NASHVILLE, Tenn.-Weak sales and increased promotional activity led Kirkland’s to a larger second-quarter net loss—$2 million, compared to a net loss of $480,000 in the second quarter of last year.
While net sales in the quarter, which ended on July 28, rose 1.5 percent to $91 million, same-store sales were down 3.6 percent. Robert Kirkland, the home decor retailer’s president and CEO, said sales were pressured by “the distinct change in consumer sentiment we noted a few months ago.” Kirkland said store sales were less than expected, and that promotional activity was more extensive than normal.
The latter factor led to a 143 basis-point drop in Kirkland’s gross margin, to 33 percent. Operating expenses headed upward by 6.9 percent on a dollar basis, and picked up 173 basis points as a percentage of sales, finishing the quarter at 33.8 percent.
“We have yet to see the sustained demand necessary to drive the results we all expect from Kirkland’s, but we are aggressively addressing these trends to position us for improved performance over the next several quarters,” Kirkland said. The measures the retailer is taking include an expansion of its e-commerce business, a new brand strategy, a store layout redesign and leveraging the rollout of new information systems to improve the company’s merchandise buying and planning execution, he said.