Kirkland's Reports $11.8 Million Net Loss and 11.2% Revenue Decline in Latest Quarter

Kirkland's, Inc. reported a net loss of $11.8 million for the 13-week period ending May 3, 2025, compared to a net loss of $8.8 million for the same period in the previous year. The company's revenue for the quarter was $81.5 million, reflecting an 11.2% decrease from $91.8 million in the prior year. This decline was attributed to a decrease in comparable sales, which fell by 8.9%, driven by reduced e-commerce traffic and a lower average ticket size. The gross profit margin also decreased significantly, from 29.5% to 24.9%, primarily due to increased promotional activity and higher store occupancy costs.

In terms of operational changes, Kirkland's closed three stores during the quarter, bringing the total number of stores to 314 across 35 states. The company has been actively working to streamline its operations, resulting in a reduction of total operating expenses from $34.6 million to $30.8 million. This included a decrease in compensation and benefits expenses, which fell by 7.4% year-over-year. However, the operating loss widened to $10.5 million from $7.5 million in the previous year, indicating ongoing challenges in achieving profitability.

Strategically, Kirkland's has entered into a partnership with Beyond, Inc., which includes a $17 million term loan and an $8 million subscription agreement. This partnership aims to leverage both companies' strengths to drive growth. As part of this agreement, Kirkland's issued 8.9 million shares of common stock to Beyond, which now holds approximately 40% of the company's shares. The partnership is expected to enhance Kirkland's market presence and operational capabilities, particularly in e-commerce and store conversions.

The company’s liquidity remains a concern, with substantial doubt about its ability to continue as a going concern for at least the next 12 months. As of June 17, 2025, Kirkland's had $38.8 million in outstanding debt and no availability for borrowing under its revolving credit facility. The company has implemented cost-saving measures and is focused on improving its operating results and liquidity through sales growth and additional financing. The recent tornado that impacted its distribution center in Jackson, Tennessee, has further complicated its operational landscape, although insurance coverage is expected to mitigate some of the financial impact.

Looking ahead, Kirkland's management is focused on executing its strategic initiatives while navigating a challenging macroeconomic environment characterized by inflation and reduced consumer spending. The company aims to enhance its profitability through improved sales performance and cost management, while also exploring opportunities for geographic expansion and product adoption in collaboration with Beyond.