In the second quarter, Kirkland’s recorded an adjusted earnings loss, which beat a Wall Street estimate, and lower sales, which fell short of Street expectations.
Earnings were $626,000, or four cents per diluted share, versus a loss in the COVID-19 pandemic hit period a year before, of $9.36 million, or 66 cents per diluted share.
Adjusted for one-time events, the company posted an operating loss of $94,000, or one cent per diluted share, versus net income of $314,000, or two cents per diluted share, in the year-previous quarter.
Kirkland’s beat an analyst average earnings estimate published by Yahoo Finance, which called for a five cents per adjusted diluted share loss in the period, but revenues came in under expectations by a little less than a million dollars.
Second-quarter comparable sales slipped 5.2%, including an e-commerce decrease of 12.6%, Kirkland’s reported. Net sales decreased 8% to $114.8 million in the period year over year, with the figure based on Kirkland’s operating 4.5% fewer stores, the company stated.
Operating income was $223,000 versus an operating loss of $5.35 million versus the year-earlier quarter while the adjusted operating loss was $132,000 versus operating income of $830,000.
“The second quarter proved to be another step forward in our transformation efforts and achieving our long-term financial targets,” said Steve “Woody” Woodward, president and CEO of Kirkland’s, in announcing the financial results. “Despite the expected challenges stemming from continued constraints in the global supply chain, we made progress in the areas that we could control and experienced an improvement in sales during the last month of the quarter with year-over-year margin gains as a result of our disciplined approach to our cost structure. This included elevating our merchandising assortment to drive higher average tickets, continuing to increase our levels of direct sourcing and further negotiating rent reductions across our store footprint. These enhancements drove a two-year comparable same-store sales increase of approximately 5% compared to the same period in pre-pandemic 2019. In addition, our positive operating income and earnings during our seasonally softest quarter are a testament to these accomplishments and others as we work towards consistent profitability in all four quarters.
As Kirkland prepares for the holiday season, Woodward said the company would adapt to supply chain woes.
“Entering into our historically strongest seasons, harvest and Christmas, our team will continue to closely monitor our inventory position and do everything we can to meet customer demand,” he said. “Although we believe some level of supply chain constraints will persist, we still expect to deliver strong same-store sales growth in the range of mid-single digits for the second half of the year. We also remain steadfast in executing upon our overall transformation strategy. We’ve been hard at work further optimizing our merchandising assortment, stabilizing margins and driving profitable growth with an overarching goal to become a high-performance specialty home furnishing retailer with quality products at affordable price points. With a strong financial position and an efficient infrastructure in place, I have the utmost confidence in our ability to achieve our goals and drive shareholder value.”
