Kirkland’s cites decline in traffic as main reason for Q4, FY sales decline

NASHVILLE, Tenn. — The fourth quarter continued a sales decline for Kirkland’s Home, a specialty retailer of home décor and furnishings, with net sales down nearly 8% for the period ended Jan. 28.

Net sales for the quarter were $162.5 million, with comparable sales decreasing 6.1%. The decrease was primarily driven by a decline in traffic, although partially offset by an increase in average ticket.

For the year, net sales were down 10.6% to $498.8 million, with comp sales down 9%, which included an 11.6% decrease in e-commerce sales.

For the quarter, Kirkland’s net loss was $3.8 million, a 130.5% drop year-over-year from net income of $2.5 million. The company also posted a net loss for the year of $44.7 million, down from the pervious year’s net income of $22 million.

“We started the fourth quarter with promising sales trends during our Black Friday event, but then declining traffic and the effect of significant inventory reductions on our merchandise mix drove sales lower,” said Steve “Woody” Woodward, CEO. “Despite these challenges, we were able to generate more than $40 million in operating cash flow that was used to pay down debt and strengthen our balance sheet.”

Looking ahead, Woodward said the company expects fiscal 2023 to be a year of stabilization.

“We recognize the importance of regaining market share in our value décor and holiday categories,” he said in the earnings release. “Shoppers in these lower-priced categories have been impactful in driving sales growth throughout our history, so we have optimized our product mix and enhanced our merchandise offerings to reinvigorate this portion of our customer base.”

He noted that Kirkland’s expects to see margin improvements starting in the fiscal first quarter. “Although it remains difficult to predict when there will be a rebound in discretionary spending, we believe in our ability to re-establish Kirkland’s Home as a leading specialty retailer of home décor and furnishings.”

As of March 31, Kirkland’s Home has entered into an amended senior credit facility with Bank of America N.A., its existing lender. The agreement increases the revolving line of credit to $90 million and extends the maturity date to March 2028.

See also: Kirkland’s holiday sales disappoint, but furniture remains a ‘positive performer’

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