Slow Traffic Stalls Kirkland’s Q2

Kirkland’s experienced a challenging second quarter, pointing to weak traffic resulting in comp declines and a net loss.

For the 13 week second quarter ended July 30, Kirkland’s posted a net loss of $3.6 million, or 22 cents per diluted share, compared to a net loss of $2.3 million, or 13 cents per diluted share, in the year-earlier period.

Comparable sales, including store and e-commerce revenues, decreased 4.3% versus last year’s second quarter. Net sales increased 6.7% to $123 million in the quarter year over year.

“The second quarter was challenging as our retail locations experienced weak traffic,” said Mike Madden, Kirkland’s president and CEO. “E-commerce revenue increased a strong 37% in the quarter, and we’re on track to meet our store opening plans for 2016. Operating costs as a percentage of sales declined, reflecting efforts to tightly manage store and corporate expenses. Gross margin was impacted by deleverage of store occupancy and distribution costs.”

Madden added, “Traffic remains under pressure as we enter the second half. Our seasonal merchandise is performing well thus far, and we have planned deeper buys in categories that are trending favorably. Our fall marketing campaign reflects a better balance of value and inspiration, and we’re making improvements to our omnichannel delivery and execution. We’re confident these initiatives can improve our sales performance, and we’ll continue to control our expenses and inventories as traffic issues persist. With further execution on our strategy, Kirkland’s is well positioned to deliver stronger sales and earnings growth over the long term.”

Kirkland’s opened 13 stores and closed four during the second quarter, and operates 392 stores in 36 states.