NASHVILLE, Tenn., June 8, 2023
/PRNewswire/ -- 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.
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.
Management Commentary
"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 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.
Investor Conference Call and Web Simulcast
Kirkland's Home management will host a conference call to
discuss its financial results for the first quarter ended
April 29, 2023, followed by a
question-and-answer period with Ann
Joyce, Interim CEO, Amy
Sullivan, President and COO, and Mike Madden, EVP and CFO.
Date: Thursday, June 8, 2023
Time: 9:00 a.m. Eastern Time
Toll-free dial-in number: (855) 560-2577
International dial-in number: (412) 542-4163
Conference ID: 10179263
Please call the conference telephone number 10-15 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Group at (949)
574-3860.
The conference call will be broadcast live and available for
replay here and via the investor relations section of the
Company's website at www.kirklands.com. The online replay will
follow shortly after the call and continue for one year.
A telephonic replay of the conference call will be available
after the conference call through June 15,
2023.
Toll-free replay number: (877) 344-7529
International replay number: (412) 317-0088
Replay ID: 9873400
About Kirkland's, Inc.
Kirkland's, Inc. is a specialty retailer of home décor and
furnishings in the United States,
currently operating 341 stores in 35 states as well as an
e-commerce website, www.kirklands.com, under the Kirkland's Home
brand. The Company provides its customers an engaging shopping
experience characterized by a curated, affordable selection of home
furnishings along with inspirational design ideas. This combination
of quality and stylish merchandise, value pricing and a stimulating
online and store experience allows the Company's customers to
furnish their home at a great value. More information can be found
at www.kirklands.com.
Forward-Looking Statements
Except for historical information contained herein, certain
statements in this release, constitute forward-looking statements
that are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 and are subject to the
finalization of the Company's quarterly financial and accounting
procedures. Forward-looking statements deal with potential future
circumstances and developments and are, accordingly,
forward-looking in nature. You are cautioned that such
forward-looking statements, which may be identified by words such
as "anticipate," "believe," "expect," "estimate," "intend," "plan,"
"seek," "may," "could," "strategy," and similar expressions,
involve known and unknown risks and uncertainties, which may cause
the Company's actual results to differ materially from forecasted
results. Those risks and uncertainties include, among other things,
risks associated with the Company's liquidity including cash flows
from operations and the amount of borrowings under the secured
revolving credit facility, the Company's actual and anticipated
progress towards its short-term and long-term objectives including
its brand strategy, the risk that natural disasters, pandemic
outbreaks (such as COVID-19), global political events, war and
terrorism could impact the Company's revenues, inventory and supply
chain, the continuing consumer impact of inflation and
countermeasures, including raising interest rates, the
effectiveness of the Company's marketing campaigns, risks related
to changes in U.S. policy related to imported merchandise,
particularly with regard to the impact of tariffs on goods imported
from China and strategies
undertaken to mitigate such impact, the Company's ability to retain
its senior management team, continued volatility in the price of
the Company's common stock, the competitive environment in the home
décor industry in general and in the Company's specific market
areas, inflation, fluctuations in cost and availability of
inventory, increased transportation costs and potential
interruptions in supply chain, distribution systems and delivery
network, including our e-commerce systems and channels, the ability
to control employment and other operating costs, availability of
suitable retail locations and other growth opportunities,
disruptions in information technology systems including the
potential for security breaches of the Company's information or its
customers' information, seasonal fluctuations in consumer spending,
and economic conditions in general. Those and other risks are more
fully described in the Company's filings with the Securities and
Exchange Commission, including the Company's Annual Report on Form
10-K filed on April 4, 2023 and
subsequent reports. Forward-looking statements included in this
release are made as of the date of this release. Any changes in
assumptions or factors on which such statements are based could
produce materially different results. Except as required by law,
the Company disclaims any obligation to update any such factors or
to publicly announce results of any revisions to any of the
forward-looking statements contained herein to reflect future
events or developments.
Contact:
|
Kirkland's
Home
|
Gateway Group,
Inc.
|
|
Mike Madden
|
Cody Slach and Cody
Cree
|
|
(615)
872-4800
|
KIRK@gatewayir.com
|
|
|
(949)
574-3860
|
KIRKLAND'S,
INC.
