KIRK - Earnings call transcript Q1 2022

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Operator

Good morning, everyone. And thank you for participating in today's conference call to discuss Kirkland’s Financial Results for the First Quarter Ended April 30, 2022.

Joining us today are Kirkland's President and CEO, Steve Woody Woodward; COO and CFO, Nicole Strain; and the company's external Director of Investor Relations, Cody Cree.

Following their remarks, we'll open the call for your questions.

Before we go further, I would like to turn the call over to Mr. forward-looking the Private Harbor of Securities provides cautions reads meaning within XXXX he important the of Litigation regarding as company's statement Safe the that Cree statements. Reform Act Cody, please go ahead.

Cody Cree

by information historical made Difficulty] statements forward-looking during Except company Difficulty]. for Difficulty] discussed [Technical [Technical call, [Technical the made pursuant and

kirklands.com. to remind in Difficulty], provided call also the uncertainties will cause webcast for differ company's release, involve available Kirkland's be X, and forecasted from be at as Forward-looking today's will in are materially June I'd XXXX. in everyone fully that Those results like with well replay [Technical link this results. statements and replay the Kirkland's actual Exchange as Commission. which through the may risks Securities press more available via described to filings on A future periods website

call like CEO, would turn Steve to Woody, I over Woodward. and Now to you. to the Kirkland's President over

Steve Woodward

to more supply to in elevated feeling ways, increased of is not the and ongoing to lifted. a last the paying Kirkland focus and Cody experiences customers inflation, weeks being not spending demand as or waning have given the results and In that and wealthier good appears now. spend. retail between put, Simply you, impacted with It is these decor When than start costs been being cash costs knows including customer value the brands more to first a with rising and bases space. compared pandemic's and our impacted and home our landscape environment, our were the constraints. Thank the going issues. some Like affected prioritizing demand that restrictions higher broader notably combine you freight exceptionally to Ukraine a commentary Certainly of significantly customer difficult meaningful quarter right consumer by our our their levels furnishings their shifted have rates. taking home costs consumer is wage chain the who by and Anyone interest geopolitical several storm customer costs, to largely trends, by transportation morning, are been such premium stemming sales many to various higher to hiring out has immune on hyper-competitive we macroeconomic the associated store peers peers, lower freight spend has concerning we're rates, heightened vacation, of discretionary these transportation challenging more momentum. the inflation attention makes and macroeconomic it over perfect Russia some everyone. issues We a negatively supply that year. believe shop few customer furnishing discretionary discretionary generate from and our conflict eat chain

a While even upon this meaningful transformation environment executing strategy harder. is within

However, design retailer we still a omnichannel in quality commitment and remain furnishings becoming our home premier an experience. will steadfast offering throughout remain to -- value,

two our our awareness base. slowdown Atlanta customer brand the growth drive and April All within are that being control. ago, across initiatives we accelerate being progress our in -- generate to pedal key of a time new that advertising gas still pace our the on Nashville tests a As all we markets, sales and said put for launched expand as customer on opportune back we're we'd storm discussed to few and this foot your making and We months our interest. weathered to wait change more

feedback challenging has the these programs initial marketing have environment, a While just we rollout only positive. begun been to amidst

once broader scale customer continue insights sentiment whether work store footprint, on to glean these rebound. on our data initiatives to could to tests will gather begins a We national these from across

items We to full looking as in-home buy and test bulky items, our outdoor the national to also such rollout customers furniture delivery service our serve a month. with recently better next in launched scheduled

As our imperative step an omnichannel this in next we've becoming improving discussed was capabilities. calls, on previous

We a and welcomed to customer our expect can enhancement we be for experience to to within continue overall better this forward. look continue our serve going customers ways we'll

We to of our cleansing in are data also data actioning the customer final platform. our stages start consumer

ability needed on through said base, consumer target our customer a have dynamic as on experiencing. capability critical will will well within much we the be as messaging. As offers this behavior, with -- insights we're groups us navigate and we This calls, especially different the give to as customer different and previous segment backdrop

