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udflyerz (89.54)

Home decor turnaround play

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May 17, 2008 – Comments (5) | RELATED TICKERS: PIR , CPWM , BBBY

Kirkland's Home (KIRK) looks interesting at $2.  It's been hit hard by the perfect storm of the housing crisis.  It's too small to rate on Caps, but do some due diligence.  Getting back to its roots of modest elegance for the home at a value price.  Closing least profitable stores, and letting leases expire in expensive mall locations in favor of cheaper locales.  Everyone I ask seems to like the stores, and foot traffic has started to improve for the first quarter in 16.  Next report should shed better light if this is a trend.

5 Comments – Post Your Own

#1) On September 11, 2008 at 10:57 PM, udflyerz (89.54) wrote:

They've now put together a couple quarters in a row of improving results.  They continue to close underperforming stores where leases have run out without penalty. 

There have been opportunities to sell this as high as $3 since my first post, but the story seems to keep improving. Also, 5 members of top management have just increased their collective ownership in the company from 22% to 30%, buying shares from a founding investor.  What could be more bullish than that? 

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#2) On March 21, 2009 at 1:52 AM, udflyerz (89.54) wrote:

We have now had an opportunity to fetch over $4 per share, but I recommend holding what you have and/or buying more.  This stock is up over 80% and the S&P500 is down roughly 45% since my first posting.  I believe more gains are coming.

Check out the latest earnings report for KIRK:  cash available is up to $1.86/share!  This is no longer a company on the brink of bankruptcy. 

Margins are improving.  Same store sales are improving.  Cost of shipping goods from China is going down.  Cost of store leases is going way down.  Continues to close least profitable stores, sometimes reopening at cheaper locations.  May be a net opener of stores by 2010 or 2011.  Hundreds of home retail  stores from competitors have closed in the last year, leaving potential business to those who remain.

I believe this stock is going to $6 and beyond in the next year, and may still be cheap.   They still have a tax loss carry forward they can use in 2009. 

 

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#3) On April 02, 2009 at 10:19 PM, udflyerz (89.54) wrote:

More highlights straight from the earnings report: 

-- Comparable store sales increase 5.3%

-- Diluted EPS increases 850% to $0.76

-- Comparable store sales increase 3.6%

(fourth consecutive quarter with increases)

-- EPS of $0.47 reverses prior-year loss

-- Ends the year with no debt and no draws all year on the line of credit

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#4) On April 07, 2009 at 10:42 PM, udflyerz (89.54) wrote:

Say it with me... "I should have bought a lot more KIRK!" 

I never thought it would reach $5.80 so quickly.  Then almost to be expected it plummeted back to $4.60.... only to climb all the way back to $5.60 same day.  Unbelievable strength despite profit taking.  New buyers are discovering the Kirkland's story.  Growing comp sales 5.3% while nearby competitor Pier1 (PIR) is showing declining sales of 9.7% in the same environment. 

All that cash, good management, improving prospects and the chance for upcoming comparisons against dismal quarters from last year point to a stock moving higher yet.  Better than expected news tonight from Bed,Bath&Beyond (BBBY) should help too. 

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#5) On June 08, 2009 at 10:04 PM, udflyerz (89.54) wrote:

Ok, after reaching a high recently of $9.79 Kirklands has pulled back to the high 8's.  This is probably just another natural pull back on its way even higher.  Excellent management has been the difference here.  Their turnaround started 12-18 months before the national retail sales slowdown, so they are poised to be the first retailer to come out of this well.

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