NASHVILLE, Tenn. — Home décor and furnishings specialty retailer Kirkland’s posted second quarter earnings, a period that was “challenged by lower traffic and the aggressive liquidation efforts in Q2 last year,” according to the company’s interim CEO.
Net sales for the period were $89.5 million, down 12.3% from the year ago period, with comparable sales decreasing 9.7% and including a 16.6% decline in e-commerce sales.
Both operating income and net income improved year-over-year, up 17% and nearly 25%, respectively. The improvement year-over year was attributed to lower compensation costs and lower advertising expenses.
“The second quarter sales results were challenged by lower traffic and the aggressive liquidation efforts in Q2 of last year that presented a tough sales comparison, period-over-period,” said Ann Joyce, interim CEO. “Although we remained promotional during the quarter, we believe the shifting of our brand voice towards value and a normalizing supply chain allowed us to improve our merchandise margin by 320 basis points year-over-year. We also believe we exercised improved control of our inventory as we rebalanced our merchandise assortment for the back half of the year, resulting in 30% lower inventory levels and lower borrowings than the prior year.”
Joyce added that the company saw this quarter as a transition period heading into the harvest and holiday selling seasons.
“We are encouraged by the early response to our seasonal assortments and our renewed emphasis on home décor, both of which will become more prominent as we get deeper into the holiday period,” she said.
As of July 29, the company had a cash balance of $4.9 million, with $46 million outstanding debt under its’ $90 million senior secured revolving credit facility.