Q2 2022 Kirkland's Inc Earnings Call

Court call ase and oper will be courort court, court cour in Co? ition 3, six twent cour every one call the resul courarter 32, 22. our cour President would cour the cour ation ty three remar the call cour ase feren repcourted coururther three company cour state in the priv cur ation 4, five provvid cour couruse ard four looking state cour ase go ex cour tor inforation discusto call the statement made by company management our four looking may persu to provisition the priv secure ation 4, 19 TRI looking statement known in risks certain which may Co cour tment actual results future peri M year four results risks certain or more fourfully dis criri cour ment filing with the secureity in exchange missition REM one that call will be available three three 10 6, two twentythousand twent two ATE also be available be the proved P rease well on the company cour Co turn the call over cour cour home propres C year would would cour would over year Thank cour and more every Y one and our reexpected on the first half of the year. We coun number of in our business Ther be the pply issu Ram inplaceation or address consum spend vironment three tor pressuers but priou the resuilillion of our high or an .ization expectcially gress transpositionion. Our companyty or St long ter sixsuccess call four in the second quarter the courren state of our customer acquposition strategy. Our the quidity and inventory manage go for the remain of the year and what the Su expending onment like as we haded to harvest and liday se se right our sesecond courarter effor cus on RE agageing with customers across our AR chanal five court while tenionally leving promotional activity to cour our excess inventory position. We in promotional we to promotion law also experi ER Co in our LY which an Act in our margions. However, we believe the thir to insure we are on tract in our AR of the the law hundred million inventory by the in the fiscalthe year ase repcour the remain on tract disiscall while comparedable Sal down about 9% for the quarter ase to see improve six point same torre sales T from the first court. Our in traffic off prove out thecourarter may starting down sevenventeteen percent, only down Le percent by the in July . Additionally our in tor adverage take increase leven percent, our we percent compared to Q2 of last year as the resul of our sh offperer take and more products with in the betterter and vbest categcour and our Chan strate begin C sign nor ization for commers. All though our year year comp CL 8% sales Chan we were near LY fif percent compared two thousand nineteentwo. We started am our commer efforts il strate it our or strategy. We continue to drive sales to ite and a our increased across all commerers coun while traffic still down teen percent year over basis we did transren improve mon out the quarter. We believe that placeation pressusure and the flow ous market have continue to act Su and proion and jority of our categor were down on year or over year bases. However, our courty category ICE this quarter with that 13% increase sales comp to the prior year. We expect our in home Li service early this quarter. To our part, ship reter we believe will plan in exexpanding our custo base and livering posit custommer experi order large like and out cour over all the customer mand cost the retail case remain and disficult to proredict the custom increase spending dis express ion comm price with many of our year the retail three RE simil sentment. However, we are cour custom UE options So we want insure that we have a clear Ed that court high forion options price point should be tracted the customers lookingking for cour. While we had to courll back on our marke exp, we improve clarity of our M and begin showing after promotion pric more thirarly on line the promentto be V compon to dri customer in interest expectcially in the seter. We believe the improve M pricing not only benefit our torical custom basase are tor customer base that very coun but also drive new customers se for value as remind court home torre four well D long peri and we in we be in the best St position to coun ure value focus customers. We bar on our formations J we made con if WA from our tor discoun or customer base V of customer, that would be will to ay a more. Our ER quidity mar in new category while strategy itionally work. We have significant market il W driving custo demand for home cour. cour market condposions have GI the new per pected and couse to strate as we, the court our to drive Grand ING many new customers to Chan 5, four possibleable to shop the new high callid March we continue to in. We will all iz POS weretail pricing strategy to thirurther dri ininterest from our torical custom base of value or in customers imcour ty pricing strategy cost the courion inustry we we will be able to just dis coun still proable while vend tomers in our new price is the right price. five as spoke ear year we have high focus inventory management significant impro quid pro law by the end the fiscal year we made AR effor to begin workworking our inventory position as we turn ex inven, ex product that we needed to clear off our valllance. No, we would Act price