Given to our -- macroeconomic in sales holiday first on the will expense flow Historically, with cash pace use strong transformation pace half our season the and and in which year performance in burn of bolster environment year. the start we we Nicole from we to since XXXX, balance prudent cover sheet, balance in our year, we've volatile more our cash balance relied management, especially we of the the will to generate the half back detail. will the of

sales time. allocation an not into furniture leaving have the allow appropriately operating to And near our position the for regarding term product built our table inventory throughout priorities, efficiently to credit necessary cash we holiday While we there possible. season more on facility top that was sales believe priority. aren't shelves simply stocked we and strong outdoor the year, having in as more the we balance, that our categories that a go our are on and backdrop, we will consumer when balanced arrived, ensure our plan capital details yet. challenging to with Nicole due weren't We any as positioning adequate we that using maintaining is and our

season our year cautiously the the augment results the are help upcoming that We in for half year. back optimistic holiday will our financial of

core We work through believe However, this efforts having will We've customer XXXX. enhanced slow down promotional our dedicated in in our losing being to originally assortment our our stockpile from more we're to customer length the customer sales merchandise also fuel and our planning without inventory how to flow. at be and we intended allow base had on generate our and cash to us momentum with than acquisition call base. to understand our we're loyal market discussed allow fully about last challenges, to

customer impacting or While Kirkland periods, I think well the backdrop during periods note challenging growth. historically consumer recessions of it our that is performed relevant results, is of to for stagnant has

attention place and over begin for opportunity an to As and the a new customer customers do we initial furnishings breaking banks, capture their get there's the home value ways begin without upgrade and believe decor hunting share. feature at shock, consumers higher from furnish design to we market a that assortments our is increase on concepts With new home price, home to their and a stylishly the perfect value elevated Kirkland’s to budget. quality for believe materials

to continue reason, during times. these executing our commitment our challenging this unwavering transformation will For

remain can goals doing everything same, and our course strategic Our our to the we're maintain hit we objectives. and

this are And and plan top than evaluating our always best and stronger as on when making weather difficult direction, before. stewards Our environment. strategic we mind possible. we're value as the ensuring we're cash we conserving our of of being capital even decisions as prudent We that of coming shareholders generate out much anticipate the long-term to

believe making continue first been I'd and It strategy. during executing and not our support road continue our the I'll like dedicated have. And Nicole efforts recognize employees floor our easy our the transformation as yours. been As our over I initiatives. always, outlook. and on detailed our to now future performance to an -- in certainly in the Strain, that has stakeholders furnishing transformation the the commentary look to I'll their any home of we Q&A to day. potential to me back the forward quarter continues questions I last for space. within true is we perseverance With to scratch begun firmly who’ll surface progress few that over call Nicole, only quarters, you what but the to us Kirkland’s inspire our believe just provide turn that and on COO, every holds have answer may CFO the be said,

Nicole Strain

good And you, Thank everyone. Woody. morning,

getting Comps by within the customer the lower to mainly wanted saw summarize the first how quarter, we to and numbers, to continued detail the it driven quarter decline business. in our traffic. Before I what impacted

products the leverage with Our talked in stronger with We've first than first of XXXX which expected the to sales better to in points to XX of price Unfortunately selling shift of the at in how past retail first came due product our our basis assortment our is the about increases. in down two taking the much the goal margin operating the shows less year, model level. are quarter mix quarters. landed in half to discounting fixed line costs and our

we inventory. March April, more what with experimenting levers turn begun continue customer term, improvement our are to seeing have Moving from sales in We which will stimulate and excess margins. still into May, promotional impact digit. date, and in through saw we the to be promotional to do double expect our down demand near To but we

historically earnings to QX. the quarter, QX that has decline second quarter expect Given toughest our been from we

