Although it came out ahead of a Wall Street estimate on sales, Kirkland’s net loss grew as comparable sales declined in the first quarter when the company realigned outreach to emphasize its value offering.
Net loss in the quarter was $12.1 million, or 95 cents per diluted share, versus a net loss of $7.9 million, or a loss of 63 cents per diluted share in the year-previous quarter, the company announced.
An analyst consensus estimate published by Yahoo Finance called for a loss per diluted share of 79 cents and revenues of $93.6 million.
Comparable sales decreased 4.4% in the quarter year over year, including a 6.6% decline in e-commerce sales, Kirkland’s noted. A decline in traffic, partially offset by an increase in average ticket, was the prime driver of the decrease. Net sales were $96.9 million versus $103.3 million in the year-prior quarter. Operating loss was $10.3 million versus an operating loss of $11.1 million in the prior year quarter. Lower advertising expenses and lower store payroll expenses, the company pointed out, partially offset by a decline in gross profit, helped cut the operating loss year over year. Adjusted operating loss was $9.1 million versus $10.3 million in the year-before period.
“During the first quarter, we placed renewed emphasis on our overall value proposition and better aligned the brand voice through improved marketing, promotional strategy and seasonally relevant décor,” said Ann Joyce, interim CEO of Kirkland’s Home, in announcing the financial results. “While a challenging consumer spending environment continued to affect traffic during the quarter, we achieved positive comparable sales for the month of April as customers responded well to our promotions and omnichannel experience. Our merchandise margins began to expand during the quarter as the benefits of lower freight and product costs started to flow through our results, and we expect this to become more meaningful in the upcoming quarters. Over the past several quarters, we have worked diligently to improve our balance sheet, and while there is still work to be done, we are on a stronger footing this year as we approach peak season. In the near term, we are realigning our category mix, strategically optimizing our promotional activity using our enhanced margin position and refocusing our messaging to engage and convert the value-conscious customer.
As the company looks ahead, she said, management is “committed to returning Kirkland’s Home to sustained levels of profitability and cash flow. We believe that a refined merchandise assortment focused on stylish home décor at a value, with an added emphasis on seasonal relevancy, will better position us to win back and attract customers. We are developing an improved retail strategy focused on an intentional promotional calendar, with flexibility to respond to an evolving consumer and ever-changing seasonal trends. I am confident in our team and our ability to capitalize on these opportunities.”
In the quarter, Kirkland’s shuttered three locations to end with 343 stores.
