Kirkland's(US:KIRK)2025-12-16 14:06Financial Performance - Net sales for Q3 2025 were $103.5 million, a decrease of 9.3% from $114.4 million in Q3 2024, driven by a 7.4% decline in consolidated comparable sales and a 6% reduction in store count[3] - Gross profit was $21.1 million, representing 20.4% of net sales, down from $32.1 million or 28.1% of net sales in the prior year quarter, primarily due to a decline in merchandise margin and increased occupancy costs[3] - The net loss for Q3 2025 was $3.7 million, or a loss of $0.16 per diluted share, an improvement from a net loss of $7.7 million, or a loss of $0.59 per diluted share in Q3 2024[6] - Adjusted net loss for Q3 2025 was $13.6 million, or an adjusted loss of $0.61 per diluted share, compared to an adjusted net loss of $3.8 million, or an adjusted loss of $0.29 per diluted share in the prior year[6] - Net loss for the 39-week period ended November 1, 2025, was $35,708 thousand, compared to a net loss of $31,014 thousand for the same period in 2024, representing an increase of 15%[14] - Adjusted EBITDA for the 39-week period ended November 1, 2025, was $(32,135) thousand, worsening from $(14,250) thousand in the same period of 2024[19] - The net loss for the 13-week period ended November 1, 2025, was $3,705,000, a decrease of 51.7% compared to $7,680,000 in the same period of 2024[20] - The adjusted net loss for the 39-week period ended November 1, 2025, was $42,724,000, compared to $26,159,000 in the prior year, reflecting a 63.5% increase[20] - The diluted loss per share for the 39-week period ended November 1, 2025, was $1.60, compared to $2.38 in the same period of 2024, indicating a 32.8% improvement[20] Expenses and Liabilities - Operating expenses decreased to $23.1 million, or 22.3% of net sales, compared to $34.5 million, or 30.2% of net sales in the prior year, attributed to reduced marketing spend and lower self-insured employee benefits costs[6] - Total liabilities rose to $273,270 thousand in November 2025 from $261,205 thousand in November 2024, an increase of 5%[13] - Total current liabilities decreased to $113,645 thousand in November 2025 from $152,672 thousand in November 2024, a decline of 26%[13] - Operating lease liabilities decreased to $77,589 thousand in November 2025 from $95,085 thousand in November 2024, a reduction of 18%[13] - Stock-based compensation expense for the 39-week period ended November 1, 2025, was $323,000, a decrease of 60.1% from $809,000 in the same period of 2024[20] Inventory and Assets - As of November 1, 2025, inventory was $88.9 million, down from $111.2 million as of November 2, 2024[6] - Total current assets decreased to $105,827 thousand in November 2025 from $124,469 thousand in November 2024, a decline of 15%[13] - Cash and cash equivalents increased to $6,457 thousand at the end of the period from $3,820 thousand at the beginning, marking a net increase of 69%[14] Mergers and Strategic Initiatives - The pending merger with Bed Bath & Beyond is expected to create a powerful omnichannel platform and unlock operational and financial synergies[2] - The company closed three Kirkland's Home stores and converted three stores to Bed Bath & Beyond Home stores, ending the quarter with 303 Kirkland's Home stores and 3 Bed Bath & Beyond Home stores[6] Debt and Financing - As of December 15, 2025, the company had $20.7 million of outstanding debt and $5.8 million in outstanding letters of credit under its revolving credit facility[6] - The company anticipates that availability under its revolving credit facility will increase as eligible inventory levels rise in the second and third fiscal quarters[6] - Borrowings on revolving line of credit significantly increased to $220,533 thousand in the 39-week period ended November 1, 2025, compared to $40,100 thousand in the same period of 2024[14] Gains and Other Income - The company reported a gain of $10,000 thousand from the sale of internally developed intangible assets during the 39-week period ended November 1, 2025[14] - The company recognized a gain of $10,000,000 from the sale of internally developed intangible assets during the 13-week period ended November 1, 2025[20] Other Expenses - The company incurred tornado-related expenses of $1,974,000 during the 39-week period ended November 1, 2025, due to damage at its distribution center[21] - The loss on extinguishment of debt for the 13-week period ended November 1, 2025, included a $2.6 million prepayment penalty[21]