With the recently concluded Beyond deal confirmed by shareholders, Kirkland’s is updating its strategic initiatives and detailed plans to advance on the path to profitability.
Kirkland’s also provided preliminary financial results for the fiscal 2024 fourth quarter. The company expects net sales of about $148 million and a consolidated comparable sales decline of approximately 0.6%, based on growth of 1.6% for comp stores and a decline of 7.9% for e-commerce year over year. The company expects net income of about $7.9 million and diluted earnings per share of 50 cents for the quarter. As of February 17, Kirkland’s had $41.9 million in outstanding borrowings and letters of credit under its revolving credit facility, and availability of $8.2 million after the minimum required availability covenant, as well as $8.5 million in debt to Beyond.
As the deal is sealed with Beyond, one that, in part, involves developing Bed Bath & Beyond bricks and mortar stores, Kirkland’s plans include, according to the company:
- Improve or Eliminate Underperforming Assets. By expanding its portfolio of brands to include Kirkland’s Home, Bed Bath & Beyond, buybuy Baby and Overstock, Kirkland’s is setting new benchmarks and raising the bar of expectations. Following a comprehensive review of the entire store footprint, the company has identified an initial list including 6% of locations that do not meet profitability standards in their current format. Kirkland’s is acting to address the underperforming stores, including strategically converting them to a more margin-accretive brand, augmenting the assortment strategy to drive improved profitability through the term of the lease, and closing select locations to ensure real estate investments align with the company’s new standards. As part of the ongoing transformation, Kirkland’s will continue eliminating or converting underperforming assets to drive revenue growth and improve profitability.
- Optimize E-commerce Performance. Although the company has experienced a sequential improvement in the brick-and-mortar channel, Kirkland remains unsatisfied with its e-commerce performance. Through its collaboration with Beyond, Kirkland’s intends to leverage its partner’s expertise to enhance the site experience and improve conversion as the company’s internal team prioritizes profitability. With a clear line of sight from holistic channel analysis, Kirkland’s has begun strategic actions, including eliminating SKUs that do not meet margin standards after shipping, handling and returns. The company also intends to strategically expand product categories to drive average order value and maximize omnichannel assets by reallocating lower average unit retail inventory to brick-and-mortar stores to maximize buy-online-pick-up-in-store capabilities. Kirkland’s designed the actions it’s taking to deliver more profitable transactions.
- Maximize Kirkland’s Home Brand Value and Distribution. For almost 60 years, Kirkland’s Home has been a destination for seasonal home décor, gifts and furnishings. The company believes it has a significant opportunity to expand Kirkland’s Home name through private label distribution across its collective family of omnichannel brands. Kirkland’s has garnered commitments from top vendor partners to expand its product development and sourcing capabilities to ensure the company can deliver unique products specifically curated for each of the omnichannel brands with which it is affiliated. It intends to leverage the Kirkland’s Home brand as the exclusive private label assortment for everyday basics and décor in Bed Bath & Beyond stores, expanding the label’s reach to new customers. Kirkland’s is also exploring opportunities to expand e-commerce distribution in furniture, patio and rugs, driving average order value through Kirkland’s, Overstock and other marketplaces.
In announcing the preliminary financials and strategic plans, Amy Sullivan, Kirkland’s CEO, said, “Over the past year, we delivered significant improvement in key operating metrics while driving consistent positive comparable brick-and-mortar store sales growth as we worked to stabilize the core Kirkland’s Home business during the first phase of our transformation. As we enter our next chapter with new assets through our partnership with Beyond, Inc., we are positioned to leverage our collective family of brands as we drive toward our path to profitability. We believe an omnichannel retail strategy focused on customer experience is foundational in building brand health, maximizing lifetime customer value and delivering sustainable, profitable growth. We are dedicated to three strategic initiatives as part of our ongoing transformation, ensuring accountability and execution at every level.”
Sullivan added, “Inspired by the possibilities for these iconic brands, we are setting higher standards and maintaining a disciplined approach to capital allocation to maximize our liquidity that we believe will not only advance our path to profitability but position Kirkland’s for long-term success while delivering value for all shareholders.”
