Kirkland's is laser-focused on e-commerce growth

Home furnishings retailer Kirkland's says its soaring digital sales are proof of the success of its omnichannel transformation, and the retailer plans to grow e-commerce even more in 2016.

The Nashville-based company said digital sales spiked 34% during the fourth quarter ended Jan. 30. Net sales increased 11.4% to $199 million compared with $178.7 million for the prior year. Same store sales, including e-commerce sales, increased 1.3% compared with an increase of 8.2% in the prior-year quarter. Net income increased 6.7% to $16.6 million, or $0.97 per diluted share, compared with net income of $15.6 million, or $0.87 per diluted share, for the 13 weeks ended Jan. 31, 2015.

"While 2015 presented challenges for Kirkland's and retail in general, we are enthusiastic about the progress we have made to support our growth plans and bolster the entire organization for the long term," said Mike Madden, president and CEO. "Our real estate effort is generating more consistency in our new store openings through process improvements and an enhanced site selection method. Recent investments in our omnichannel initiative, while still early in the process, are beginning to have an impact as evidenced by a 38% increase in digital revenue for 2015. We have made tangible strides in delivering a complementary customer experience between the channels."

Kirkland's opened 12 stores and closed six during the fourth quarter, bringing the total number of stores to 376 at quarter end.

Madden added: "We are very pleased to have returned $51 million to shareholders during 2015 through a special dividend and share repurchases, reflecting our confidence in the long-term prospects for the Company and its position in the marketplace. We ended the year in a strong financial position, with no debt and ample liquidity to invest in the business and execute our growth strategy. The retail environment continues to evolve at a rapid pace. We are positioning the organization to respond to these opportunities effectively and nimbly through systems, processes and people. Our long-term earnings plan includes a goal to drive double-digit sales growth with improving profit margins as we increase store-level sales productivity, leverage our real estate opportunity and further expand our omni-channel capability – all with the intent of improving the overall customer experience and interaction with our brand."

For fiscal 2016, the company said it expects to achieve approximately 6% to 8% square footage growth with 35 to 40 new store openings and 10 to 15 store closings. Openings and closings are expected to be weighted toward the first half of the year.

Total sales for fiscal 2016 are expected to increase approximately 10% to 12% compared with fiscal 2015. This level of sales performance assumes a low-single-digit comparable store sales increase for fiscal 2016.