margion as RE inventory for harvest and proct for holiday. The AG it UE the inventory cour pared in the C on our balance for the quarter as resul the inventory fales par the next two quarters we are courrently C in our eight in position which we plan four and cour our last call. However, our one in rate that our inventory turn and F pcasease expected and benefit will really start show and our fourth quarter after thein jority of our harvest and lid inventory direct reate to the top the cer our RE. Our liquidity position as expected we continue two cap all line cred to ING the March for the vest lid C and similar inventory POS. We believe we are citying the borrowing aument. However we in to gener cash next two quarters we start to P down and inaddition impro manage our operating sentenses. Sure, we propri actx nine the value of every doll in the business call drive thirur. But I want rate that inventory in liquidity remain to five and we believe the St TA, our bal and the that POS are woring to remain year the 30 fourth quarters our tor, our STR sales quarters as provest holida se drive custommer M we our way to the shoing se in the B position that we were last year with inventory on. However over the demand five couration no, while ficult to reredict, we want keep our expectation we are begin to cour results RE sales J gest to continue to impro only down 3% a year over bases and we seen the .prox five hundred basis point provement on and marg from our Q2 rate ex two quarters. We will continue inventory promotional activity to drive sales of high law pricing strategy discused, as the resul expected, more normal ized to dis coun ATE coross all category, while promotion activity will have a dri on our margins for the remain the year. We believe three we case to wal cour UE inventory for M we are also incour cost with in pply change coun down as prices as prices ship rates normal. However, due the timing RE inventory our marg will like not benefit from thirly twentthousand 20, three we are Act viron ment we are change in nine managing remain igion in our cost management. Keep ING courst promotion leers to dri demand operation per pected we believe remain position. We have found and and C in my be our C three exted experi our business and inustry and prov serv C ship and exeut Ro coures. We believe my four for our Fin? An or ation and part AR ateg for we continue in the our transformation we exed continue prove man operation cour courty sentenses. We looking four my our cost struct value our 4, four and in in Sa and POS that we LY have more to on ment PRI the quarters overall whether the cour to the court sto pect the LO Su end in rising LY cost. We experi the P seven quarters. We are still very comm Ed to cing our our trans formation strategy turn cour to prem year home courion. The cour we have barking on transformation has not law we have continue to five sixexcess AR coun four improve product MI direct and now in the Li option we stand for committed CRE company in the continue to thir courort our vision Act IM iz that value we D in our for our we that for cour TR prov tail comventory on our four in the second quarter and out look as we earlyyear in the quter in call will be on law cour priou what we into com to and that the best next counpter all year court. We thank every for this company. The call courers thank for cour would mning every Y 1, four geting to the specific, the courarter want prov on our liquid inventory position and how expected that to cour out for the remain the year. Going back to how we year, we have a C ulated the significant ount of already PUR product twentthousand 20, one that not due to Su five STR we orarters and ship that product to insure we havehad in mar five demand offset of inventory. We courch limited new product for the first half of 2, 20.02 thousand as the time we believe the, the be ort term working capital P and that we would have inventory the expect expected ation that it normalizized by the idal the year. Additionally courll four harvest and lid quarters. Sure we didn't't T have the Su. We had twentthousand 20, one M cour. We T expected the significant D off sales begining mar. We quickly quickly remove the proximment six million in C from the back half of twoy 22 began to Ram promotition Q2 to turn ex inventory C as we mention on the last call. We expected early Q3 be our inventory and on our line redit yearre that we are where we expected to be: inventory eight ING in August and courrent balllance on our law six million which we expected priyear as we expect to partv. We allalready C our wor capital Pro and expected start grad pay our law and out stand pay able in the thir quarter with most the progress begining in November . We expected in the year with inventory in the 80 to nine million doll R and the have 10 million bar. We intend to M age our inventory TI LY and out fiscal twent thousand 20, three to further improve our working capital position ING to our resul for the quarter sales 1, two point one million compared to hundred 14 point eight million in the year quarter which included the proper sto ses decline eight point 6% which would driven by the year year decline sto and on line traffic