Weak store traffic challenged Kirkland’s in the third quarter as the retailer reported a decline in net sales and comparable store sales, and a larger net loss.
Net sales for the third quarter ended November 2, 2019, decreased 6.2% to $144.9 million compared to $154.6 million for the previous third quarter. Comparable store sales, including e-commerce sales, decreased 6.4% compared to an increase of 1.4% in the prior-year quarter. The decline in comparable store 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, which was partially offset by an improvement in conversion. E-commerce sales were driven by gains in traffic and conversion, partially offset by a decline in average ticket.
Net loss for the third quarter was $22.3 million, or $1.61 per diluted share, compared to a net loss of $2.8 million, or $0.18 per diluted share, for the third quarter of 2018. Excluding asset impairment of $3.4 million, a tax valuation allowance of $11.3 million and severance charges, the adjusted loss for the quarter was $8.1 million, or $0.58 per share.
“We are focused on strengthening the balance sheet and executing merchandising initiatives that we believe have the best potential to rejuvenate the top line and improve financial results,” said Woody Woodward, CEO, Kirkland’s. “We effectively managed the seasonal investments in the business during the third quarter, our traditional low point for cash, and we expect to end 2019 with lower inventory levels and positive net cash. Trends remain challenging. We are pleased with elements of our new assortments, and we are encouraged by e-commerce trends, which accelerated in the quarter, but there is clearly more work to do to address weak store traffic. We have adjusted our outlook to account for these trends, and we are working aggressively to address infrastructure, manage operating expenses and improve product costs.”