Kirkland's, Inc. KIRK reported a first-quarter FY23 sales decline of 6.2% year-on-year to $96.88 million, beating the consensus of $93.58 million. Adjusted EPS loss of $(0.95) missed the analyst consensus of $(0.79) loss.
Comparable same-store sales decreased 4.4%, including a 6.6% decline in e-commerce sales. The decrease was primarily driven by a reduction in traffic, partially offset by an increase in average tickets.
"While a challenging consumer spending environment continued to affect traffic during the quarter, we achieved positive comparable sales for the month of April as customers responded well to our promotions and omni-channel experience," said interim CEO Ann Joyce.
Gross profit margin contracted 70 basis points Y/Y to 26.7%. The decline was primarily a result of the deleverage of fixed cost components on the lower sales base, partially offset by improved merchandise margin.
The operating loss for the quarter was $(10.3) million compared to an operating loss of $(11.1) million in the prior year quarter.
"Our merchandise margins began to expand during the quarter as the benefits of lower freight and product costs started to flow through our results, and we expect this to become more meaningful in the upcoming quarters," Joyce added.
Kirkland's held $7.07 million in cash and equivalents as of Apr. 29, 2023.
Price Action: KIRK shares are trading at $2.96 on the last check Thursday, down about 6.03%.
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