UNAUDITED
CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS
(In thousands,
except per share data)
|
|
|
|
|
|
13-Week Period
Ended
|
|
|
|
April
29,
|
|
|
April
30,
|
|
|
|
2023
|
|
|
2022
|
|
Net sales
|
|
$
|
96,875
|
|
|
$
|
103,285
|
|
Cost of
sales
|
|
|
71,004
|
|
|
|
74,993
|
|
Gross
profit
|
|
|
25,871
|
|
|
|
28,292
|
|
Operating
expenses:
|
|
|
|
|
|
|
Compensation and
benefits
|
|
|
20,039
|
|
|
|
20,892
|
|
Other operating
expenses
|
|
|
14,738
|
|
|
|
16,798
|
|
Depreciation
(exclusive of depreciation included in cost of sales)
|
|
|
1,206
|
|
|
|
1,697
|
|
Asset
impairment
|
|
|
225
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
36,208
|
|
|
|
39,387
|
|
Operating
loss
|
|
|
(10,337)
|
|
|
|
(11,095)
|
|
Other expense,
net
|
|
|
410
|
|
|
|
84
|
|
Loss before income
taxes
|
|
|
(10,747)
|
|
|
|
(11,179)
|
|
Income tax expense
(benefit)
|
|
|
1,360
|
|
|
|
(3,324)
|
|
Net loss
|
|
$
|
(12,107)
|
|
|
$
|
(7,855)
|
|
Loss per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.95)
|
|
|
$
|
(0.63)
|
|
Diluted
|
|
$
|
(0.95)
|
|
|
$
|
(0.63)
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
12,778
|
|
|
|
12,565
|
|
Diluted
|
|
|
12,778
|
|
|
|
12,565
|
|
KIRKLAND'S,
INC.
UNAUDITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(In
thousands)
|
|
|
|
April
29,
|
|
|
January
28,
|
|
|
April
30,
|
|
|
|
2023
|
|
|
2023
|
|
|
2022
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
7,072
|
|
|
$
|
5,171
|
|
|
$
|
5,382
|
|
Inventories,
net
|
|
|
83,332
|
|
|
|
84,071
|
|
|
|
130,855
|
|
Prepaid expenses and
other current assets
|
|
|
4,905
|
|
|
|
5,089
|
|
|
|
10,994
|
|
Total current
assets
|
|
|
95,309
|
|
|
|
94,331
|
|
|
|
147,231
|
|
Property and equipment,
net
|
|
|
36,146
|
|
|
|
38,676
|
|
|
|
47,269
|
|
Operating lease
right-of-use assets
|
|
|
131,289
|
|
|
|
134,525
|
|
|
|
134,343
|
|
Other assets
|
|
|
7,137
|
|
|
|
6,714
|
|
|
|
7,173
|
|
Total
assets
|
|
$
|
269,881
|
|
|
$
|
274,246
|
|
|
$
|
336,016
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
38,092
|
|
|
$
|
43,739
|
|
|
$
|
47,313
|
|
Accrued
expenses
|
|
|
25,499
|
|
|
|
26,069
|
|
|
|
24,016
|
|
Operating lease
liabilities
|
|
|
41,173
|
|
|
|
41,499
|
|
|
|
41,531
|
|
Total current
liabilities
|
|
|
104,764
|
|
|
|
111,307
|
|
|
|
112,860
|
|
Operating lease
liabilities
|
|
|
110,165
|
|
|
|
114,613
|
|
|
|
118,658
|
|
Revolving line of
credit
|
|
|
33,000
|
|
|
|
15,000
|
|
|
|
35,000
|
|
Other
liabilities
|
|
|
3,872
|
|
|
|
3,553
|
|
|
|
4,291
|
|
Total
liabilities
|
|
|
251,801
|
|
|
|
244,473
|
|
|
|
270,809
|
|
Net shareholders'
equity
|
|
|
18,080
|
|
|
|
29,773
|
|
|
|
65,207
|
|
Total liabilities and
shareholders' equity
|
|
$
|
269,881
|
|
|
$
|
274,246
|
|
|
$
|
336,016
|
|
KIRKLAND'S,
INC.
UNAUDITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In
thousands)
|
|
|
|
|
|
13-Week Period
Ended
|
|
|
|
April
29,
|
|
|
April
30,
|
|
|
|
2023
|
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(12,107)
|
|
|
$
|
(7,855)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
3,257
|
|
|
|
4,499
|
|
Amortization of debt
issue costs
|
|
|
20
|
|
|
|
23
|
|
Asset
impairment
|
|
|
225
|
|
|
|
—
|
|
(Gain) loss on disposal
of property and equipment
|
|
|
(21)
|
|
|
|
191
|
|
Stock-based
compensation expense
|
|
|
490
|
|
|
|
548
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Inventories,
net
|
|
|
739
|
|
|
|
(16,826)
|
|
Prepaid expenses and
other current assets
|
|
|
162
|
|
|
|
932
|
|
Accounts
payable
|
|
|
(5,792)
|
|
|
|
(14,806)
|
|
Accrued
expenses
|
|
|
(1,913)
|
|
|
|
(4,884)
|
|
Income taxes payable
(refundable)
|
|
|
1,365
|
|
|
|
(3,300)
|
|
Operating lease assets
and liabilities
|
|
|
(1,555)
|
|
|
|
(1,843)
|
|
Other assets and
liabilities
|
|
|
349
|
|
|
|
(310)
|
|
Net cash used in
operating activities
|
|
|
(14,781)
|
|
|
|
(43,631)
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
Proceeds from sale of
property and equipment
|
|
|
60
|
|
|
|
17
|
|
Capital
expenditures
|
|
|
(846)
|
|
|
|
(2,395)
|
|
Net cash used in
investing activities
|
|
|
(786)
|
|
|
|
(2,378)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
Borrowings on revolving
line of credit
|
|
|
21,000
|
|
|
|
35,000
|
|
Repayments on revolving
line of credit
|
|
|
(3,000)
|
|
|
|
—
|
|
Debt issuance
costs
|
|
|
(456)
|
|
|
|
—
|
|
Cash used in net share
settlement of stock options and restricted stock units
|
|
|
(76)
|
|
|
|
(2,375)
|
|
Proceeds received from
employee stock option exercises
|
|
|
—
|
|
|
|
16
|
|
Repurchase and
retirement of common stock
|
|
|
—
|
|
|
|
(6,253)
|
|
Net cash provided by
financing activities
|
|
|
17,468
|
|
|
|
26,388
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents:
|
|
|
|
|
|
|
Net increase
(decrease)
|
|
|
1,901
|
|
|
|
(19,621)
|
|
Beginning of the
period
|
|
|
5,171
|
|
|
|
25,003
|
|
End of the
period
|
|
$
|
7,072
|
|
|
$
|
5,382
|
|
|
|
|
|
|
|
|
Supplemental
schedule of non-cash activities:
|
|
|
|
|
|
|
Non-cash accruals for
purchases of property and equipment
|
|
$
|
844
|
|
|
$
|
887
|
|
Non-GAAP Financial Measures
To supplement our unaudited consolidated condensed financial
statements presented in accordance with generally accepted
accounting principles ("GAAP"), this earnings release and the
related earnings conference call contain certain non-GAAP financial
measures, including EBITDA, adjusted EBITDA and adjusted operating
loss. These measures are not in accordance with, and are not
intended as alternatives to, GAAP financial measures. The Company
uses these non-GAAP financial measures internally in analyzing our
financial results and believes that they provide useful information
to analysts and investors, as a supplement to GAAP financial
measures, in evaluating the Company's operational performance.
The Company defines EBITDA as net loss before interest and the
provision for income tax, which is equivalent to operating loss,
adjusted for depreciation, adjusted EBITDA as EBITDA with non-GAAP
adjustments and adjusted operating loss as operating loss with
non-GAAP adjustments.
Non-GAAP financial measures are intended to provide additional
information only and do not have any standard meanings prescribed
by GAAP. Use of these terms may differ from similar measures
reported by other companies. Each non-GAAP financial measure has
its limitations as an analytical tool, and you should not consider
them in isolation or as a substitute for analysis of the Company's
results as reported under GAAP. The Company's non-GAAP adjustments
remove asset impairment and stock-based compensation expense, due
to the non-cash nature of these expenses, and remove severance
charges and lease termination costs, as those expenses can
fluctuate based on the needs of the business and do not represent a
normal, recurring operating expense.
The following table shows a reconciliation of operating loss to
EBITDA and adjusted EBITDA (in thousands) for the 13-week periods
indicated:
|
|
13-Week Period
Ended
|
|
|
|
April 29,
2023
|
|
|
April 30,
2022
|
|
Operating
loss
|
|
$
|
(10,337)
|
|
|
$
|
(11,095)
|
|
Depreciation
|
|
|
3,257
|
|
|
|
4,499
|
|
EBITDA
|
|
|
(7,080)
|
|
|
|
(6,596)
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
Closed store and lease
termination costs in cost of sales(1)
|
|
|
—
|
|
|
|
208
|
|
Asset
impairment(2)
|
|
|
225
|
|
|
|
—
|
|
Stock-based
compensation expense(3)
|
|
|
490
|
|
|
|
548
|
|
Severance
charges(4)
|
|
|
529
|
|
|
|
13
|
|
Total adjustments in
operating expenses
|
|
|
1,244
|
|
|
|
561
|
|
Total non-GAAP
adjustments
|
|
|
1,244
|
|
|
|
769
|
|
Adjusted
EBITDA
|
|
|
(5,836)
|
|
|
|
(5,827)
|
|
Depreciation
|
|
|
3,257
|
|
|
|
4,499
|
|
Adjusted operating
loss
|
|
$
|
(9,093)
|
|
|
$
|
(10,326)
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Costs associated with
asset disposals, closed store and lease termination costs and any
gains on lease terminations.
|
(2)
|
Asset impairment
charges are related to property and equipment.
|
(3)
|
Stock-based
compensation expense includes amounts expensed related to equity
incentive plans.
|
(4)
|
Severance charges
include expenses related to severance agreements and permanent
store closure compensation costs.
|
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SOURCE Kirkland's, Inc.