Author Topic: KIRK - Kirkland's  (Read 3156 times)

JayGatsby

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KIRK - Kirkland's
« on: August 01, 2017, 09:03:24 AM »
Curious if anyone's ever shopped here and has views on it from a consumer perspective? Seems to be a slightly cheaper Pottery Barn / Crate & Barrel (http://www.kirklands.com/). Their key demo is 25 - 55 yo female with a house and an average household income of ~$90k. Their real estate strategy seems to focus on suburbs.

Key stats are (in Millions):
Market Cap: $149
Debt: $0
Cash: $60
TEV: $89
EBITDA: $39
Capex: $29
Q1 B&M store sales down 6.6%. (3.8% if you include ecomm, which was up 32%)

Shareholder friendliness seems pretty good. In 2015 they returned ~ $50M to shareholders, half in a dividend, half in buybacks. They're at ~400 stores and their target is to get to 500. That's the biggest thing that gives me pause. They seem to reinvest a lot of cash into new stores but the store count doesn't go up as much as you'd expect. In Q1 they opened 8 and closed 11. Last year they opened 43, closed 11. They say a store costs $350k to build and generates a $250k store level contribution. Unit profitability the last few years hasn't been great. They ended FY14 with 344 stores and ended FY16 with 404 stores... in that time EBITDA went from $47.6 to $42.6. Online gift card discounting isn't extreme, which I think is an interesting proxy of a retailer's health (https://www.giftcardgranny.com/buy-gift-cards/kirklands/).
« Last Edit: August 01, 2017, 11:36:04 AM by JayGatsby »


bigspydee

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Re: KIRK - Kirkland's
« Reply #1 on: August 13, 2019, 07:48:15 AM »
Well, the stock looks interesting now, its at $1.35, its market cap is $20 million and equity is $60 million. They have 428 stores and competition is definitely eating into their margins and revenue. CEO indicated china's tariffs are going to affect them and reduced guidance. They dont have long term debt and very share holder friendly. Looks interesting 

DTEJD1997

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Re: KIRK - Kirkland's
« Reply #2 on: August 13, 2019, 05:45:10 PM »
I've shopped in a Kirklands a few times.  Went in to get a picture frame on time another time to get a gift.

To me, they seemed to be nothing special or unusual...just another part of suburbia.

Not sure that they stand out enough?

I also suspect that they may simply be in a broken business model.  That is, their margins & sales aren't high enough to overcome the rent & overhead that they have.

For example, TUES has rent costs of about 10% of sales.

I have a business that is about 98% on the internet.  At this point in time, my occupancy costs (not rent as I own the real estate) are about 2.5% to 3% of gross sales.  I have a lot of under/un utilized space, and will be opening a retail showroom later this year.

It is not outside the realm of possibility that I could double my sales within a year.  If so, my occupancy costs will be under 2% of gross sales.

I have a rather unusual situation, and would not expect the large retailers to be able to replicate it...but I think a lot of them are simply renting space that is too big, too expensive.  Kind of almost opening stores simply to be opening them.

KIRK is certainly interesting though...if they can work on their margins, they might make quite a bit of $$$.