July 22, 2014 10:13 PM ET

Specialty Retail

Company Overview of The Kitchen Collection, LLC

Company Overview

The Kitchen Collection, LLC operates kitchenware stores in the United States. It sells small appliances, bake ware, kitchen gadgets, cookware, cutlery, tableware, food products, decorative wood products, and marble and ceramics. The company sells products through its stores located in factory outlet malls and regional fashion malls; and online. The Kitchen Collection, LLC was formerly known as The Kitchen Collection, Inc. The company was founded in 1982 and is based in Chillicothe, Ohio. The Kitchen Collection, LLC operates as a subsidiary of Nacco Industries Inc.

71 East Water Street

Chillicothe, OH 45601

United States

Founded in 1982

Phone:

740-774-0561

Fax:

740-774-0593

Key Executives for The Kitchen Collection, LLC

Chief Executive Officer and Director
Age: 52
President
Age: 57
Compensation as of Fiscal Year 2014.

The Kitchen Collection, LLC Key Developments

Kitchen Collection, LLC Reports Unaudited Earnings Results for the First Quarter Ended March 31, 2014; Provides Earnings Guidance for 2014; Plans to Close Approximately Ten Stores in Second Quarter of 2014

Kitchen Collection, LLC reported unaudited earnings results for the first quarter ended March 31, 2014. The company reported a net loss of $4.0 million and revenues of $36.9 million for the first quarter of 2014 compared with a net loss of $3.3 million and revenues of $39.7 million for the first quarter of 2013. The decline in Kitchen Collection's Revenue was primarily the result of the loss of sales from the closure of unprofitable Le Gourmet Chef and Kitchen Collection stores since March 31, 2013 and a decrease in comparable store sales at both the Kitchen Collection and Le Gourmet Chef stores. The decline in comparable store sales was predominantly due to a decrease in customer visits and store transactions, partially offset by a modest improvement in the average sales transaction value. First quarter 2014 revenues were also unfavorably affected by an increase in the number of temporary store closures due to inclement weather. The decline in revenue was partially offset by sales at newly opened Kitchen Collection stores. The increase in Kitchen Collection's first quarter 2014 net loss was primarily the result of lower operating margins at both Kitchen Collection and Le Gourmet Chef stores mainly caused by the reduction in sales and unfavorable margins from the liquidation of discontinued inventory and inventory at stores that closed. Seasonal losses at newly opened stores also contributed to the increase in the net loss. Operating loss was $6.5 million against $5.0 million for the same period in the last year. Loss before income tax provision (benefit) was $6.6 million against $5.1 million for the same period in the last year. Capital expenditures were $0.3 million against $0.8 million for the same period in the last year. Net cash used for operating activities was $10.4 million against $17.8 million for the same period in the last year. Negative return on equity was 20.8% against 8.7% for the same period in the last year. Consumer traffic to all mall locations, and particularly outlet malls, continued to decline in the first quarter of 2014 and prospects for the remainder of 2014 are uncertain. Fewer households were established in 2013, and this trend is expected to continue in 2014 because the middle-market consumer remains under pressure as a result of financial and economic concerns. These concerns are expected to continue to dampen consumer sentiment and limit consumer spending levels for Kitchen Collection's target customer in 2014. In this context, Kitchen Collection closed 48 stores in the first quarter of 2014 and plans to close approximately ten more in the second quarter, as part of a program to close underperforming stores and realign the business around core stores which perform with acceptable profitability. The net effect of closing stores early in 2014 and the anticipated opening of a small number of new stores during the second half of 2014 is expected to contribute to significantly improved operating results beginning in the second quarter and gradually improving throughout 2014 with the objective of approaching break-even operating profit for the full year, compared with a significant loss in 2013, and to generate positive cash flow before financing activities. The company plans to maintain a lower number of stores in 2014 and, as a result, expects 2014 revenues to decrease compared with 2013. Overall, however, the company expects a moderate net loss in 2014.

Kitchen Collection Reports Unaudited Earnings Results for the Third Quarter and Nine Months Ended September 30, 2013; Provides Earnings Guidance for the Fourth Quarter of 2013 and Full Year of 2013 and 2014; Expects to Add 20 Stores During the Fourth Quarter of 2013