allocation e-commerce into XX.X% the quarter. increased lower of period, in offsetting was of compared flow which compared the conversion margin furnishings due comparable by distribution our had prior X.X% credit. QX management store to stores the I'll of of from impacting total to year decrease and and the prior higher in of costs to DC to that inventory finally of compared from to costs and in sales the comp on to April. Net productivity compared quarter. the centers lower cash the to and reduced quarter, decline XX.X%. QX conditions channels. our decline some line XX% million compared early in X.X% in implementation million both sales, the fuel inventory the of system. a a Gross year-over-year. within compounded our $XX sales infrastructure and our March, comp period, of later. first to the capital was in the that increased X.X% prior capital in and in and product our down new a occupancy $XXX.X an year sales of prior quarter, how down quarter. for year to driving Store X.X% primarily costs. industry, was which our sales due the sales into were million to sales had profit perspective quarter. a costs a a to Outbound our E-commerce decline mainly accounted negative year quarter. in February, approximately on in plan year, of to relatively and Lastly, Jumping flat freight XX.X% in year home sales results XX% The in due and at inflation decline incremental sales in-store bit freight draw included resulted product prior traffic was XX% remain base. costs macroeconomic XX.X% in XX.X% bring the rate We quarter impacts to was year inflation. XX.X% X% ago decline prior from impact with plan sales E-commerce working from X% sales of the warehouse of in shipping fixed levels revolving XX.X% compared $XXX.X expected exacerbated more a Landed our a by X.X% to the The get deleverage wage of our Breaking in and discounting the for for increased be stock slow from in

excluding impacting store expenses. costs for the to was million operating of negative of labor, non-operating impairment cost and $X.X depreciation and increased year. sold XXXX. the drivers increasing expenses basis to damages in due increases employee were EBITDA inventory. other sales $XX.X increase the compared with minor $X.X Wage points, last mainly $XX.X increased in XX.X% million compared Expenses sales, impairment Operating were specifically to million the primary XXX same other or higher of million XX.X% in goods or excluding Lastly, with benefit QX, along Adjusted period

borrowings an quarter first excludes which impairment, share, per in was adjusted year other loss Our was of in of non-operating earnings prior $XX ended to compared per quarter loss the these the compared to $X.XX revolving prior $X.XX cash credit was in We normalized XX.X% period. minor items on the in adjustments Adjusted million including in and tax share per $X.X the tax with year. earnings rate XX.X%, GAAP $X.XX the our year. in utilized million to share, rate prior compared and $X.XX facility. normalized non-cash

first drawn and in half in a inventory, second the shipped through to sales third us credit mentioned With inventory Christmas for slower sell of facility. further bulk to year credit be the resulted and for the QX, expect of on quarter. As our harvest arriving the we quarter, before, which we we the revolving paid and tapping the expected facility the during

the sell position. to expect through fourth as holiday borrowing size this and right We inventory quarter, the overall reduce significantly inventory we in our

time taken a in in half receipts of which increase million inventory same $XX.X of the turn million quarter year, by fiscal end to $XX.X have to promotion the the at fiscal of year, We to $XX of the million and of year operating last end at million, our reduce expected quarter was of remainder faster on second $XXX.X an facility, back cost $XX year. the the through inventory the includes reducing the compared series to through from was the up of existing million a of reliance Inventory actions increasing million approximately the $XX the pace. reductions our credit and level the which remainder implementing of

We under by our $XXX levels million in fiscal August to declined end the to the of year. expect and inventory peak

the the program at a an at repurchase cumulative had share At approximately million. first cost average of quarter, $X.X first we end our buyback $XX.XX per continued XXX,XXX in million with XX.X shares the available authorization We of for quarter share.

