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From Home Furnishing Business

Kirkland's Announced an Update to Strategic Plans

February 18, 2025  by Karen Parrish in Business Strategy, Industry   

Amy Sullivan, CEO of Kirkland's, commented, "Over the past year we delivered significant improvement in key operating metrics while driving consistent positive comparable brick-and-mortar store sales growth as we worked to stabilize the core Kirkland's Home business during the first phase of our transformation."

"As we enter our next chapter with new assets through our partnership with Beyond, Inc., we are positioned to leverage our collective family of brands as we drive towards our path to profitability. We believe an omnichannel retail strategy focused on customer experience is foundational in building brand health, maximizing lifetime customer value and delivering sustainable profitable growth. We are dedicated to three strategic initiatives as part of our ongoing transformation, ensuring accountability and execution at every level."

— Improve or Eliminate Underperforming Assets: By expanding our portfolio of brands to include Kirkland's Home, Bed Bath & Beyond, buybuy Baby and Overstock, we are setting new benchmarks and raising the bar of expectations. Following a comprehensive review of our entire store footprint, we have identified an initial list of approximately 6% of our stores that do not meet our profitability standards in their current format, and we are aggressively taking actions to address these stores. Such actions include strategically converting stores to a more margin accretive brand, augmenting the assortment strategy to drive improved profitability through the term of the lease, and closing select locations to ensure our real estate investments align to our new standards. As part of our ongoing transformation, we will continue to eliminate or convert underperforming assets to drive revenue growth and improve the profitability of the company.

— Optimize E-Commerce Performance: While we have seen sequential improvement in our Kirkland's Home brick & mortar channel, we are not satisfied with our e-Commerce performance. Through our collaboration with Beyond, we intend to leverage their expertise and partnerships to enhance site experience and improve conversion, while our internal team prioritizes profitability. With clear line of sight from our holistic channel analysis, we have begun strategic actions including eliminating SKUs that do not meet margin standards after shipping, handling and returns, strategically expanding product categories to drive average order value and maximizing our omnichannel assets by reallocating lower AUR inventory to brick & mortar stores to maximize our Buy Online Pick-up In Store ("BOPIS") capabilities. Our e-Commerce channel is an integral part of our Kirkland's Home customer journey, and we believe the actions we are taking will deliver a more profitable transaction.

— Maximize Kirkland's Home Brand Value and Distribution: For almost 60 years, Kirkland's Home has been a destination for seasonally relevant home décor, gifts and furnishings. We believe there is a significant opportunity to expand the Kirkland's Home name through private label distribution across our collective family of omnichannel brands. We have commitments from top vendor partners to expand our product development and sourcing capabilities to ensure we can deliver unique Kirkland's Home product specifically curated for each of our omnichannel brands. We intend to leverage the Kirkland's Home brand as the exclusive private label assortment for everyday basics and décor in Bed Bath & Beyond stores expanding the reach of the brand to new customers. In addition, we are exploring opportunities to expand e-commerce distribution in furniture, patio and rugs driving average order value through Kirkland's, Overstock and other marketplaces.

"Inspired by the possibilities for these iconic brands, we are setting higher standards and maintaining a disciplined approach to capital allocation to maximize our liquidity that we believe will not only advance our path to profitability but position Kirkland's for long-term success while delivering value for all shareholders," concluded Sullivan.

Preliminary Financial Results
For the fourth quarter of fiscal 2024, the Company expects net sales of approximately $148 million and a consolidated comparable sales decline of approximately 0.6%, inclusive of comparable store growth of 1.6% and an e-commerce decline of 7.9%, compared to the fourth quarter of fiscal 2023. In addition, the Company expects net income of approximately $7.9 million, diluted earnings per share of approximately $0.50, reflecting a total share count of approximately 15.8 million shares, and adjusted EBITDA of approximately $12.0 million. As of February 17, 2025, the Company had $41.9 million of outstanding borrowings and letters of credit under its revolving credit facility, with availability of $8.2 million after the minimum required availability covenant, and $8.5 million in debt to Beyond, Inc.

Fireside Chat
In addition, the Company announced that Amy Sullivan, will participate in a virtual fireside chat hosted by Jeremy Hamblin from Craig-Hallum on Wednesday, February 19, 2025 at 2pm ET.

The event will be webcast live and can be accessed on the Company's Investor Relations website, https://ir.kirklands.com/. An online archive will be available on that site following the fireside chat.