NASHVILLE, Tenn. -- Kirkland's, Inc. (Nasdaq: KIRK) ("Kirkland's" or the "Company"), a multi-brand specialty retailer of home décor, housewares and furnishings, announced financial results for the 13-week period ended May 3, 2025.
First Quarter 2025 Summary
• Net sales of $81.5 million; consolidated comparable sales decreased 8.9%, inclusive of comparable store decline of 3.1% and e-commerce decline of 26.7% compared to the first quarter of fiscal 2024.
• Gross profit margin of 24.9%.
• Operating loss of $10.5 million.
• Adjusted EBITDA loss of $7.9 million.
• Closed 3 stores during the period to end the quarter with 314 stores.
Management Commentary
Amy Sullivan, CEO of Kirkland's, said, "Like many in retail, our first quarter performance was impacted by weather and the continued softness in consumer sentiment. Despite these challenges, we saw improvements in our store performance for the combined March and April period. While our e-commerce business remains pressured, and was exacerbated in late May by weather-related disruptions in our Jackson, Tennessee distribution center, we continue to see momentum in our Kirkland's Home stores which saw comparable store sales up approximately 3% versus last year for the month of May. While encouraged by our store performance, it is time to accelerate our transformation. We have already begun to take actions in moving excess and slower turning inventory in the first quarter and will continue the elimination of underperforming assets as we expand the utilization of our Bed Bath & Beyond, Overstock and buybuy Baby licenses."
Ms. Sullivan continued, "As announced today, we are entering a new era in our organization as we reimagine our future as a multi-brand retail operator maximizing our partnership with Beyond. We are realigning our business to drive performance and profitability - strengthening our team, sharpening our operational discipline to improve inventory productivity, and accelerating the brand conversion or closure of underperforming assets across our portfolio. While we expect these decisive actions and the optimization of our assets to impact near-term performance, we believe rebuilding our foundation will unlock significant operating leverage, drive sustainable profitable growth and create long-term value for our shareholders."
First Quarter 2025 Financial Results
Net sales in the first quarter of 2025 were $81.5 million, compared to $91.8 million in the prior year quarter. The decrease was primarily driven by a decline in e-commerce sales and comparable store sales, along with a decline in store count of approximately 5%. Comparable sales decreased 8.9% compared to the first quarter of 2024, including a 3.1% decrease in comparable store sales and a 26.7% decline in e-commerce sales. The decrease in comparable sales was primarily driven by a decrease in consolidated average ticket and e-commerce traffic, partially offset by an increase in store conversion.
Gross profit in the first quarter of 2025 was $20.3 million, or 24.9% of net sales, compared to $27.1 million, or 29.5% of net sales in the prior year quarter. The decline is primarily a result of lower merchandise margins, due to higher promotional activity, and the deleverage of store occupancy costs, partially offset by lower outbound freight costs.
Operating expenses in the first quarter of 2025 were $30.8 million, or 37.8% of net sales, compared to $34.6 million, or 37.7% of net sales in the prior year quarter. The decline in operating expenses was driven by lower store and corporate compensation and benefits expenses, reduced advertising costs and lower consulting costs.
Operating loss in the first quarter of 2025 was $10.5 million compared to $7.5 million in the prior year quarter. Adjusted operating loss in the first quarter of 2025 was $10.0 million compared to $7.1 million in the prior year quarter. Adjusted operating loss removes the impact of asset impairment, stock-based compensation expense, severance charges and any financing related legal or professional fees that, due to their nature, did not qualify for capitalization as deferred debt or equity issuance costs.
Net loss in the first quarter of 2025 was $11.8 million, or a loss of $0.54 per diluted share, compared to $8.8 million, or a loss of $0.68 per diluted share in the prior year quarter. Diluted weighted average shares outstanding in the first quarter of 2025 were approximately 22.1 million compared to 13.0 million in the prior year quarter, mainly due to Beyond, Inc. ("Beyond") acquiring approximately 8.9 million shares of common stock in the Company.
EBITDA in the first quarter of 2025 was a loss of $8.4 million compared to a loss of $4.9 million in the prior year quarter. Adjusted EBITDA in the first quarter of 2025 was a loss of $7.9 million compared to a loss of $4.5 million in the prior year quarter. Adjusted EBITDA removes the impact of asset impairment, stock-based compensation expense, severance charges and any financing related legal or professional fees that, due to their nature, did not qualify for capitalization as deferred debt or equity issuance costs.
Adjusted diluted net loss in the first quarter of 2025 was $11.3 million, or an adjusted loss of $0.51 per diluted share, compared to adjusted net loss of $8.4 million, or an adjusted loss of $0.65 per diluted share in the prior year quarter. Adjusted net loss removes the impact of asset impairment, stock-based compensation expense, severance charges and any financing related legal or professional fees not subject to capitalization.