Will Kirkland's Shareholder-Friendly Moves Aid the Stock?
Kirkland's, Inc. KIRK is focused on lifting investors’ sentiments through strategic growth initiatives and shareholder-friendly moves. Toward this end, the company unveiled a new authorization program, including share buybacks of roughly $10 million.
Kirkland's has been committed toward boosting shareholders’ returns for quite a few years now. Evidently, the company had announced a similar buyback plan in August 2017, wherein it authorized share repurchases of up to $10 million. Markedly, the company had repurchased 733,201 shares for nearly $7.1 million under this program as of Sep 21, 2018. Now, shares worth $2.9 million are left for buybacks.
We note that share repurchases and dividend payments are common among companies that are committed toward boosting shareholders’ returns. Other than Kirkland's, major retailers like Kroger KR, TJX Companies TJX and Dollar General DG are also popular for their shareholder-friendly initiatives.
Kroger hiked its quarterly dividend by 12% to 14 cents per share in June 2018. In the trailing four quarters, the company bought back $2.6 billion of shares and paid $435 million in dividends. TJX Companies repurchased 11.3 million shares for $1.0 billion in first-half fiscal 2019, while it paid dividends worth nearly $441 million. For fiscal 2019, the company expects to repurchase shares worth approximately $2.5-$3.0 billion. As for Dollar General, the company repurchased 2.1 million shares for $200 million and spent $77 million toward dividend payments during the second quarter of fiscal 2018.
Coming back to Kirkland’s, we expect the company’s focus on shareholders and strategic growth efforts to help revive its stock. Notably, this Zacks Rank #4 (Sell) stock has lost 6.5% in the past six months, against the industry’s jump of 21.2%. The company has been battling gross margin contraction for a while, due to higher cost of sales. The persistent drop in gross margin combined with high operating expenses remains a considerable threat to the company’s profitability. These factors seem to have weighed on investors’ sentiments.
Some Efforts to Aid Revival
Nevertheless, Kirkland’s is gaining on the top-line front, as the company’s sales have been improving year over year for eleven straight quarters now. The company has been benefiting from its efforts to develop e-commerce business and constant store additions. These factors fueled Kirkland’s sales in second-quarter fiscal 2018, wherein net sales increased 1.7% year over year. In fact, management is making efforts to attract more customers, both online and in stores.
Kirkland’s has been focused on enhancing its e-commerce business to resonate with the changing consumer trends. Incidentally, the company redesigned and leveraged the rollout of new information systems to improve online purchase and planning execution. These efforts have been yielding significant results as e-commerce sales jumped 15% to $17.1 million year over year and represented about 12.8% of Kirkland’s total sales during the second quarter of fiscal 2018.
Going ahead, the company is expected to continue expanding its third-party partnerships, improving its ‘buy online and pick up in store’ system and refining its fulfillment processes further. Such growth initiatives and shareholder-friendly actions should aid Kirkland’s recovery.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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