Kirkland's(US:KIRK)2023-09-05 16:00Financial Performance - Net sales decreased by 12.3% to $89.5 million for the 13-week period ended July 29, 2023, compared to $102.1 million for the same period in 2022[59]. - Comparable sales, including e-commerce, decreased by 9.7%, or $9.6 million, for the second 13 weeks of fiscal 2023[60]. - Net sales decreased by 9.3% to $186.4 million for the first 26 weeks of fiscal 2023 compared to $205.4 million for the prior year period, with a 4.5% decline in store count[67]. - E-commerce comparable sales decreased by 16.6% compared to the prior year period, driven by lower traffic[60]. - E-commerce comparable sales decreased by 11.6% in the first 26 weeks of fiscal 2023, contributing to the overall decline in comparable sales[67]. Profitability Metrics - Gross profit as a percentage of net sales increased by 140 basis points to 19.5% in the second 13 weeks of fiscal 2023, up from 18.1% in the prior year[61]. - Merchandise margin increased approximately 320 basis points to 51.2% in the second 13 weeks of fiscal 2023, primarily due to lower inbound freight rates[61]. - Gross profit margin increased by 40 basis points to 23.2% in the first 26 weeks of fiscal 2023, driven by a merchandise margin increase of approximately 250 basis points to 54.1%[68]. - Operating loss for the first 26 weeks of fiscal 2023 was $28.4 million, a 13.6% improvement compared to a loss of $32.9 million in the prior year[67]. - Net loss for the second 13 weeks of fiscal 2023 was $19.4 million, or a loss of $1.51 per diluted share, compared to a net loss of $25.7 million, or a loss of $2.02 per diluted share, in the prior year[65]. - Net loss was $31.5 million, or a loss of $2.46 per diluted share, compared to a net loss of $33.6 million, or a loss of $2.65 per diluted share, for the same period last year[73]. Operating Expenses - Total operating expenses decreased by 11.9% to $35.5 million in the second 13 weeks of fiscal 2023 compared to $40.3 million in the prior year[59]. - Compensation and benefits as a percentage of net sales increased to 21.5% in the second 13 weeks of fiscal 2023 from 21.1% in the prior year[62]. Cash Flow and Financing - Cash used in operating activities decreased to approximately $28.5 million in the first 26 weeks of fiscal 2023 from $56.1 million in the prior year, attributed to changes in working capital[80]. - Capital expenditures for the first 26 weeks of fiscal 2023 were $2.3 million, down from $5.0 million in the prior year, primarily focused on technology and omni-channel projects[82]. - Net cash provided by financing activities was $30.5 million, with $36.0 million borrowed under the revolving credit facility, partially offset by $5.0 million in repayments[83]. - The 2023 Credit Agreement increased the senior secured revolving credit facility from $75.0 million to $90.0 million, with a maturity date extended to March 2028[84]. - As of July 29, 2023, the company had approximately $46.0 million in outstanding borrowings under the 2023 Credit Agreement, with an additional $9.0 million borrowed subsequently[87][93]. - The company reported a cash and cash equivalents balance of approximately $4.9 million as of July 29, 2023, which is expected to be sufficient to fund planned capital expenditures and working capital for at least the next twelve months[88]. Shareholder Actions - The share repurchase plan authorized by the Board of Directors allows for the purchase of up to $30.0 million of common stock, with approximately $26.3 million remaining under the current plan as of July 29, 2023[89]. - No shares were repurchased during the 13-week period ended July 29, 2023, while 479,966 shares were repurchased at a cost of $6.253 million during the 26-week period ended July 30, 2022[90]. Debt and Risk Management - The company had $55.0 million in outstanding borrowings under the 2019 Credit Agreement as of July 30, 2022, indicating a reduction in borrowings over the year[93]. - The company is exposed to interest rate changes due to borrowings under its Credit Agreements, but a one percent change in interest rates would not materially impact operations[93]. - The company manages cash and cash equivalents beyond federally insured limits, which poses a risk of not recovering the full principal of investments[94]. Store Operations - The company operated a total of 340 stores as of July 29, 2023, down from 356 stores a year earlier, reflecting a 4.5% decline in store count[58].