Warning Overshadows Kirkland's Strong Quarter

The retailer's post strong third-quarter results but warns about the fourth-quarter.
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After besting expectations in the third quarter,


(KIRK) - Get Report

warned that its fourth-quarter and full-year numbers will come in below analysts' estimates.

The company's shares closed regular trading down $1.11, or 5.3%, to $20. In after-hours trading, Kirkland's stock fell another 76 cents, or 3.8%, to $19.24.

The home decor retailer earned $1.22 million, or 6 cents a share, in the quarter ended Nov. 1 vs. $1.24 million, or 6 cents a share, a year prior.

A $1.1 million charge related to a lease termination dampened the company's results in the just-completed quarter. Without the charge, Kirkland's would have earned $1.9 million, or 10 cents a share. Kirkland's sales rose 12.2% year over year to $84.05 million.

Analyst polled by Thomson First Call were expecting the company to earn 8 cents a share on this basis on $83.47 million in sales.

In the fourth quarter, Kirkland's expects to earn 81 cents to 86 cents a share on sales ranging from $137 million to $140 million. For the full year, Kirkland's lowered its earnings guidance to $1 to $1.05 a share from its previous range of $1.02 to $1.07 a share. Neither of the full-year ranges includes the cost of the lease termination.

But all of those estimates are significantly lower than Wall Street's expectations. Analysts had forecast that the Jackson, Tenn.-based company would earn 89 cents a share in the fourth quarter on sales of $143.9 million. For the full year, analysts had projected profits of $1.07 a share on revenue of $379.59 million.

In a statement, company officials said Kirkland's had seen slower-than-expected sales in recent weeks and expected the holiday season to be heavily promotional. The company expects its same-store sales, which compare results from outlets open more than one year, to be flat with last year in the fourth quarter.