Kitchen Collection reported unaudited earnings results for the third quarter and nine months ended September 30, 2013. For the quarter, the company reported revenue of $42,618,000 against $48,154,000 a year ago. Operating loss was $3,658,000 against $1,873,000 a year ago. Loss from continuing operations before income tax provision was $3,762,000 against $2,015,000 a year ago. Loss from continuing operations, net of tax was $2,822,000 against $1,208,000 a year ago. The company reported net loss of $2.8 million for the third quarter of 2013 compared with a net loss of $1.2 million for the third quarter of 2012. The decline in Revenue was primarily the result of the loss of sales from the closure of unprofitable le gourmet chef® and kitchen collection® stores since September 30, 2012 and a decrease in comparable store sales at both the kitchen collection® and le gourmet chef® stores. The decline in comparable store sales was predominantly due to a decrease in customer visits and store transactions, partially offset by improvements in the average sales transaction value. The decline in revenue was partially offset by sales at newly opened kitchen collection® stores. The increase in the third quarter 2013 net loss was primarily the result of lower operating margins at both kitchen collection® and le gourmet chef® comparable stores mainly caused by lower sales and a shift in mix toward lower margin product categories, seasonal losses at newly opened stores and a lower quarterly effective income tax rate in 2013 compared with 2012, which resulted in a lower tax benefit from the operating loss. Capital expenditures was $0.4 million compared to $1.0 million last year. Net cash used in operating activities $2.0 million compared to net cash provided by operating activities of $1.4 million last year. Return on equity was negative 11.2% compared to return on equity of 1.0% last year. For the nine months, the company reported net loss of $8.5 million compared with a net loss of $7.2 million for the first nine months of 2012. Revenue was $120,709,000 against $135,787,000 a year ago. Operating loss was $14,045,000 against $11,614,000 a year ago. Loss from continuing operations before income tax provision was $14,321,000 against $12,025,000 a year ago. Loss from continuing operations, net of tax was $8,492,000 against $7,214,000 a year ago. While the company expects to add 20 kitchen collection® stores during the fourth quarter of 2013, the company expects to end the year with a lower number of stores than in 2012 and expects to maintain a lower number of stores throughout much of 2014 compared with 2013 as a result of closing a number of stores during the first quarter of 2014. As a result, the company expects revenues for the fourth quarter of 2013 and for 2014 to decrease compared with the prior year periods. Overall, the company expects a modest increase in 2013 fourth quarter net income compared with the fourth quarter of 2012 primarily from enhanced margins resulting from further refinements of promotional offers and merchandise mix in both store formats, and from closure of stores with store operating losses. However, these improvements will depend on improved mall traffic compared with earlier in 2013 and are still not expected to offset fully the losses from the first nine months of the year. As a result, the company expects a loss for the 2013 full year. Cash flow before financing in 2013 is expected to be lower than 2012, but improve in 2014 compared with 2013. The net effect of closing a number of stores early in 2014 and the anticipated opening of new stores during the second half of 2014 is expected to contribute to improved results of around break-even in 2014.

Kitchen Collection Announces Unaudited Earnings Results for the Second Quarter and Six Months Ended June 30, 2013; Provides Earnings Guidance for the Second Half and Full Year of 2013; Plans to Close Six Additional Le Gourmet Chef Stores; Plans to Increase Number of Kitchen Collection Stores

Kitchen Collection announced unaudited earnings results for the second quarter and six months ended June 30, 2013. For the quarter, the company reported revenue of $38,380,000 against $42,340,000 a year ago. Operating loss was $5,407,000 against $5,163,000 a year ago. Loss before income taxes was $5,505,000 against $5,315,000 a year ago. Net loss was $2,403,000 compared with $3,189,000 for the second quarter of 2012. Decrease in net loss primarily as a result of a higher separate company effective income tax rate in 2013 which generated a greater tax benefit. Revenues declined primarily as a result of the loss of sales from closing unprofitable Le Gourmet Chef(R) and Kitchen Collection(R) stores since June 30, 2012 and a decrease in comparable store sales at both the Kitchen Collection(R) and Le Gourmet Chef(R) stores. The decline in comparable store sales was predominantly due to a decrease in customer visits and store transactions, partially offset by improvements in the average sales transaction value. The decline in revenue was partially offset by sales at newly opened Kitchen Collection(R) stores. For the six months, the company reported revenue of $78,091,000 against $87,633,000 a year ago. Operating loss was $10,387,000 against $9,741,000 a year ago. Loss before income taxes was $10,559,000 against $10,010,000 a year ago. Net loss was $5,670,000 compared with $6,006,000 for the second quarter of 2012. The company expects to increase the number of Kitchen Collection(R) stores in the second half of 2013 compared with the first half of 2013. The company expects to close six additional Le Gourmet Chef stores(R) during the remainder of 2013. The company expects a moderate loss for the 2013 full year. The company expects revenues in the second half of 2013 to decrease compared with the second half of 2012. The company expects an increase in net income for the second half of 2013 compared with the second half of 2012, primarily in the fourth quarter. The company expects positive cash flow before financing activities in 2013 compared with essentially break even cash flow before financing activities in 2012.

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