Kirkland's (KIRK) Turnaround Seems Likely: Should You Hold?
Zacks Investment Research | Nov 29, 2016 09:51PM ET
"Nothing is permanent," it is said. Similarly, we may say that bad times of a stock are also just a passing phase. The tide is bound to turn when the stock rebounds.
Taking a look at home furnishing retailer, Kirkland’s, Inc. (NASDAQ:KIRK) , we observe that the company has been in the red zone for a while now, as it has been struggling with low traffic and anticipates the trend to persist in fiscal 2016 as more consumers are shifting to online shopping.
Further, Kirkland’s has been incurring higher operating expenses for several quarters now due to an increase in store occupancy costs. The higher costs were a result of increased shipping and packaging expenses, putting margins under pressure.
With so much going wrong at Kirkland's, what are the factors that still make this Zacks Rank #3 (Hold) company look attractive for the long run? Let’s delve deeper and bring what’s hidden to the surface.
The Growth Drivers
Kirkland’s has been taking all possible measures to bring about a turnaround in its business. Recently, management has chalked out various strategic plans to improve its traffic at stores. In this regard, the company identified certain core focus areas, which include improving in-store productivity, enhancing omni-channel platform, optimizing real estate and reinforcing a culture of continuous improvement.
Further, Kirkland’s has ramped up marketing efforts to support near-term traffic driving initiatives. The company has also started providing free shipping to customers who fulfill certain conditions. These efforts are likely to help the company boost its top line.
KIRKLANDS INC Price, Consensus and EPS Surprise
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