Hurricane Impacts Kirkland's Q3 Performance, Focuses On Beyond Partnership To Spark Growth

Kirkland’s Inc. KIRK reported a third-quarter 2024 sales decline of 1.7% year over year to $114.42 million, beating the consensus of $110.23 million.

Comparable sales decreased 3.0% despite a 1.6% increase in comparable store sales compared to Q3 2023, with roughly 1.0% of the decline attributed to hurricane-related disruptions.

The decrease was mainly due to lower average ticket and e-commerce conversion, partly offset by higher traffic and store conversion.

Gross profit margin expanded 174 basis points YoY to 28.1%. The operating loss for the quarter was $2.39 million versus a loss of $6.65 million last year.

Adjusted EBITDA for Q3 was $0.5 million, compared to a loss of $3.2 million in the same quarter last year. Adj. EPS loss of 29 cents missed the consensus of 27 cents loss.

As of November 2, 2024, inventory was $111.2 million, up 5.7% from the prior year, primarily due to later inventory receipts this year. The company had $6.8 million in cash, $65.0 million in debt under its $90.0 million credit facility, and $15.4 million in debt to Beyond, Inc.

Strategic Partnership with Beyond: On October 21, 2024, the company formed a strategic partnership with Beyond, Inc., with Beyond investing $25 million in a debt and equity transaction. $17 million from the Beyond Credit Agreement was used to repay the FILO Term Loan and reduce revolving credit facility borrowings.

“This quarter also marked a pivotal moment for Kirkland’s as we entered into a strategic partnership with Beyond enabling us to strengthen our financial position and providing new avenues for growth as 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,” said Amy Sullivan, Kirkland’s CEO.

Net cash used in operating activities for the nine months ended stood at $39.03 million, compared to $42.686 million a year ago. The company Ended the quarter with 325 stores, consistent with Q2 2024.

Price Action: KIRK shares are trading lower by 6.93% to $1.88 at the check on Friday.

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