Harvest-themed inventory is in place to fulfill expected seasonal demand in the second half of the year.
NASHVILLE, Tenn.—Sales momentum from its furniture category was a bright spot for Kirkland’s Inc. in a second quarter that saw comparable same-store sales decrease by 8.6% over the prior year to $102.1 million.
“Our second quarter efforts were focused on re-engaging with our customers both in-store and online to drive sales in a challenging consumer spending environment,” said Steve “Woody” Woodward, president and CEO for the specialty home décor and furnishings retailer. He also called out the company’s in-home delivery program as gaining adoption as they continue streamlining processes and improving efficiency.
To work through inventory, Woodward said Kirkland’s Home elevated promotions, “resulting in compressed margins, but an improved sales trend from the first quarter across our omni-channel platform.”
The sales momentum from furniture also “gives us confidence that we remain on the right track to drive growth in this segment of the market,” he said. During the quarterly earnings call, Woodward said furniture sales were up 13% over the prior year and the category was “exceeding expectations.”
The drop in net sales for the quarter from $114.8 million in the same quarter of 2021, were attributed to a decline in traffic and conversion, partially offset by a higher average ticket size. E-commerce sales for the quarter were down 9.1% over the same prior-year period and represented 28% of sales in the quarter.
Net loss in the second quarter was $25.7 million, or $2.02 per diluted share compared to net income of $0.6 million or earnings of $0.04 per diluted share in the prior year quarter. Gross profit in the second quarter was $18.5 million, or 18.1% of net sales vs. $39.7 million, or 34.6% of net sales in the same quarter in 2021.
The company, which ended the quarter with 356 stores — four fewer than the previous quarter — is seeing signs that fall and holiday sales will deliver a boost for the second half of the year.
Sales and gross profit margin improved in the first few weeks of August, said Woodward. “With the majority of our harvest inventory already in place and our holiday inventory on schedule, we believe we are in a healthy position to fulfill the expected seasonal demand in the back half of the year.”
Big winners in July and August, he said during the earnings call, were categories like furniture and mirrors. Part of it could be, he said, that customers can now have a whole room of furnishings delivered rather than having to pick up products at the store.
The focus for the remainder of the year, said Woodward, is improving liquidity and managing inventory, in part by adjusting Kirkland’s promotional strategy to drive sales and work through excess product. The company removed $50 million in receipts for the second half of the year.