Kirkland’s explains disappointing Q1
Kirkland’s, Inc. (Nasdaq: KIRK) basically misjudged the market during the first quarter ended May 5, said executives of the home décor retailer on a Friday morning conference call.
“We overemphasized new initiatives and took our focus off the core merchandise productivity,” Kirkland’s President Cathy David said on the call.
Attempts to drive customer traffic to the new merchandise were “largely unsuccessful,” she said. To increase business, David said the company is focusing on key items and value, as well as reshuffling the business team. The company’s marketing and presentation teams have been consolidated, she said.
Kirkland’s also recently hired a new general merchandise manager, director of sales and director of visual presentation, CEO Robert Alderson said on the call.
“We have some big challenges ahead. Customers don’t need anything we sell to sustain life, just to make it better,” Alderson said regarding macroeconomic factors like gas prices, the housing market and mortgage rates.
Before the opening bell Friday, the Jackson, Tenn.-based business reported revenue of $82.3 million for the first quarter ended May 5, down from $92.6 in the year-ago period. The company posted a first-quarter loss of $7.5 million, or $0.38 a share, down from a loss of $3.0 million, or $0.16 per share, a year earlier. The company reported an 18.8% decline in first-quarter comparable store sales.
In midday trading, Kirkland’s was down $0.64, or nearly 14%, to $4.12. The 52-week low is $4.10.
The company predicts a wider loss this year in the second quarter ending Aug. 4. Due to “mixed” reaction to merchandise, the company forecasts second-quarter revenues between $85 million and $88 million. The company expects a loss per share between $0.35 and $0.40, compared with a $0.29 loss per share in the second quarter of 2006. The loss per share includes $0.05 in costs related to opening a Nashville, Tenn., office. Analysts polled by Thomson Financial had been expecting a loss of $0.28 per share on revenue of $91.2 million.
Also on the call, Kirkland’s executives said:
• The average dollar transactions decreased 4% during the first quarter
• The company will no longer issue annual sales guidance. Now, the company will only issue guidance one quarter in advance
