Expenses hit Kirkland’s Q1 profit as sales miss

Increases in cost of sales, operating expenses and depreciation resulted in net income dropping at Kirkland’s Inc. during a generally disappointing first quarter of fiscal 2016.



The specialty home décor chain’s net income totaled $916 million, down 64% from $2.53 billion in the first quarter of the previous fiscal year. Net sales rose 10% to $129.91 million from $118.31 million, below expectations. Same-store sales edged up 0.5%.



"The first quarter was in line with our expectations as we executed on our strategic priorities in a challenging traffic environment," said Mike Madden, president and CEO. "E-commerce revenues increased 28%, store conversion was positive, and our seasonal categories performed well. As expected, gross margin was impacted by a planned increase in promotional activity and startup costs for our new e-commerce fulfillment center. Operating expenses were tightly managed during the quarter and will remain a focus throughout the year."



Kirkland's maintained its fiscal 2016 outlook of diluted earnings per share in the range of $0.98 to $1.11. The retailer opened 14 stores and closed eight during the first quarter of fiscal 2016, bringing the total number of stores to 382 at quarter end.