Kirkland's, Inc KIRKis slated to report first-quarter fiscal 2018 results on May 31, before the market opens. This retailer of home decor products has been benefiting from impressive top-line performance, buoyed by efforts to enhance merchandise assortments, develop e-commerce business and increase store counts.
On the flip side, higher operating expenses combined with promotional costs have been a drag. With these aspects in mind, let’s delve into how things are shaping up for the upcoming quarterly results.Efforts to Drive Sales Bode Well
Kirkland’s sales have been improving year over year for nine straight quarters now, courtesy of its well-chalked endeavors. Notably, the company has been making several investments for improving merchandise assortments, rationalizing SKUs, undertaking repairs at various categories as well as enhancing pricing and mix to augment overall execution.
Further, Kirkland's gains from a robust e-commerce business. Notably, the company redesigned and leveraged the rollout of new information systems to improve online purchase and planning execution. Additionally, third-party drop shipping is providing customers a wider assortment of product offerings. These efforts have been yielding significant results, evident from the strong e-commerce momentum witnessed of late. In fourth-quarter fiscal 2017, e-commerce sales surged 30% year over year and represented about 10% of Kirkland’s top line. In the near term, the company is expected to continue expanding its third-party partnerships, improve ‘buy online pick up in store’ capability and refine fulfillment processes to boost the profits from the Ship to Home business.
Kirkland's also undertakes frequent store openings to support top-line growth. In this respect, the company resorts to the strategy of opening stores at popular locations, while shuttering smaller underperforming stores.
Going ahead, management is committed toward making several experiments to attract more customers — online and in stores. That said, Kirkland’s anticipates net sales in fiscal 2018 to advance 3-5%, owing to increased store count and contributions from e-commerce sales. Also, the guidance is based on comps growth of 1-2%. Well, such positive top-line view for the fiscal combined with the company’s constant efforts to bolster sales raises the possibility of the company to deliver solid performance in the impending quarter. Incidentally, analysts polled by Zacks project sales to rise almost 5.4% during first-quarter 2018 to reach $140.1 million.