For the third quarter ended October 31, Kirkland’s reported a net loss of $270,000, or two cents per diluted share, versus net income of $1.3 million, or seven cents per diluted share, for the period a year earlier.
Kirkland’s stated that the third quarter loss includes a tax benefit of two cents per diluted share related to state employment and investment credits.
Third quarter net sales increased 10.3% to $129.2 million while comparable sales, including e-commerce revenue, gained 1.8% versus last year’s period. Operating loss was $932,000 versus operating income of $2 million in the quarter a year ago.
Mike Madden, Kirkland’s president and CEO, said, “While our fall seasonal merchandise performed well and e-commerce revenues exceeded our expectations, we were disappointed with our third quarter results. Comparable sales were impacted by soft traffic including weakness in Texas, where we have our highest concentration of stores. Merchandise margins were lower due primarily to an increase in promotional activity to stimulate traffic and manage inventory levels, as well as higher supply chain costs.”
He added that, although traffic challenges remain a Kirkland’s concern, “the bulk of the holiday selling season is ahead of us, and we believe we have a strong and engaging holiday assortment as evidenced by our continued strength in conversion. We’re also encouraged by the performance of our 2015 class of stores and will enter Thanksgiving with 11% more stores open versus last year.”
Kirkland’s opened 21 stores in the third quarter and closed two, bringing total unit count to 370.