Kirkland’s extends comp store sales growth, eyes benefits of Beyond partnership
Kirkland's continued its positive comp store sales growth for the fourth consecutive quarter in Q3, which also saw it enter into a partnership with Beyond Inc.
NASHVILLE, Tenn. — Despite the impact of hurricanes in its stores’ trading areas, specialty home retailer Kirkland’s saw comparable store sales rise by 1.6% for the third quarter, marking its fourth consecutive quarter of positive comp store sales growth.
Net sales, meanwhile, fell to $114.4 million for the quarter from $116.4 in the prior year quarter. Overall comparable sales were off by 3%, including an e-commerce decline of nearly 15% for the quarter. E-commerce accounted for 24% of total sales vs. 28% in the same quarter a year ago.
Kirkland’s attributed the sales drop to a decrease in the consolidated average ticket and e-commerce conversion, which was partially offset by an increase in consolidated traffic and store conversion. Hurricanes Helene and Milton had about a 1% impact on sales across stores.
“The third quarter marked our fourth consecutive quarter of positive comparable store sales growth and significant year-over-year improvement in adjusted EBITDA,” said Amy Sullivan, CEO. She cited the company’s initiatives on “re-engaging our core customer, refocusing our product assortment and strengthening our omni-channel capabilities” for the improvements.
Adjusted EBITDA for the third quarter resulted in income of $0.5 million compared to a loss of $3.2 million in Q3 a year ago. Gross profit for the quarter was $32.1 million, or 28.1% of net sales, compared with $30.7 million, or 26.3% of sales the prior year. The improvement was attributed to lower distribution center and outbound freight costs, partially offset by the deleverage of store occupancy costs and lower merchandise margins.
Reduced advertising costs and corporate salaries contributed to a drop in operating expenses for the quarter to $34.5 million vs. $37.3 million in the third quarter of 2023.
Addressing the company’s various strategic initiatives, Sullivan said the “always something new” focus has shown benefits in categories such as holiday, floral, gift, fragrance and textiles, while it continues to see softness in bigger-ticket sectors such as furniture, mirrors, wall décor and lamps.
Sullivan called out the company’s recent strategic partnership with Beyond Inc. from October, in which Kirkland’s became the exclusive licensee of Bed Bath & Beyond neighborhood stores. “We are thrilled to leverage our merchandising and brick-and-mortar strengths while positioning Kirkland’s as a multi-brand retailer with the first Bed Bath & Beyond neighborhood store opening next year.”
In the company’s earnings call, Sullivan said the expectation is for two times the revenue from the new Bed Bath & Beyond stores vs. the average Kirkland’s store. The stores will feature a mix of BB&B brands as well as Kirkland’s seasonal merchandise.
Plans are also underway to leverage Beyond’s database to help with new customer acquisition, said Sullivan, and with unification between the brands within the loyalty/rewards arena.
Calling 2024 a “transformative year” for Kirkland’s, Sullivan noted the company began it as a single format operator but is exiting the year “as a dual-brand retailer with an improved balance sheet.”
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