We a allocation as continue in component strategy. to share believe of valuable capital our repurchases

needed first support market the conditions facility making maintain upcoming for we on to current However, quarters, are we our the sure liquidity our focusing given business. credit the reliance forecasted and on

our credit purchases places borrowing Additionally, while a position. restrictions certain share on in facility

revisit will this program flow as We cash allows.

environment. believe will efforts operational Our we challenging I foundation carry strong and remain transformation a built through that us this

we operating we with executing headwinds, confident are we remain according transformation. the that strategic and Although our are to right on macro track

us Kirkland’s areas the for are And a ready unlocking of continue We control Q&A. Thank on home and all joining furnishings today. to focus can specialty operator the you we on as will we potential retailer. for now

Operator

Craig-Hallum will now the question-and-answer comes first your from session. Group. go begin question Please Capital with Hamblin We Instructions] [Operator Our ahead with question. Jeremy

Jeremy Hamblin

and you, good Thank morning.

about by management so So, I and start to wanted the forth. inventory asking

high-teens of part seen the million, year-over-year, is total. I down of below first sales trends terms the inventory level that my was $XXX -- the understanding think getting was, elevated inventory obviously up math In by XX% composition down in about

that of the up. actual to we fuel an inventory, about component just stacking just of the of it's of is other I that parts freight that opposed impact to you the terms In much thinking get wanted if as guys? pressures how hitting component inflationary just surcharges whether understanding pieces parts of are costs, could how much was are this the actually and themselves, kind see of that

Nicole Strain

there. I think a pieces of couple

we when were So compare last perspective. we year, an really from to low inventory

under So we had be. well been want operating to where it we

that to we this holiday freight big seasonal of the have the million be we carrying seeing are of we're season. definitely So a also growth. $X And piece over

in is where year that for we so a say ended the I'd us if number So quarter, between we where somewhere ago right were and helps. the that

Jeremy Hamblin

more know you in terms That you're a observation less category think getting is is home noted think Wanted an whole what soften trends. where over as a or industry experiences. and get they've pivot to sales as that's next value-oriented. be in the your perhaps how more end a And that whether you're customer on understanding right the they're furnishings of helpful. And an affluent -- that spending rolling use at get couple bit as, the whether to or the consumers perhaps seen through over a that dollars, certainly, promotional because potentially But of the impacting you kind not not we've I a your have little here seen industry, in ability even whole. Wanted starting more clear quarters. goods category maybe shifting here to understanding you're of to high seeing you of then seeing I or

Steve Woodward

industry Multiple Jeremy, about thanks a that. things first It’s for all, whole. talk the the question. of Woody. Well, as let's in embedded

I to sell. recessionary think gotten that thing that store, of has that a customer discretionary tough, what more gone gas being and In the into sell and we time a those expensive. to it's benefited just cautious we and at our when things a that period, from when some you're then tough, people times We $XXX, have, we've up of are don't we value items have dreams. are player. were grocery history wants They -- as filling we and company, tank go the being $XXX or times the and are, your on one like sell you

So homes, have the our promotional now. started. housing, this components inventory on as have with medium the that back kind and people be we're the seeing which the and end that lot And their up, of are our and ending off being situation think we low us shift wanted just right if that, stock our make I in a end to because of guard, we brethren at the as refocus But time that year anticipating at we right were focus. inflation on of so don't And we for last disaster look we high hands, all a that's both you customers. it low war came year change more this that started. caught And by a

everyone to inventory I and bloated they a be. is on don't So bit want think little

is said were fairly go that that's sales. or year. Nicole the it's particular bit in more mean, little So inventory All months the liquidate as think the I component inventory, is around caused million of of we we category. level decrease bloated traffic promotional, in think in at less right We will to through not ourselves in a right get I be and coming the I have next good. said, be $XXX we which to seem to the one our just lack being into expectation this of

things overall where inventory. as component lump have one we we that we're inventory. so kind I inventory I when that sell kind other that an have had macroeconomic issue And haven't just, same the And the experiencing and dramatically, is fast. in due like changed dramatically, we've that then lowering have didn't problem, both think mention, traffic don't good changed of should these of like declines we downtick. It's we've both quarter are past a of just to things the the we you the It's environments,

So where in they areas appealing like in all assortment, our furniture, our about the declined change the candle we design they're we that with same amount. in the areas where didn't quality dramatically change aspects and and decline much, increase and

we an is know hit and short don't inventory very next outdoor do it's in overall we so So category, will fourth a our that one more area being bit our on carry into third of the one. period making liquidate seasonal that the that we during be that promotional versus sure numbers, it macro we The that sales little time, quarter.

