Kirkland's Inc (NASDAQ:KIRK) reported a first-quarter FY24 sales decline of 5.3% year-on-year to $91.75 million, missing the analyst consensus estimate of $93.07 million.
Comparable sales decreased 3.5% versus last year, including a 19.1% decline in e-commerce sales and a 2.8% increase in comparable store sales.
The decrease was primarily driven by a decrease in consolidated average ticket and e-commerce traffic, partially offset by an increase in store traffic and conversion.
Gross profit margin expanded 280 basis points Y/Y to 29.5%. The operating loss for the quarter was $7.5 million versus a loss of $10.3 million last year.
Adjusted EBITDA was a loss of $4.5 million compared to a loss of $5.8 million in the prior year quarter.
EPS loss of $(0.68) beat the analyst consensus of $(0.92).
As of May 4, inventory was $75.8 million, a 9.1% decrease Y/Y. Kirkland's held $3.8 million in cash and equivalents as of May 4. Net cash used in operating activities for the quarter totaled $(13.6) million.
The company opened one store and closed two stores to end the quarter with 329 stores.
"Given the slower than anticipated start to the year and the continued headwinds associated with higher ticket categories, particularly with our value conscious customer, we are taking swift actions to better align our cost structure to current demand trends and are taking steps to improve our e-commerce business while remaining laser-focused on driving long-term, profitable growth," said CEO Amy Sullivan.
"We believe these initiatives coupled with maintaining disciplined operational effectiveness and improvement in our liquidity position, should enable us to achieve $600 million in revenue and an adjusted EBITDA margin in line with our historical performance in the next five years."
Following the end of the quarter, the company has implemented several cost savings initiatives.
The cost savings initiatives include reducing corporate overhead, store payroll, marketing, and third-party technology expenses. The company expects to realize approximately $6 million of savings in fiscal 2024 and estimates $7 million in ongoing annual pre-tax savings from these initiatives.
In addition, on May 14, the company retained Consensus, an investment banking firm specializing in consumer-facing companies, to serve as its financial advisor in pursuing and evaluating potential strategic opportunities.
Price Action: KIRK shares are trading lower by 8.45% at $2.005 at the last check Thursday.
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