Kirkland's (KIRK) AI Stock Analysis

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Kirkland's

(NASDAQ:KIRK)

38Underperform

Kirkland's faces significant financial challenges, with negative margins and a precarious balance sheet driving the low score. While there are some operational improvements and cost reductions, the overall risk remains high. Technical and valuation indicators provide little relief, resulting in a cautious outlook for the stock.

Kirkland's (KIRK) vs. S&P 500 (SPY)

Market Cap

$15.48M

Dividend YieldN/A

Average Volume (3M)118.77K

Price to Earnings (P/E)―

Beta (1Y)1.27

Revenue Growth-6.02%

EPS GrowthN/A

CountryUS

Employees900

SectorConsumer Cyclical

Sector Strength58

IndustrySpecialty Retail

Share Statistics

EPS (TTM)-1.60

Shares Outstanding13,117,942

10 Day Avg. Volume125,735

30 Day Avg. Volume118,765

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.04

Price to Cash Flow (P/CF)-0.40

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$2.00

Price Target Upside69.49% Upside

Rating ConsensusHold

Number of Analyst Covering1

Kirkland's Business Overview & Revenue Model

Company DescriptionKirkland's, Inc. is a specialty retailer in the United States, primarily focused on providing a wide range of home décor products. The company offers an extensive selection of merchandise, including furniture, textiles, wall art, decorative accessories, lighting, and seasonal decor. With a strong emphasis on style and value, Kirkland's operates both physical retail stores and an e-commerce platform, catering to customers seeking to enhance their living spaces with unique and affordable items.

How the Company Makes MoneyKirkland's generates revenue primarily through the sale of its diverse range of home décor products. The company's key revenue streams include sales from its network of physical retail stores across the United States and its online e-commerce platform. These channels allow Kirkland's to reach a broad customer base, offering both in-store shopping experiences and convenient online purchasing options. Kirkland's revenue is significantly influenced by seasonal trends and customer preferences in home decoration, with peak sales typically occurring during holiday seasons when demand for decorative and seasonal items is high. Additionally, Kirkland's occasionally collaborates with designers and brands to introduce exclusive product lines, enhancing its appeal and driving sales.

Kirkland's Financial Statement Overview

Summary

Kirkland's financial performance is under significant pressure, with declining revenue, negative profit margins, and a balance sheet showing negative equity. Operational inefficiencies and cash flow constraints indicate heightened financial risk.

Income Statement

Negative

Kirkland's has experienced declining revenue and profitability over recent periods. The TTM (Trailing-Twelve-Months) data shows a negative net profit margin and EBIT margin, indicating challenges in maintaining profitability. Gross profit margin has also decreased significantly compared to earlier periods, reflecting increased cost pressures or reduced sales efficiency. Revenue growth rate is negative, highlighting a contraction in sales, and both EBIT and EBITDA margins are negative, signifying operational challenges.

Balance Sheet

Very Negative

Kirkland's current balance sheet reveals significant financial distress. The company has a negative stockholders' equity position, indicating that liabilities exceed assets, and a high debt-to-equity ratio due to negative equity, which poses substantial financial risk. Return on Equity (ROE) is not calculable due to negative equity, and the equity ratio is negative, underscoring financial instability and potential solvency issues.

Cash Flow

Negative

Kirkland’s cash flow statement reflects negative operating cash flow and free cash flow, indicating cash generation challenges. The Free Cash Flow to Net Income ratio is not meaningful due to negative figures. The Operating Cash Flow to Net Income ratio is also negative, suggesting inefficiencies in converting income into cash. These factors highlight liquidity pressures and constraints on financial flexibility.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
458.41M	468.69M	498.82M	558.18M	543.50M	603.88M
	Gross Profit
85.54M	126.99M	119.79M	188.43M	172.38M	165.43M
	EBIT
-12.11M	-24.41M	-40.68M	25.34M	26.61M	-33.81M
	EBITDA
-4.17M	-11.94M	-25.89M	46.12M	31.92M	-24.41M
	Net Income Common Stockholders
-20.90M	-27.75M	-44.69M	22.03M	16.64M	-53.27M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
58.83M	3.81M	5.17M	25.00M	100.34M	30.13M
	Total Assets
180.81M	250.57M	274.25M	331.19M	389.42M	422.44M
	Total Debt
30.33M	173.79M	171.11M	152.29M	196.41M	248.89M
	Net Debt
-28.50M	169.99M	165.94M	127.29M	96.07M	218.76M
	Total Liabilities
77.88M	247.45M	244.47M	250.06M	294.89M	345.49M
	Stockholders Equity
102.93M	3.12M	29.77M	81.13M	94.53M	76.95M
Cash Flow		Free Cash Flow
-13.94M	-19.25M	-26.27M	-37.91M	69.86M	-23.95M
	Operating Cash Flow
-10.82M	-14.48M	-18.15M	-30.79M	78.56M	-8.27M
	Investing Cash Flow
-3.08M	-4.63M	-8.06M	-7.06M	-8.49M	-15.68M
	Financing Cash Flow
14.90M	17.74M	6.38M	-37.49M	131.00K	-3.87M

