Kirkland’s Stumbles In Q4, Fiscal Year

Despite e-commerce gains, Kirkland’s posted lower fourth quarter adjusted profits and a loss for the year as comparable sales decreased. The company also said it plans to close 28 underperforming stores in the first quarter.

Net loss for the fourth quarter ended February 1 was $4.9 million, or 35 cents per diluted share, compared to net income of $14.2 million, or 95 cents per diluted share, for the year-before period.

Adjusted for one-time and non-cash items, net income was $8.2 million, or 59 cents per diluted share, versus $14.3 million, or 97 cents per diluted share in the year-previous quarter. Kirkland’s fell short of a MarketBeat-published analyst consensus estimate for fourth quarter adjusted diluted earnings per share of 67 cents.

Comparable store sales, including e-commerce revenues, slipped 2.7% versus the year-previous quarter. An improvement in average ticket partially offset softer store traffic. E-commerce sales advanced 37.9% in the period year over year driven by an increase in transactions. Net sales decreased 3.1% to $209.4 million versus the year-past period.

Net loss for the full fiscal year was $53.3 million, or $3.79 per diluted share, versus net income of $3.8 million, or 24 cents per diluted share, for the year before. Adjusted loss for the year was $22 million, or $1.57 per diluted share, versus net income of $5.9 million, or 38 cents per diluted share, in the year previous.

Comps slid 7.1% versus the year previous. A slowdown in store traffic drove the decline. A 25.3% increase in e-commerce sales arose from a gain in transactions partially offset by a drop in average ticket. Net sales decreased 6.7% to $603.9 million in the year past.

“We accomplished a great deal in 2019 to evolve our merchandise assortment and improve the omnichannel experience,” said Woody Woodward, Kirkland’s CEO. “We’re encouraged that some of the hard work began to take hold in the fourth quarter, with strong e-commerce growth and better revenues in segments of the assortment including furniture and tabletop. Fourth quarter results also reflect additional steps to right size our infrastructure with the planned closure of 28 underperforming stores in the first quarter and approximately $14 million in additional expense reductions as we transition to 2020. We believe there are more opportunities to streamline our supply chain, and we’ll continue to optimize our store base and related expenses.”

He added that, as 2020 proceeds, Kirkland’s is “focused on realizing our vision to deliver an expanded assortment that can furnish a home of any size on a budget. The growth of pure-play e-commerce operators and the impact on the brick-and-mortar segment has created a void that we believe can be exploited to leverage Kirkland’s unique design capabilities and value heritage.”