Release Date: December 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kirkland's Inc (KIRK, Financial) entered a strategic partnership with Beyond, allowing the company to retire expensive debt and strengthen its balance sheet.
- The company achieved its fourth consecutive quarter of positive comparable store sales growth, with a 1.6% increase driven by positive traffic and conversion.
- Kirkland's Inc (KIRK) reported a $3.7 million year-over-year improvement in adjusted EBITDA, returning to positive adjusted EBITDA for the quarter.
- The company saw a 6% increase in transactions and a 10% increase in units sold, driven by strong performance in seasonally relevant decor categories.
- Kirkland's Inc (KIRK) successfully reactivated 39% of lapsed customers over the last 12 months, enhancing customer loyalty and engagement.
Negative Points
- Total comparable sales declined by 3% for the period, with e-commerce sales declining 14.9% compared to the prior year.
- The company faced significant headwinds from hurricanes Helene and Milton, impacting approximately 20% of its store base.
- Higher ticket categories such as furniture and wall decor experienced continued softness due to macroeconomic pressures and strategic shipping decisions.
- Gross profit margin was pressured by increased promotional activity and a decline in merchandise margin.
- Kirkland's Inc (KIRK) reported a net loss of $7.7 million for the quarter, compared to a $6.4 million loss in the prior year.
Q & A Highlights
Q: Can you provide more color on the trends you're seeing, particularly regarding November's softer results and the split between e-commerce and retail store sales?
A: Amy Sullivan, President and CEO: The calendar shift has created some noise in November, but we remain optimistic about the combined November and December performance. The next two weeks are crucial, and we have a significant customer appreciation event underway. Michael Madden, EVP and CFO: We expect continued momentum in store sales, despite tougher comps, as we've seen traffic and conversion gains there.
Q: How will the Beyond partnership evolve in 2025, especially concerning your e-commerce business and marketing budget?
A: Amy Sullivan, President and CEO: We are evaluating our technology and replatforming options with Beyond's expertise. We aim to make a platform decision by year-end and explore unified loyalty and credit programs. Michael Madden, EVP and CFO: The collaboration fees are neutral compared to our previous debt costs, and we anticipate benefits from the partnership.
Q: Will Kirkland's need to make a greater investment to kick-start the Beyond partnership next year?
A: Michael Madden, EVP and CFO: Yes, particularly in operating the new stores. We plan to open five pilot stores, which will require investment, but we will receive additional capital from the Beyond transaction to support this.
Q: What are you seeing in the promotional environment, and are there specific categories with more aggressive promotions?
A: Amy Sullivan, President and CEO: We've maintained a consistent promotional cadence to drive traffic and conversion. While we've seen better regular pricing in seasonal decor, high-ticket categories continue to face pressure. We're focused on value-engineered products to balance this.
Q: How do you plan to leverage the pooled customer data with Beyond for marketing?
A: Amy Sullivan, President and CEO: We aim to learn from pooled customer data and explore unified loyalty and credit programs. This could help us acquire new customers more efficiently by tapping into Beyond's larger customer base.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
