Kirkland's Bets On The Brand House Collective For Turnaround After Q1 Loss

Kirkland’s, Inc. KIRK announced its first-quarter results on Tuesday.

The company also unveiled a significant strategic transformation, including a corporate rebranding to The Brand House Collective, Inc., reflecting its evolution into a multi-brand merchandising, supply chain, and retail operator for Kirkland’s Home and Beyond, Inc.’s BYON brands (Bed Bath & Beyond, Overstock, and buybuy Baby).

The company reported first-quarter adjusted earnings per share of 51 cents loss, missing the analyst consensus estimate of 47 cents loss. The quarterly sales of $81.50 million missed the analyst consensus estimate of $85.60 million.

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The company said consolidated comparable sales decreased by 8.9%, including a comparable store decline of 3.1% and an e-commerce decline of 26.7% compared to the first quarter of fiscal 2024.

The decrease in comparable sales was primarily driven by a decline in consolidated average ticket and e-commerce traffic.

Gross profit for the first quarter was $20.3 million, down from $27.1 million in the prior year quarter.

Gross margin declined to 24.9% of net sales from 29.5% a year ago. The decline is primarily a result of lower merchandise margins due to higher promotional activity and the deleverage of store occupancy costs, partially offset by lower outbound freight costs.

In the quarter, the company reported an adjusted EBITDA loss of $7.9 million compared to a loss of $4.5 million in the prior year quarter. 

As of May 3, inventory was $76.4 million, a 0.8% increase compared to the prior year period. The company closed three stores during the period to end the quarter with 314 stores.

The company exited the quarter with cash and equivalents worth $3.5 million, with $38.9 million of outstanding debt.

Amy Sullivan, CEO of Kirkland’s, attributed the first quarter’s performance challenges to adverse weather and continued softness in consumer sentiment.

Transformation, Expansion, Rebrand

The company plans a name and ticker change to The Brand House Collective, pending shareholder approval at the July 24, 2025, annual meeting. The ticker symbol will be changed from “KIRK” to “TBHC”.

Kirkland’s is undergoing a major transformation into The Brand House Collective, aiming to become a multi-brand retail operator. This transformation will involve a comprehensive operational reset aimed at streamlining the company’s footprint.

The company expects to consolidate its real estate, leveraging underperforming store closures to reduce excess inventory and improve inventory turnover. The plan is to retain approximately 290 current store locations as the foundational footprint for Kirkland’s Home, Bed Bath & Beyond Home, and Overstock.

To support this transformation, the company has undergone a comprehensive corporate reorganization. The corporate reorganization introduced new leadership roles to drive brand-specific growth. Four new directors will join the board, replacing five outgoing members.

Price Action: KIRK shares are trading lower by 7.09% to $1.18 at last check Tuesday.

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