Kirkland’s reduces corporate, DC headcount; negotiating with landlords
Kirkland’s is making permanent job cuts and is in discussions with landlords to defer or waive rent while its stores remain closed amid the COVID-19 pandemic.
The home décor retailer, which was struggling before the pandemic, also has accelerated ongoing negotiations with landlords on potential closures of unprofitable stores in addition to the 27 permanent store shutterings that it completed in the first quarter of 2020.
Kirkland’s said it has permanently reduced headcount at its corporate headquarters by approximately 18% (in addition to a 14% reduction in January) and temporarily reduced compensation for the executive team. It also has permanently reduced 33% of distribution center indirect labor and furloughed 30% of direct labor, while also further reducing hours to match demand.
"With our stores closed to customer traffic to keep our employees and customers safe, we have accelerated our contingency plans across all areas of the company,” said Woody Woodward, CEO, Kirkland’s, which operates 405 stores in 36 states. “I'm proud of the innovation of our team as we stood up contactless curbside pickup and immediately saw great results. These actions have had a direct impact on many within our Kirkland's family and were taken to ensure we have the right cost structure and infrastructure for this new environment as well as the liquidity and capabilities to serve our customers online during this pandemic."
Other actions Kirkland's has recently taken to mitigate the impact of the current situation include:
• Extended the closure of all of its 405 stores to customer traffic, instead offering contactless curbside pickup at over 300 of our stores during specific hours, as permitted;
• Focused offers and promotions on its e-commerce business through its website;
• After paying all store team members during the first two weeks of closure, furloughed all part-time store employees and temporarily reduced the pay of full-time managers and key employees;
• Cancelled orders and delayed merchandise receipts to manage inventory levels, and extended payment terms with product and non-product vendors to improve working capital;
• Significantly reduced transportation expenses with limited deliveries to stores and the delay/reduction of inbound freight receipts;
• Significantly reduced the planned 2020 marketing spend to levels consistent with 2019 and reduced all non-operating and non-essential expenses;
• Further reduced capital expenditures planned for 2020 below the low end of the previously released range of $10 million.
As previously disclosed, Kirkland’s drew down $40 million of its $75 million revolving credit facility. As of April 17, 2020, the company had approximately $34 million of cash on hand.