Jeremy Hamblin

to Right, that's of get of those component, between, the seasonal. the $XX noted of million décor, cutting bulk But taking inventory art, the being and of the further, so furniture, not Wanted kind the helpful the of that think might step textiles, roughly or half to categories color. a holiday you're receipts, where or wall the of of back understand sense made? And reductions a you year. lamps, kind be departments that where's get or I presumably wanted in you seeing

Steve Woodward

they when for we come opportunity holiday and people and fall year. have trying making out effort know just really of us harvest to on our from Because We And protect year us every that. big last were are we definitely assortments. stock a every that. to And what that's our

are protected. And So water the on are actually those those now. right

last $X in So for launch. carryover Plus, holiday. we stock we have be fully we year from expect to when million the

hit a One, those come good it's And pure inventory accepting might certain very come Most of a two The say for sales gates just of most that their would us being cancellations. plan of second products for just amount now they've overall right assortments. reductions product so want that later inventory quarter the we those vendors be $XX is points. date. And So right the first a lowering of sure of second to the just and position, end at on in our one the from of come out plans exposure for to in of rest are out little cancelled. been we're faster little some are And we sales I some year. their a of missing the items the of make the in the $XX quarter. to million million that shifting that didn't core

and board, across of faster be I position. to might generally and heavier in bit So would all inventory get it's say trying the the there, a little because across right grown furniture just it's kind we'd categories, but that

Jeremy Hamblin

Got the I'll hop and then out it. one of queue. Last

quarter. In one in terms store a think of store right, thinking about you've I closures, closed

obviously here. more think rightsizing know that kind last just metrics the done on and the shored is, about want to of where forward I couple plan business to part do team And leases making have think Nicole hard understand the closing of of the need we on profitability basis. is I up work and component, stores, of changed here decision kind But over lot a have of years. go getting a here that

Nicole Strain

Not a Jeremy. significant change this at point,

additional will we'll we'll have the that that closures it. that talked and normal at And closer money, but stores can until got we what year. But that of the not at we've will sort the end think watch year, doesn't of renewals point, to really evaluate close, getting the about anything get this continue handful otherwise to this XXX. lease we've where of changing down on a reductions then couple open, happen significant, keeping those we we'll rent I it just make were that have

Jeremy Hamblin

Best color. for wishes, guys. Thanks all Great. the

Nicole Strain

you. Thank

Operator

Lebiedzinski your Anthony ahead question Sidoti Company. from go [Operator Please comes with question. with Instructions] Our next &

Anthony Lebiedzinski

everyone. morning, for questions. Hey. taking the Thanks Good

like the kind So pulling Talked far you've bit Nashville, And stages you little you're quarter-to-date looks in of wanted any Could far you're and initial that on doing improvement double May. whether down commentary, there? tie is still -- the in levers. a Or first, at also that still promotional marketing to just as as in tests in Atlanta digits expand in some about terms perhaps so of what some it those markets? to say? seen that their of incremental too with are from just early in two

Steve Woodward

Start with the is thanks the to of marketing that. Anthony. optimism are it's early too early We test? that in -- there, And it's question, really read. the really feel tests some weeks marketing for The there still but

that to going sure -- early market we're it's some is but we Atlanta that make need market, time. than better One the too the so Nashville we still slightly to give market, tell. responding And to

it So to on those or our it's of TV. seeing be are commercials the and the exciting ongoing, on driving road hearing one radio down and

then on answer will Because And continue we -- to other Nicole question, it's those. going the that. let So I'm

