Kirkland’s Pressured With Q1 Sales Decline

Kirkland’s faced a challenging first quarter with comps and net sales declining. The home décor retailer said it is taking steps to improve its second-half performance.

Net sales for the first quarter ended May 4 decreased 9% to $129.6 million compared to $142.5 million for the previous first quarter. Comparable store sales, including e-commerce sales, decreased 10.7% compared to an increase of 1.4% in the prior-year quarter. The decline in comparable stores sales for the quarter was driven by a decline in store sales partially offset by an increase in e-commerce sales. Store sales were impacted by negative store traffic and a decline in average ticket, which was partially offset by an improvement in conversion. E-commerce sales were driven by gains in traffic, partially offset by a decline in conversion and average ticket.

Net loss for the first quarter was $8.9 million, or $0.62 per diluted share, compared to a net loss of $0.9 million, or $0.06 per diluted share, for the previous first quarter.

“The environment remains challenging, and slower-than-expected sales in the first quarter are evidence that we must continue to fast-track our strategy to improve the business,” said Woody Woodward, CEO, Kirkland’s. “For example, continued pressure on brick and mortar traffic offset stronger seasonal performance and a double digit increase in e-commerce sales against last year’s gain. To address these issues, we’re taking additional steps to reduce operating costs by $10 million in 2019 as well as mitigate the potential impact of higher tariffs on home décor products.”

He added, “We’re encouraged by progress on our strategic priorities as we approach the second half. Plans to add product categories that can significantly broaden our reach are on schedule, and we’re expanding buy online, pickup in store to further differentiate Kirkland’s in the home décor sector. Initiatives to improve supply chain efficiency and accelerate direct sourcing are also on track. We’re in a strong financial position to execute our plan, and we’re optimistic about prospects to improve performance in the second half of 2019.”