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Kirkland's (KIRK) Grappling with Multiple Issues: Dump Now?
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The home furnishing sector recently suffered a setback due to the sluggish turnover of the housing sector. Meanwhile, although consumer spending in the U.S. is improving, consumers are cautious and have not increased discretionary spending to a substantial extent. Moreover, online retail giant Amazon Inc. (AMZN - Free Report) poses a threat to the traditional brick and mortar retailers as an increasing number of customers are turning to online shopping.
One such apparel stock Kirkland’s Inc. (KIRK - Free Report) has been suffering losses for quite some time now due to substantially lower revenues.
Here we highlight five reasons why Kirkland’s might not be an attractive pick for your portfolio now.
Rank; Estimates and Share Price: Kirkland’s carries a Zacks Rank #4 (Sell). Moreover, the company had a poor run in the last three months with its share price declining around 17.98%. Over the past 30 days, the estimates for fiscal 2016.dropped around 4.7%, while that for fiscal 2017 fell 3.1%.
First-Quarter Results: Kirkland’s first-quarter fiscal 2016 adjusted income of $0.06 per share missed the Zacks Consensus Estimate of 10 cents almost 40.0%. Earnings also plunged 57.14% year over year due to lower margins. Although net sales increased 9.8% year over year, it lagged the consensus mark by 2.3% due to lower comps
Traffic Trends: Kirkland’s has been experiencing low traffic over the past few months and expects the trend to persist in fiscal 2016 as well, especially in Texas, where it has a wide footprint. Although the company is trying to improve its omni channel and attract customers to its e-commerce business, it lags behind the online business of e-commerce giant Amazon.com which has captured almost the whole of the retail market.
Operating Expenses: Kirkland’s has been incurring higher operating expenses for the several quarters due to increase in store occupancy costs. The higher costs resulted from increased shipping and packaging expenses which have put margins under pressure. The company is aggressively expanding its store locations which is expected to raise store occupancy costs further. Also, the company’s intention to expand the supply-chain capabilities would increase costs.
Stocks to Consider
Investors interested in the broader retail wholesale sector can consider stocks like Darden Restaurants, Inc. (DRI - Free Report) and Fred’s Inc. , all holding a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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Kirkland's (KIRK) Grappling with Multiple Issues: Dump Now?
The home furnishing sector recently suffered a setback due to the sluggish turnover of the housing sector. Meanwhile, although consumer spending in the U.S. is improving, consumers are cautious and have not increased discretionary spending to a substantial extent. Moreover, online retail giant Amazon Inc. (AMZN - Free Report) poses a threat to the traditional brick and mortar retailers as an increasing number of customers are turning to online shopping.
One such apparel stock Kirkland’s Inc. (KIRK - Free Report) has been suffering losses for quite some time now due to substantially lower revenues.
Here we highlight five reasons why Kirkland’s might not be an attractive pick for your portfolio now.
Rank; Estimates and Share Price: Kirkland’s carries a Zacks Rank #4 (Sell). Moreover, the company had a poor run in the last three months with its share price declining around 17.98%. Over the past 30 days, the estimates for fiscal 2016.dropped around 4.7%, while that for fiscal 2017 fell 3.1%.
First-Quarter Results: Kirkland’s first-quarter fiscal 2016 adjusted income of $0.06 per share missed the Zacks Consensus Estimate of 10 cents almost 40.0%. Earnings also plunged 57.14% year over year due to lower margins. Although net sales increased 9.8% year over year, it lagged the consensus mark by 2.3% due to lower comps
Traffic Trends: Kirkland’s has been experiencing low traffic over the past few months and expects the trend to persist in fiscal 2016 as well, especially in Texas, where it has a wide footprint. Although the company is trying to improve its omni channel and attract customers to its e-commerce business, it lags behind the online business of e-commerce giant Amazon.com which has captured almost the whole of the retail market.
Operating Expenses: Kirkland’s has been incurring higher operating expenses for the several quarters due to increase in store occupancy costs. The higher costs resulted from increased shipping and packaging expenses which have put margins under pressure. The company is aggressively expanding its store locations which is expected to raise store occupancy costs further. Also, the company’s intention to expand the supply-chain capabilities would increase costs.
Stocks to Consider
Investors interested in the broader retail wholesale sector can consider stocks like Darden Restaurants, Inc. (DRI - Free Report) and Fred’s Inc. , all holding a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>