Nicole Strain

I now Yeah, think the in it's we're perspective it right more realizing generally what promotional customer from to a get the takes store. is, just

we've bit. go seeing future. little seen to the at And need demand a this level of it success, customer so of that level deeper level Day, very was seeing we'll change the March increased we promotional the we've we're also we off But looks And are willing and our to discount, to the near of Memorial are we've coupons. our for in some point, with like continue a promotions, which everyone just obviously when and increased came

Anthony Lebiedzinski

sourcing And then give Okay, an you can thanks update for your that. initiative? us direct on

Steve Woodward

very we're progress. Yeah, good making

back control, we then in good but the direct cancellations of our of we of things sourcing. to goals come XX% direct remains year XX% making still even some hit to assortment on the we things. And But have those were and come source. we that despite So cancellations other will our being the some the progress can when this through goal in

is fine. Asia that finding coming our just sourcing along are We

in some mitigating are to our then seems exposure any we of so not one be else. opening But which still an Although be looking future. sourcing to country. found results, the exclusive us on generally, initiative. very good we're be that Mexico, producing yes, the we can't dependent up out at merchandise are good And on for It's promising plus, anywhere shape that giving

Anthony Lebiedzinski

most the China. been seems you. impacted of still, just in And from lockdowns Got China. But your you terms on know on comments. just that far materially to you there? inventory shape as in in good I wondering certainly comes of guys be comment based situation your the specifically if could as your sourcing, Have pretty just

Nicole Strain

port's really, we lot of impacted. haven't We have aren't that are the we the haven't been a -- our that shipping, of holiday ones out

So to this point, no.

Anthony Lebiedzinski

Got it.

question Okay. And last then for me.

a good. looking some give there? to think details talked some more to you're perhaps on cost Could So, as that expand that you Nicole, that you that what million have do that cutting I mentioned us of moves you about $XX to you million $XX

Nicole Strain

categories sales so But takeout to that our the to seeing. forward. to costs find and us need regulate really biggest business that trying IT costs dollars The in the continuing match levels the things can we that or for spends, move labor, store, Sure. advertising balance, if we to we're do

easier as equally percent more So pretty were a obviously dollars QX point. because through much through QX at that less to of QX variable spread and QX, there much fixed out and take

Anthony Lebiedzinski

of best luck. and you, thank Well, it. Got

Steve Woodward

Thanks, Anthony.

Nicole Strain

you. Thank

Operator

Question with John ahead Benchmark. comes go question. Lawrence your from with Please

John Lawrence

guys. Good hi, morning. Yeah,

what accelerated what Just so of about be impediments And and And the we a expense? bit that quarter? what couple far and ongoing have to talk you you higher see continue was seen little questions. this the Thanks. what in fourth freight can of cost? a year, Nicole, this

Nicole Strain

rates. we contract And rolled new our into We were just paying year. were what last those about

out that to additional the get to take you Christmas had here. we pay If

seeing rates our be under right and spot We now are some rates ports. contract

people then the inbound pull the may than wanting people see least. freight at there's demand, ship think rest costs to we and do benefit supply goods back for more in as So some I overall, of year that

we what average similar to container, we're paying paying which to now right similar with were outside on So Christmas. of a XX,XXX paying last year is

John Lawrence

in into that that little the first a there. understood about quarter? you question Yeah, to more what got you than and bit the quarter little worse Is you second a delve be a and Can last into? decided

Nicole Strain

that It it inventory. is, the Outside digits. think in where just down perspective, something volume from from May margin perspective. I quarter. then biggest with a top-line a the our being expecting impact more sales some the excess that, And being promotional of of low-double are we to for is And what similar through move we're lowest forecasting is is

really pretty quickly, de P&L leverages the especially So profit. gross

just it's our always quarter. thing year. see been toughest think same the again, And I So this we'll

John Lawrence

sorry, Yeah, one advertising I'm you've holiday when make fourth to and into year, a tested, just much So is that and that in more, that the timeframe? of half decision? that look August-September quarter, second of will to you how the that, especially you the play -- say,

Nicole Strain

so. I watch to make it continue think it decisions and sense. We'll makes as

to come in We a trying new for the lot half us, really we to for strong half. and to get customers, are last do better think, us realized of that back first I people really the year in holiday.

