Kirkland’s, Inc. (NASDAQ: KIRK) is home décor specialty retailer located in the United States. The retailer operates 369 stores across 35 states, as well as its ecommerce website, Kirklands.com. Shares of the home décor company are gaining 16% through early trading on Thursday, September 2, 2021. Over the past three months, Kirkland’s has seen average daily volume of 453,270 shares. However, volume of 681,182 shares or dollar volume of $14.75 million, has already exchanged hands during the first hour of trading on Thursday.
Shares of Kirkland’s are rallying after the company reported second quarter 2021 financial results and announced the authorization to repurchase up to $20 million of its stock. Net sales slumped 8% to $114.8 million compared to a year ago. Comparable sales declined 5.2%, including an e-commerce drop of 12.6%.
On a positive note, gross profit margins jumped 600 basis points to 34.6% and EBITDA saw a significant increase to $5.4 million, compared to $0.6 million during last year’s second quarter. Furthermore, Kirkland’s holds no debt and held a cash balance of $45.2 million. The company repurchased $12 million worth of its stock during Q2 2021.
Management notes challenges from the disrupted global supply chain as being a key factor for its slumping top-line results. However, Kirkland’s leadership was pleased with the gains made in profit margins and staying financially nimble.
Looking forward to the second half of 2021, management maintains a mostly-positive outlook. The retailer estimates a mid-single-digit same-store sales increase, driven by improving inventories and growth in average customer ticket. The Company still anticipates year-over-year earnings growth in 2021, despite the significantly higher freight costs.
“The second quarter proved to be another step forward in our transformation efforts and achieving our long-term financial targets,” said Steve “Woody” Woodward, president and CEO of Kirkland’s. “Despite the expected challenges stemming from continued constraints in the global supply chain, we made progress in the areas that we could control and experienced an improvement in sales during the last month of the quarter with year-over-year margin gains as a result of our disciplined approach to our cost structure. This included elevating our merchandising assortment to drive higher average ticket, continuing to increase our levels of direct sourcing and further negotiating rent reductions across our store footprint. These enhancements drove a two-year comparable same-store sales increase of approximately 5% compared to the same period in pre-pandemic 2019. In addition, our positive operating income and earnings during our seasonally softest quarter are a testament to these accomplishments and others as we work towards consistent profitability in all four quarters.”
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