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7 Retail Stocks That Rocked in 2013

Stocks in this article: BBY ZLC CONN RH PSUN KIRK HGG

4. Kirkland's

Year-to-date Total Return (as of Dec. 12): 129.18%

Price-to-earnings ratio: 26.38

Market Cap: $420 million

Kirkland's (KIRK), a Nashville-based chain of more than 300 stores that sells home furnishings and decor, sits in this year's retail sweet spot, as home buying was on a tear earlier this year and consumers made big ticket purchases for their new homes and renovations. The massive success of TJX's (TJX) HomeGoods chain bodes well for Kirkland's prospects.

"We view Kirkland's as a viable competitor in home furnishings and accessories, with a well-differentiated merchandising strategy and significant organic growth opportunities," writes Wedbush Securities analyst Joan Storms in a Nov. 21 research note. Storms rates Kirkland's at "outperform."

"The company is investing not only in systems, but also in personnel and better processes, which is translating to better buying in key categories such as wall decor and decorative accessories as well as higher conversion rates and average ticket," Storms penned in the note.

Kirkland's reported third-quarter earnings of 6 cents a share, above expectations, while sales comps rose 4.9% (compared to a decrease of 4.7% in the prior year's quarter).

"Sales momentum was strong during the quarter as our fall and holiday seasonal merchandise performed well," Kirkland's President and CEO Robert Alderson said, We continued to see positive results from strong product margin, higher conversion and higher average ticket as our merchandise assortments are resonating well with customers. Traffic improved sequentially during the quarter, and early fourth quarter trends are similar."

Kirkland's bumped up its full-year earnings range to 90 cents to 95 cents a share from its previous guidance of 80 cents to 90 cents a share.

"Our plan for fiscal 2014 is to continue to build on our momentum with growth in sales, margin improvement, the execution of our multi-channel strategies and further investments in branding and e-commerce," Alderson said. "We also believe that fiscal 2014 is an opportune time to begin a more aggressive approach to store growth. We currently anticipate that our square footage growth will be at least 10% in the coming year. This early outlook reflects the intense foundational work we've done over the last three years, which has us well-positioned to grow the business."

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