versition off set by crease verage six cour down Sal in the quarter we have a total decline we point 7% decline seven point 4% and five point 8% creaseed July the commer sales decline by nine point 1% compared to the prior year quarter and improve from down six teen point 5% to down 1%. July erce was two 20, 8% of total sales in the quarter which similar to theprior year. Proof was eighteteen point 1% sales compared the 30, four point 6% in theprior year quarter. The decline priimyear LY UE to be creaseed promotional activity to inventory cus as will higheror disributation cost and three from the elevated inventory leve and be impact lower sales on six Co compon off cost increased the Fifteen point 8% of sales compared 14% in the prior year. courarter due lower sales bas the cost increased the five point 5% sales compared tothe 4% in the prior year. peri priimarly due to operating in ition fe with the high or inventory leve down for cost. Our disributation cent to our sto creaseed three point 9% sales from two point 3% in the prior year. Ue to adding additional out more inventory long increased shiping rate cost erce ship cost creaseed lightly to four point 8% sales ared the four point 9% in the prior year. courar operating expectens, excluding crease and pairment: 30, eight point five million. 30, seven point 7% sales compared to 30, seven point eight million or 30, 3% sales. Q2 two thousand 20, one operating exsent. Our largeg six in the first half of the year which allowed limited AB reuce cost ses decl just ING pairment and other Min non operating ex sentes neged sixteen point four million compared tothe five point one million in the same period last year. Our normal ized TA threeate in the second quarter with 2, 22 point 7% compared to 20, four point 4% in the prior year period as just St share included non C exclud non cash pairment normalizized tax three and other Min non operating estment with the dollar thirtyy one cent compared to Ed law year of one in the prior year law year, including two llars cent compared to RE 4% from the prior year. We the courarter 10 point three million C and ized fif ty five million borrowing on our revol cred facabity inventory the the courarter was the hundred fourty one point seven million which would an creaseed the courty nine point seven million from the time last year and 20, seven point seven mill compared to bethe end the fifiscal two 20 20, one certainteen over all Su demand we expect year ter. We will not provviding GU the coun off some collor on law four ment included and our liquidity out the. The sales perpected allg off better start Q2 with the decline 3% which more statevorable than our expectationition. We expected to be in ason inventory position and product ailable. ched 8, we believe will benef EF lid demand the most with year ofover year sales improvement in the back half to in the first half of November the? The expected the operortunity exist in thefour quarter as we didn't't of callliday product tor last year. Given the L? riable margin perpected will continue to be promotional for the remain of year. As our cour priority improvinging our liquidity and inventory position to set for six cess two twentythousand 20, three our level of dis? coun will normal? izized from what we two we expect margin to sequentionally prove from the second quarter. The continue down compared to the prior year by 4, five hundred bas point Q3 and two to three hundred bas point Q4. While we are see rate decl we significant benefit in our financi and il the first part of fifiscal twentthousand 20, three as the inventory we will Sal three this year high prior R? Last we discuss our last call. We call our yearre by back. Given the RE striction our courred, the abity have place while in rowing position and main in appropri level liquidity needed to sucourort the business. We believe that RE cour ch will be valueuable component of our capital allo cation strate long ter and we provide date RE Su by Act move to liquidity position in the coming quarters. Before we believe the? A want to thank every one cour home that the operpportunity to thir and C? ure helping the company and trans four pectcial be home forcour that today cour will be the caseable's of idity as well experi ancial operation teen support long the to our value year hold to by and cour three the year and I four court home law two the cent oper. We now ready. We sion question one We ase pro the case. cour ase first two question cour Please thank and the call sent cour work wions one of the by sure the expect teen ation around cour margin improvement: six which was pected quentional improvement by courarter four hundred five basase point three Q2. That other 2, three hundred basase point Q4 cour was do expected the sequentional improvement from Q2 to be down four down the last year 4, five hundred basis point Q3 and two to three hundred bas point Q4 and that Act land margin cour proofit will likely be down that more than that RE more in inventory last year those of land margions and the land marg by two were down margin fourty 9, one down seven Y basase point percent pointthe C cour. The year would V the one year AR law good, our Ed the cour and how?