Kirkland’s e-commerce sales plummet; reviewing strategic alternatives
Kirkland’s brick-and-mortar sales showed momentum in the first quarter, but its online business continued to decline.
"We are continuing to see progress on our strategic initiatives as demonstrated by our comparable sales growth of 2.8% in our brick-and-mortar stores for the first quarter,” stated Amy Sullivan, who was promoted to CEO in February. “While this positive momentum was offset by continued pressure in our e-commerce business, we are encouraged by the early signs of traction driven by our marketing and merchandising repositioning strategies."
The home décor and furnishings retailer has been realigning its product assortment, including downplaying high-ticket furniture items, to better reflect consumer demand. On the earnings call, Sullivan said Kirkland’s is focusing on floral, décor and gifts for growth.
On May 14, Kirkland’s retained Consensus, an investment banking firm specializing in consumer-facing companies, to serve as financial advisor to its board in the pursuit and evaluation of potential strategic opportunities to support the company and its initiatives.
“The company has not set a deadline or definitive timetable for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any particular outcome,” Kirkland’s stated.
The retailer reported a net loss of $8.8 million, or a loss of $0.68 per share, for the quarter ended May 4, compared to a net loss of $12.1 million, or a loss of $0.95 per share, in the year-ago quarter. Net sales fell to $91.8 million, compared to $96.9 million last year.
Comparable sales decreased 3.5%, including a 19.1% decline in e-commerce sales and a 2.8% increase in comparable store sales. The decrease was primarily driven by a decrease in consolidated average ticket and e-commerce traffic, partially offset by an increase in store traffic and conversion.
"Given the slower than anticipated start to the year and the continued headwinds associated with higher ticket categories, particularly with our value conscious customer, we are taking swift actions to better align our cost structure to current demand trends and are taking steps to improve our e-commerce business while remaining laser-focused on driving long-term, profitable growth,” Sullivan stated in the earnings release.
At the end of the quarter, inventory was $75.8 million, a 9.1% decrease compared to the year-earlier period, due to the closure of two e-commerce distribution locations in fiscal 2023 and a 4.1% decrease in store count.
As of June 6, Kirkland’s had $40.9 million of outstanding debt under its revolving credit facility and $10 million in borrowings under its term loan. In February, the company secured additional credit line, a $12 million first-in last-out delayed draw term loan from Gordon Brothers.
Kirkland's currently operates 328 stores in 35 states.