings Per Share [Abstract] | ||||
Stock options and restricted stock units not included in the computation of diluted earnings per share (in shares) | 1.6 | 1.5 | 1.5 | 1.4 |
Stock-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017 |
Oct. 29, 2016 |
Oct. 28, 2017 |
Oct. 29, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 582 | $ 817 | $ 1,766 | $ 2,521 |
Stock options granted (in shares) | 0 | 0 | 245,000 | 189,000 |
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock units granted (in shares) | 2,000 | 0 | 148,500 | 126,500 |
Related Party Transactions (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017
USD ($)
vice_president
|
Oct. 29, 2016
USD ($)
|
Oct. 28, 2017
USD ($)
vice_president
|
Oct. 29, 2016
USD ($)
|
|
Related party vendor | ||||
Related Party Transaction [Line Items] | ||||
Number of Vice Presidents of merchandising | vice_president | 2 | 2 | ||
Merchandise purchases | ||||
Related Party Transaction [Line Items] | ||||
Purchases as a percent of total merchandise purchases | 20.40% | 19.80% | 21.50% | 17.50% |
Merchandise purchases | Related party vendor | ||||
Related Party Transaction [Line Items] | ||||
Purchases | $ | $ 17,684 | $ 16,318 | $ 41,743 | $ 33,257 |
Stock Repurchase Program (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Oct. 28, 2017 |
Oct. 28, 2017 |
Oct. 29, 2016 |
Aug. 22, 2017 |
|
Treasury Stock Transactions [Abstract] | ||||
Stock Repurchase Program, Authorized Amount | $ 10,000,000 | |||
Stock Repurchased and Retired During Period, Shares | 18,901 | 18,901 | ||
Payments for Repurchase of Common Stock | $ 218,000 | $ 218,000 | $ 0 | |
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 9,800,000 | $ 9,800,000 |
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