Nashville, Tennessee — Specialty home retailer Kirkland’s saw comparable store sales increase by 1.6% during the third quarter, marking its fourth consecutive quarter of strong comp store sales growth, despite the effects of hurricanes on the trading areas of its locations.
In contrast, net sales decreased from $116.4 million in the previous year’s quarter to $114.4 million this quarter. Comparable sales were down 3% overall, with e-commerce declining by over 15% throughout the period. Compared to 28% in the same quarter last year, e-commerce now makes up 24% of overall sales.
An rise in consolidated traffic and store conversion helped to somewhat offset the decline in sales, which Kirkland’s ascribed to a decline in the combined average ticket and e-commerce conversion. Store sales were affected by Hurricanes Helene and Milton by roughly 1%.
Amy Sullivan, CEO, stated, “We had positive comparable store sales growth for the fourth consecutive quarter and a notable year-over-year improvement in adjusted EBITDA in the third quarter.” She attributed the enhancements to the company’s efforts to “re-engage our core customer, refocus our product assortment, and strengthen our omni-channel capabilities.”
Speaking about the company’s numerous strategic efforts, Sullivan stated that the “always something new” focus has been beneficial in areas like holiday, floral, gift, fragrance, and textiles, although it still sees softness in more expensive industries like furniture, mirrors, wall décor, and lighting.
In the third quarter, adjusted EBITDA generated $0.5 million in revenue, as opposed to $3.2 million in the same period last year. In comparison to $30.7 million, or 26.3% of sales, in the previous year, the gross profit for the quarter was $32.1 million, or 28.1% of net sales. Deleverage of store occupancy costs and weaker retail margins somewhat offset the improvement, which was ascribed to decreased outbound freight and distribution center expenses.
In October, Kirkland’s became the official licensee of Bed Bath & Beyond neighborhood stores, a recent strategic agreement between the company and Beyond Inc., which Sullivan highlighted. “With the first Bed Bath & Beyond neighborhood store opening next year, we are excited to leverage our merchandising and brick-and-mortar strengths while positioning Kirkland’s as a multi-brand retailer.”
Sullivan stated during the company’s earnings call that the new Bed Bath & Beyond locations are expected to generate twice as much sales as the typical Kirkland’s store. Both Kirkland’s seasonal items and a variety of BB&B brands will be available in the locations.
According to Sullivan, there are also plans to use Beyond’s database to aid in the acquisition of new clients and brand unification in the loyalty and rewards space.
Kirkland’s is ending 2024 “as a dual-brand retailer with an improved balance sheet,” according to Sullivan, who called the year a “transformative year” for the company.
