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Kirkland's - Inflection Achieved

Sep. 08, 2020 10:06 AM ETKirkland's, Inc. (KIRK)HOME, BYON, W
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  • KIRK reported solid quarterly results characterized by 10% SSS growth despite 44 store closures.  E-Commerce growth accelerated to 77%+ on DTC and pickups and looks to approach 100%+.
  • After many years, the Company hit EPS+ and is now at an EBITDA run rate of roughly $30MM.  All LT debt was paid off.
  • Tailwinds from the favorable dynamics within the home segment (stay at home) and fewer store-based competitors than a year ago aiuded momentum created by KIRK's own merchandising, brand, omni-channel strategies.
  • Best comp HOME put up stellar results a week or so ago, but they appear to have been priced in with the stock selling off several points on inventory concerns.  That said, one can drive a truck through the valuation gap between KIRK at 0.5x sales vs. HOME at 1.7x.
  • Pruning underperforming stores, accelerating e-commerce sales, building inventory for the next cycle, turning EPS+, and paying off all LT debt reinforces our bullishness on this turnaround/underfollowed stock.  We reiterate STRONG-BUY $25 recommendation/price target, which is an enterprise value (EV) of $550MM or 1x next year annual sales adjusted for conservative growth assumptions of 10%.  We recommend aggressive purchase of shares in the single digits as risk/reward favors the bulls.

KIRK 2Q Earnings PR

Kirkland's Reports Second Quarter 2020 Results

KIRK Cap Table @ $6.75 (pre-market 09-08-2020)


KIRK Cap Table @ $25 (1x forward sales)


Analyst's Disclosure: I am/we are long KIRK.

We intend to provide additional commentary in our ongoing coverage of KIRK.

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