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Factors to Watch Ahead of Kirkland's (KIRK) Q4 Earnings

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Kirkland's, Inc. KIRK is slated to release fourth-quarter fiscal 2018 results on Mar 15. This home products retailer has a mixed bottom-line surprise record in the trailing four quarters. Let’s see what’s in store for the company this time around.

Kirkland's, Inc. Price and EPS Surprise

Kirkland's, Inc. Price and EPS Surprise | Kirkland's, Inc. Quote

What to Expect?

The Zacks Consensus Estimate for earnings has gone down in the past seven days to 95 cents, which, however, shows an increase of 20.2% from the year-ago quarter’s reported figure. The consensus mark for revenues is $216 million, reflecting 4% decline from the year-ago quarter.

Factors Likely to Impact

Kirkland's recently posted unimpressive sales results for the fourth quarter of fiscal 2018. Results were hit by headwinds like challenges in the wall decor category, soft brick and mortar sales stemming from unfavorable channel mix, and some port constraints that dented product outflow in January. These hurdles couldn’t be fully compensated by Kirkland’s strong seasonal products performance and solid sales-driving efforts like gift-giving initiatives and introducing products, among others. Disappointing fourth-quarter sales results also compelled management to revise its earnings outlook for fiscal 2018.

Also, the company has been incurring higher store occupancy costs for a while now. This was also witnessed in third-quarter fiscal 2018, wherein store occupancy costs rose 80 basis points (bps). Also, the company witnessed a 20 bps increase in outbound freight costs (including e-commerce shipping) as percentage of sales, thanks to greater e-commerce penetration. Persistent rise in such expenses is likely to dent the company’s profitability and hurt performance in the forthcoming periods.

Can Sales-Driving Efforts Offer Some Respite?

The company has been strongly focused on enhancing its e-commerce business. Incidentally, Kirkland’s has redesigned and leveraged the rollout of new information systems to improve online purchase. These efforts have been yielding significant results, evident from the strong e-commerce momentum witnessed lately. Though these factors combined with Kirkland’s store optimization efforts should offer some cushion, let’s see if these can completely offset hurdles in the company’s path.

What the Zacks Model Unveils

Our proven model doesn’t show that Kirkland's is likely to beat bottom-line estimates this quarter.  For this to happen, the stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Kirkland's currently carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Zumiez Inc. ZUMZ has an Earnings ESP of +0.90% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bed, Bath & Beyond BBBY has an Earnings ESP of +1.82% and a Zacks Rank #2.

Amazon AMZN has an Earnings ESP of +0.86% and a Zacks Rank #3.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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