KIRKLAND’S REPORTS FIRST QUARTER 2019 RESULTS AND UPDATES 2019 EARNINGS GUIDANCE
NASHVILLE, Tenn. (June 6, 2019) — Kirkland’s, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week period ended May 4, 2019.
Net sales for the 13 weeks ended May 4, 2019 decreased 9.0% to $129.6 million compared to $142.5 million for the 13 weeks ended May 5, 2018. Kirkland’s opened 3 stores and closed no stores during the first quarter, bringing the total number of stores to 431 at quarter-end. Comparable store sales, including e-commerce sales, decreased 10.7% compared to an increase of 1.4% in the prior-year quarter. The decline in comparable stores sales for the quarter was driven by a decline in store sales partially offset by an increase in e-commerce sales. Store sales were impacted by negative store traffic and a decline in average ticket, which was partially offset by an improvement in conversion. E-commerce sales were driven by gains in traffic, partially offset by a decline in conversion and average ticket.
Net loss for the 13 weeks ended May 4, 2019 was $8.9 million, or $0.62 per diluted share, compared to a net loss of $0.9 million, or $0.06 per diluted share, for the 13 weeks ended May 5, 2018. Adjusted net loss, excluding asset impairment charges, for the 13 weeks ended May 4, 2019 was $7.6 million, or $0.53 per share compared to an adjusted net loss, excluding CEO transition costs, in the prior year period of $0.1 million or $0.00 per share. Gross profit declined from 31.8% to 27.9% of sales, primarily driven by deleverage of store occupancy costs and a decline in merchandise margin. Total operating expenses, excluding depreciation and impairment charges, increased from 31.7% to 34.9% of net sales primarily due to the deleverage of payroll costs and increased advertising expenses.
“The environment remains challenging, and slower-than-expected sales in the first quarter are evidence that we must continue to fast-track our strategy to improve the business,” said Woody Woodward, Chief Executive Officer. “For example, continued pressure on brick and mortar traffic offset stronger seasonal performance and a double digit increase in e-commerce sales against last year’s gain. To address these issues, we’re taking additional steps to reduce operating costs by $10 million in 2019 as well as mitigate the potential impact of higher tariffs on home decor products.”
“We’re encouraged by progress on our strategic priorities as we approach the second half,” continued Mr. Woodward. “Plans to add product categories that can significantly broaden our reach are on schedule, and we’re expanding BOPIS to further differentiate Kirkland’s in the home decor sector. Initiatives to improve supply chain efficiency and accelerate direct sourcing are also on track. We’re in a strong financial position to execute our plan, and we’re optimistic about prospects to improve performance in the second half of 2019.”
Fiscal 2019 Outlook
The Company now expects fiscal 2019 diluted earnings per share to be in the range of flat to $0.15. The full year guidance includes a projection for additional tariffs, offset by the implementation of the cost reduction program.
This performance outlook is based on current information as of June 6, 2019. The information on which this outlook is based is subject to change, and the Company may update its full year business outlook or any portion thereof at any time for any reason.
Investor Conference Call and Web Simulcast
Kirkland’s will hold its earnings call for the first quarter later today at 9:00 a.m. ET. Participating on the call will be Steve Woodward, Chief Executive Officer, Mike Cairnes, President and Chief Operating Officer, and Nicole Strain, Interim Chief Financial Officer. The number to call for the interactive teleconference is (412) 542-4163. A replay of the conference call will be available through Thursday, June 13, 2019 by dialing (412) 317-0088 and entering the confirmation number 10131715.
A live webcast of Kirkland’s quarterly conference call will be available online on the Company’s Investor Relations Page on June 6, 2019, beginning at 9:00 a.m. ET. The online replay will follow shortly after the call and continue for one year.
The following information was filed by Kirkland's, Inc (KIRK) on Thursday, June 6, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.