that that set our that will if the as sense product. sure a to to holiday and period on the come forward move on based people to have time And the for results. will dates. It But our make set customers advertising makes us. So of there we or slowdown the be really holiday is lot -- watch trying demand to continue existing inventory I message think we

John Lawrence

you. Thank

Nicole Strain

John. you, Thank

Operator

ahead Haynes [Operator Edge with comes your question Management. Asset go with [ph] Barry next from question. Our Instructions] Please

Unidentified Analyst

inventory trying had Thanks for a better. question. just so bit taking much couple of questions. to the a little my I situation understand I'm

kinds -- want first inventory. assuming like inventory are increases much does the to holiday just are or $XXX Is inventory the you before that So much. -- that rightsized around. be sort the low? And But in say much so versus last would carry that things some between, that that's priced of was the at difference that, units. move you granted that outdoors, of how the difference, that of level let's and XXX sales then rebound? sort the quarter where of inventory really would the spring just you you in assume that experienced seasonal Thanks continues, million, versus, of of And everyday second normally now the how of we the year to lower is in get look you the goods it if roughly too terms

Nicole Strain

more So made any let rebound, with I starting least a significant assume aren't cuts, know in promotional, it one, first significant. not missed which we improvement at an XXXX, me sense overall at in to would receipt a or But will environment by versus to as that we last different year, if of looking make macroeconomic but being relative look anything the factoring those. change the some just bit

sales from there So could upside some be perspective. a there

one, Going the to second believe back which I freight. was

about of our So freight running of cost goods XX% is now sold. right

a So that has significant been piece.

items. like We items on also to have vendors. seen from we and materials so that price of we're increase quantify reorder don't increases a like tough ordering, Pretty us not skews, because lot for

quantify units? to difficult other, somewhat it's that piece. the What So was

Unidentified Analyst

Yeah.

Nicole Strain

unit a interesting. the one bit So also is

As rest. what the and bulkier pace our at units actually furniture, sell we same mix cost bigger units the We're not we've moved as units. more and are increasing basically getting of the higher towards

make at purchase. the some ticket that is the sure -- for bit We're items of the inventory year So composition looking more the and to differently we that our are people little and back lower the and of to has the trying changed. easier slowing people come to a of that as this decision half economy whole make in have

Unidentified Analyst

Yeah, the the seasonal component overage? of

Nicole Strain

as make now over significant will at just move in to through that sense our right say the to us portion discount a not high significant in that really to of our I at burn don't Woody we rate. and risk. the would we're to ship we'll DC outdoor that in margins impact don't out of and through it's I There's because need next think Q. I month discount significantly. obviously, outdoor expect it have a doesn't it amount again, trying But, a mentioned, carry half. We inventory end the significant to will Yeah, have stores it

Unidentified Analyst

just just Great, number? as sold. said of cost much. that thanks so you repeat missed of a when Could percent you goods And freight I

Nicole Strain

XX%. it's Yeah, about

Unidentified Analyst

luck. much. help. so Appreciate the Thanks Good XX%.

Steve Woodward

Thank you, Barry.

Operator

question. with your comes question John ahead Partners. next Our with Lewis go Please from Osmium

John Lewis

guys. morning, are How Good you?

Nicole Strain

Good morning.

John Lewis

at last your ones. like? couple look accounts that you see you're $XX Where to payable? Yeah, drag -- just out the do a I flow on $XX million? What quick accounts million, year quarter. huge I start closed guess you year payable, this just at a there's does feel in cash

Nicole Strain

XX% I What's $XX that's is sell right in early roughly ratio about that million. to holds, In paying so of the inventory. does we for And most time we equate we're brought flop a that cases. XX% in that inventory is before our and it. different now it flip to normal about And think, AP here

capital XX% that the knew that $XXX be we we year, inventory number. would by working should to back the AP of to a being be million of But close end hit. So, that

John Lewis

payables XX, you million million, closer million doing now on components your to should right, squeeze And million, $XXX should inventory be $XX two So if sheet, XX% $XXX of inventories. will really from if just your take million be of $XXX right? those say in roughly this, I'm that let's so in on $XX at your so cash is putting go you you to balance cash out should

Nicole Strain

now, From where we are right yes.

