Kirkland's states it will continue to fine tune its promotional and seasonal offering.
NASHVILLE, Tenn. -- Kirkland's, Inc. (Nasdaq: KIRK) ("Kirkland's Home" or the "Company"), a specialty retailer of home décor and furnishings, announced financial results for the 13-week period ended April 29, 2023.
"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. "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 omni-channel 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 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.
"Looking ahead, we are 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."
First Quarter 2023 Summary
• Net sales were $96.9 million, with comparable sales decreasing 4.4%.
• Gross profit margin of 26.7%.
• Operating loss of $10.3 million.
• Adjusted EBITDA of $(5.8) million.
• Ended the period with a cash balance of $7.1 million and $33.0 million in outstanding debt.
• Closed three stores to end the quarter with 343 stores.
First Quarter 2023 Financial Results
Net sales in the first quarter of 2023 were $96.9 million, compared to $103.3 million in the prior year quarter. Comparable same-store sales decreased 4.4%, including a 6.6% decline in e-commerce sales. The decrease was primarily driven by a decline in traffic, partially offset by an increase in average ticket.
Gross profit in the first quarter of 2023 was $25.9 million, or 26.7% of net sales, compared to $28.3 million, or 27.4% of net sales in the prior year quarter. The decline was primarily a result of the deleverage of fixed cost components on the lower sales base, partially offset by improved merchandise margin.
Operating loss in the first quarter of 2023 was $10.3 million compared to an operating loss of $11.1 million in the prior year quarter. The improvement to the prior year period was primarily a result of lower advertising expense and lower store payroll expense, partially offset by the aforementioned decline in gross profit.
EBITDA in the first quarter of 2023 was $(7.1) million compared to $(6.6) million in the prior year quarter. Adjusted EBITDA in the first quarter of 2023 was $(5.8) million, which was consistent with the prior year quarter.
Net loss in the first quarter of 2023 was $12.1 million, or a loss of $0.95 per diluted share, compared to a net loss of $7.9 million, or a loss of $0.63 per diluted share in the prior year quarter.
As of April 29, 2023, the Company had a cash balance of $7.1 million, with $33.0 million of outstanding debt under its $90 million senior secured revolving credit facility.
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