Kirkland's Reports $23.1 Million Net Loss, Enters Partnership with Beyond, Inc.

Kirkland's, Inc. reported a net loss of $23.1 million, or $1.77 per diluted share, for the fiscal year ending February 1, 2025, an improvement from a net loss of $27.8 million, or $2.16 per diluted share, in the previous fiscal year. The company's net sales decreased by 5.8% to $441.4 million, down from $468.7 million in fiscal 2023. This decline was attributed to a combination of store closures, a non-comparable sales decrease of $18.1 million, and a consolidated comparable sales decrease of $9.2 million, primarily driven by reduced average ticket sizes and e-commerce traffic. Despite the decrease in sales, gross profit as a percentage of net sales improved to 27.6%, up from 27.1% in the prior year, reflecting better management of outbound freight and distribution center costs.

In a strategic move, Kirkland's entered into a partnership with Beyond, Inc. on October 21, 2024, which included a $17 million term loan and an $8 million equity investment. This partnership aims to enhance collaboration and drive growth, allowing Kirkland's to operate small format stores under Beyond's trademarks, including Bed Bath & Beyond and Buy Buy Baby. The partnership was approved by shareholders on February 5, 2025, resulting in the issuance of approximately 8.9 million shares of common stock to Beyond. The company plans to open new stores under these brands while closing 15 to 20 underperforming Kirkland's locations in fiscal 2025.

Operationally, Kirkland's operated 317 stores across 35 states as of February 1, 2025, a decrease from 330 stores the previous year. The company has focused on enhancing its omni-channel capabilities, with e-commerce sales accounting for 23.5% of total net sales in fiscal 2024. The company is also reallocating lower-priced inventory to physical stores to maximize its Buy Online Pick-up In Store (BOPIS) capabilities. Employee headcount stood at approximately 4,010, with a mix of full-time and part-time staff, reflecting the company's seasonal hiring practices.

Looking ahead, Kirkland's faces challenges from a difficult macroeconomic environment characterized by inflation and reduced consumer spending. The company is closely monitoring its liquidity position, ending fiscal 2024 with $3.8 million in cash and $43 million in outstanding debt under its revolving credit facility. The company has expressed substantial doubt about its ability to continue as a going concern, emphasizing the need for improved operating results and additional financing to support its strategic initiatives. The management is actively seeking to secure further financing to bolster its liquidity and operational stability.