Kirkland's Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.18

Price Trends

50DMA

1.33

Negative

100DMA

1.51

Negative

200DMA

1.62

Negative

Market Momentum

MACD

-0.05

Positive

RSI

42.37

Neutral

STOCH

46.04

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KIRK, the sentiment is Negative. The current price of 1.18 is below the 20-day moving average (MA) of 1.25, below the 50-day MA of 1.33, and below the 200-day MA of 1.62, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 42.37 is Neutral, neither overbought nor oversold. The STOCH value of 46.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KIRK.

Kirkland's Risk Analysis

Kirkland's disclosed 38 risk factors in its most recent earnings report. Kirkland's reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Kirkland's Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WSM	66 Neutral	$17.19B	15.84	53.91%	1.63%	-0.50%	24.11%
Sector *	60 Neutral	$7.23B	11.55	3.67%	4.04%	2.96%	-13.54%
HVT	58 Neutral	$287.80M	14.83	6.48%	7.23%	-16.15%	-66.79%
BSET	56 Neutral	$162.77M	―	-3.83%	4.15%	-11.78%	-13.89%
RH	49 Neutral	$3.02B	44.69	-38.18%	―	5.01%	-35.45%
KIRK	38 Underperform	$15.48M	―	77.02%	―	-6.02%	―

* Consumer Cyclical Sector Average

Performance Comparison

KIRK

Kirkland's

1.18

-0.74

-38.54%

BSET

Bassett Furniture

18.70

6.30

50.81%

HVT

Haverty

17.71

-11.91

-40.21%

WSM

Williams-Sonoma

139.21

1.76

1.28%

161.13

-79.28

-32.98%

Kirkland's Earnings Call Summary

Earnings Call Date: Mar 14, 2025 | % Change Since: -7.09% | Next Earnings Date: Jun 5, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a positive shift in operational efficiency and strategic repositioning with improvements in gross profit margin, customer traffic, and inventory management. However, significant challenges remain with declining net sales and negative adjusted EBITDA. The sentiment is cautiously optimistic as the company executes its turnaround strategy.

Highlights

Improved Gross Profit Margin

Gross profit margin increased by 130 basis points to 26.3% compared to 25% in the previous year, driven by a 110 basis point increase in merchandise margin and decreased central distribution costs.

Sequential Improvement in Comparable Sales

Comparable sales improved from a decline of 13% in August to 6% in October, showing a monthly sequential improvement throughout the quarter.

Cost Reduction Success

Operating expenses were reduced by over $2 million compared to the prior year, reflecting effective cost containment strategies.

Increased Customer Engagement

A 20% increase in lapsed customer reactivations and a significant improvement in e-commerce traffic decline from negative 17% to negative 3%.

Inventory Management

Inventory levels decreased by 17% compared to the previous year, improving supply chain efficiency and positioning for the holiday season.

Lowlights

Decline in Net Sales

Net sales decreased to $116.4 million from $131 million in the prior year quarter, with a 9.2% decline in comparable sales.

Continued Challenges in High-Ticket Categories

Inflation affected customer purchases in high-ticket categories like furniture and wall decor, although strategic shifts are being made to address this.

Negative Adjusted EBITDA

Adjusted EBITDA was negative $3.2 million, compared to negative $1.7 million in the prior year, indicating ongoing operational challenges.

Interest Expense Increase

Net interest expense rose to $1.2 million from $0.7 million due to higher interest rates.

Company Guidance

During the third-quarter 2024 earnings call for Kirkland's, the company provided several key metrics and guidance updates. The call highlighted sequential improvements in traffic and comparable sales, with traffic declines improving from 14% in August to 4% in October, and comparable sales improving from a 13% decline in August to a 6% decline in October. Gross profit margin increased by 130 basis points to 26.3%, driven by a merchandise margin improvement of 110 basis points. Additionally, Kirkland's saw a 20% increase in lapsed customer reactivations and an 8% sales increase in the decorative accessories category. The company reported a 17% reduction in inventory levels compared to the previous year and reduced operating expenses by over $2 million. Looking ahead, Kirkland's expects a low single-digit increase in comparable sales and further improvements in merchandise margins in the fourth quarter.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.