John Lewis

Right.

million. questions. you $XX a you get I then that one can I bit? $XX Can reductions? of talk Okay. you guess my that about you I said to million little think main bit -- a cost was into And unpack guess, little

Nicole Strain

ago. really And and -- million taken $XX we've of of $XX couple million went everything. $XX you're out we right, to million years through a costs

ours low that back labor, really in open of is Marketing, sales off. at seeing. trying is for had third of store of added are that. to stores are sales a third stores back lean, day that that to we right out about And cases the hour that taking probably also back the going some last that and and the levels volume So of Say but we're we coming size relatively a dollars place biggest projects where but that getting we IT from essential and are and holding here we spending sales with at like weren't driving that we're we weren't that we of comes weren't and that up to The necessary, benefit the it. that there, marketing could rest part looking time from, come a is planned is every had demand that that may third. not the other be when available getting the

John Lewis

to expanding that Got was you they are, inventories given line? are thought between to given ratio it. I credit inventory the your do other going I guess facility, ask where historic your that about your and is, access thing

Nicole Strain

We the number, number a keep do inventory thing credit And in bit one at what $XX have. for XXX GAAP number, with about than mind That bank. to the to the get it's a GAAP was is XXX different which million. compared we

But we for it's needed, to valuations think And, beyond But We in million the warehouse against $XX bank applied things and obviously the option and do that We us we further. GAAP any I $XX are need if of accordion do that. there's haven't other that top could the it. are think cap which So are that we don't have that really did. is on that. go feature, gotten an request if there million that number. we'll our

John Lewis

in $XX it share, have I share a even you your EBITDA if share looking count. if by kind $X.X as sheet. brainer. seems the back Got if I to $X million, to you'll it you back per a million get over million, put on at a of way a $XX the no -- even you'd to was a cut you net I $XX And mean, half, $XX here, were million stock. inventory shares And on go Yeah, $X got numbers million share, It in you've had $X guess I ever a balance is like do your your cash at at it? if $XX balance to EBITDA you're in look is looking you

equity So Christmas. given, structural high I There's enormous, yet there's opportunity Thanksgiving, at always to there's fairly the inventory a think always reasons, repurchase seasonal prices these a turns,

to dollar. just it's buying seems market it market, to if $X.XX So equity that you your or me at on look your inventory, with cap the your

peers the are it's yeah, in also the market at we So, and inventory, X.X almost times current market, to guess at -- cap three trading I today, inventory. times looked even we're

think macro all we is up. stock But, And catch your get the undervalued I the tough we'll headwinds. So efforts. and appreciate absolutely

Steve Woodward

John. Thanks,

Nicole Strain

done love we that share this have continuing $X I back at buying John, thoughts be love buying be at my a are do already believe that is to we and back would on be we've and level. to we'd think, socket undervalued. had to our And what

availability restrictions point credit our any in order I share that we think agreement to have borrowing. some -- repurchases the much we're time have how make is at does balance on have to in

a agree I just the we're the support things So all liquidity making with you in we maintain near term that to But balancing that lot right we the of and said. things agree sure and business. the

Steve Woodward

Thanks, John.

Operator

like over the any This to remarks. question-and-answer turn would closing Mr. to conference for session. concludes back Woodward, I our

Steve Woodward

And out. again, us. quarter we Yeah, today's of our XXXX report look come And you, for James. operator, call. the like to results listening thanks to to thank for second everyone forward thank joining when We'd to you speaking

Operator

attending concluded. has The you presentation. now for today's conference Thank

You may now disconnect.

Kirkland's (KIRK) 31 May 222022 Q1 Earnings call transcript