Kirkland's(KIRK) - 2025 Q2 - Quarterly Report

Sales Performance - Net sales decreased by 3.6% to $86.3 million for the 13-week period ended August 3, 2024, compared to $89.5 million for the same period in 2023[61] - Comparable sales decreased by 1.7%, or $1.4 million, with e-commerce comparable sales down 10.6% and store comparable sales up 1.8%[61] - Net sales decreased by 4.5% to $178.0 million for the first 26 weeks of fiscal 2024 compared to $186.4 million for the prior year period[66] - E-commerce comparable sales decreased by 15.1%, while store comparable sales increased by 2.3% for the first 26 weeks of fiscal 2024[66] Profitability - Gross profit as a percentage of net sales increased by 100 basis points to 20.5% in the second 13 weeks of fiscal 2024, up from 19.5% in the prior year[62] - Gross profit margin increased by 190 basis points from 23.2% to 25.1% due to favorable outbound freight costs and merchandise margin[67] - Merchandise margin improved by approximately 90 basis points to 52.1% due to favorable shrink and damages[62] - Net loss for the second 13 weeks of fiscal 2024 was $14.5 million, or a loss of $1.11 per diluted share, compared to a net loss of $19.4 million, or a loss of $1.51 per diluted share, in the prior year[65] - Net loss for the first 26 weeks of fiscal 2024 was $23.3 million, or a loss of $1.79 per diluted share, compared to a net loss of $31.5 million, or a loss of $2.46 per diluted share in the prior year[69] - Operating loss improved by 26.4% to $13.32 million from $18.09 million in the prior year[61] - Operating loss improved by $7.6 million, from a loss of $28.4 million in the prior year to a loss of $20.8 million in fiscal 2024[66] Operating Expenses - Total operating expenses decreased by 12.8% to $30.98 million, down from $35.53 million in the prior year[61] - Compensation and benefits as a percentage of net sales increased to 21.6% from 21.5% in the prior year[63] - Other operating expenses as a percentage of net sales decreased to 13.2% from 15.7% in the prior year, primarily due to reduced advertising costs[63] - Compensation and benefits as a percentage of net sales increased to 21.3% in fiscal 2024 from 21.1% in fiscal 2023[68] - Other operating expenses as a percentage of net sales decreased to 14.4% in fiscal 2024 from 15.5% in fiscal 2023[68] Capital Expenditures and Cash Flow - Total capital expenditures for the first 26 weeks of fiscal 2024 were $1.2 million, down from $2.3 million in the prior year[75] - Cash used in operating activities decreased to approximately $26.4 million in fiscal 2024 from $28.5 million in fiscal 2023[75] - In the first 26 weeks of fiscal 2024, net cash provided by financing activities was $28.2 million, compared to approximately $30.5 million in the same period of fiscal 2023[76] Debt and Financing - As of August 3, 2024, outstanding borrowings under the 2023 Credit Agreement were $52.7 million, $34.0 million, and $46.0 million for the dates August 3, 2024, February 3, 2024, and July 29, 2023, respectively[82] - The company entered into a $12.0 million "first-in, last-out" delayed-draw asset-based Term Loan, maturing in March 2028, with an initial interest rate of one-month term SOFR plus a margin of 9.50%[80] - The 2023 Credit Agreement was amended to increase the revolving credit facility from $75.0 million to $90.0 million, with a maturity date extended to March 2028[77] - As of August 3, 2024, the company had approximately $7.9 million available for borrowing under the 2023 Credit Agreement and the Term Loan[82] - The company did not repurchase any shares under its $30.0 million share repurchase plan during the first 26 weeks of fiscal 2024 or 2023, with approximately $26.3 million remaining under the plan as of August 3, 2024[83][84] - A one percent increase or decrease in the interest rate on borrowings under the 2023 Credit Agreement or Term Loan would not have a material impact on the company's results of operations[87] - The company is subject to a Security Agreement, pledging a lien on substantially all assets to secure obligations under the 2023 Credit Agreement[79] - The company has not engaged in any foreign exchange contracts, hedges, interest rate swaps, derivatives, or other financial instruments as of August 3, 2024[88] - The company remains in compliance with the covenants in the 2023 Credit Agreement and the Term Loan as of August 3, 2024[82] Store Operations - The company operated a total of 325 stores as of August 3, 2024, down from 340 stores as of July 29, 2023[59]