Kirkland’s has had a rough summer, with comps down double digits and net loss up.
For the second quarter ended August 3, net loss was $17.1 million, or $1.21 per share, versus a net loss of $6.7 million, or 43 cents per share, in the period a year before. Adjusted net loss, excluding asset impairment and severance charges, was $14.9 million, or $1.05 per share, versus an adjusted net loss, excluding CEO transition costs, of $6.4 million or 41 cents per share, in the prior-year period.
Adjusted net loss in the quarter exceeded a MarketBeat-published analyst consensus estimate of 67 cents.
Comparable sales, including e-commerce, decreased 11.2% in the quarter versus the period a year earlier, driven by a decline in store sales partially offset by an increase in online-generated revenues. Negative store traffic hurt comps as did a decline in average ticket, Kirkland’s reported, partially offset by an improvement in conversion. Gains in traffic and conversion, partially offset by a decline in average ticket, helped e-commerce sales, the company added.
Net sales for the quarter decreased 10.5% to $119.9 million versus the year-previous period.
“Overall trends remained challenging in the second quarter as our home décor customers continued to shift their shopping and purchasing patterns,” said Woody Woodward, CEO, Kirkland’s. “E-commerce sales reaccelerated in the second quarter, resulting in 22% growth over the prior year, while store traffic declined at a double-digit rate, pressuring margins with associated expense deleverage. Store traffic remains challenging, and we expect near-term financial results to be impacted by promotional activity to bring inventory back into alignment and increased marketing spend to drive traffic, highlight new product and target new customers.”
As the company moves forward, Woodward said, “our teams are moving with increased speed and determination to implement our strategy to broaden Kirkland’s product reach, optimize brick and mortar infrastructure to align with an omnichannel experience and streamline the supply chain. We’re seeing solid performance in new categories including tabletop and rugs, and we’re excited about the upcoming launch of bedding, which will be introduced in the third quarter. We have the right plan, the right people, and capital to drive our transformation, and we’re confident we can return Kirkland’s to profitable growth over time.”