Why Kirkland's Shares Are Slipping Today?

Kirkland's Inc KIRK shares are trading lower by over 8% after the company reported weaker-than-expected Q2 FY23 results.

Sales of $89.5 million missed the consensus of $91.86 million. 

Comparable same-store sales decreased by 9.7%, including a 16.6% Y/Y decline in e-commerce sales on a drop in traffic and average tickets.

Gross profit margin expanded to 19.5% from 18.1% a year ago on improved merchandise margin.

Adjusted EBITDA loss improved to $(13.5) million from $(16.4) million the prior year.

Adjusted EPS loss of $(1.39) missed the analyst consensus loss of $(1.10).

As of July 29, 2023, the company held a cash balance of $4.9 million, with $46.0 million of outstanding debt under its $90 million senior secured revolving credit facility.

"While macro-economic challenges have certainly impacted our results, there are a number of other challenges that we are working to resolve. First, we are making changes quickly to our merchandise assortment and our marketing strategy to ensure that we are reconnecting with our core customers and attracting more to the fold. We are also optimizing our inventory flow through supply chain improvements, improving the omni-channel experience through technology, and ensuring stores are fully supported to deliver a superior customer experience. We believe these changes will put us on a path to positive adjusted EBITDA in the back-half of fiscal 2023 and, as we execute, position us for a return to historical adjusted EBITDA margins," said Ann Joyce, interim CEO. 

Price Action: KIRK shares are trading down by 8.9% at $2.24 on the last check Wednesday.

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