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A home decor retailer seeks shoppers who buy online, pick up in store

August 24, 2015 04:20 PM
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Customers who bought online and picked up in store helped furnish a lucrative quarter for home decor retailer Kirkland’s Inc.

CEO Mike Madden told analysts on the retailer’s Q2 2015 earnings call that shoppers who opt to pick up their online orders in store spend nearly twice as much money with the retailer online than those who opt to have their purchases shipped directly to their homes. More than 70% of the retailer’s online revenue of $7.7 million in the second quarter, or about $5.4 million, were fulfilled via the buy online, pick up in store option.

Chief financial officer Adam Holland said the company is pleased with the shift. “We've kind of steered it, but the customer is also responding to it,” he told analysts on the call, according to a transcript from Seeking Alpha. “We definitely prefer the in-store delivery because it gets us another store visit, and we have evidence that once those customers go into the store, they are spending more and we're ringing another transaction.”

The second quarter proved to be a strong one overall online for Kirkland’s, No. 533 in the Internet Retailer 2015 Second 500 Guide, with overall site visits up 40% year over year. Online sales during the quarter of $7.7 million represented a year-over-year gain of 38% from $5.6 million during the same time last year, with the average order value growing 2% year over year. While online sales accounted for only 6.7% of revenue in the quarter, the roughly $2.1 million in online sales growth represented 17.8% of Kirkland’s overall sales growth of $11.8 million during the quarter.

The 38% year-over-year growth comes during a quarter when Kirkland’s reduced by 25% the number of items offered online.

“Just because we're down now doesn’t mean that's the way we intended for it to be,” Madden said of the online selection, though he didn’t specify why the company decreased its online offerings. Kirkland’s plans to increase the number of products available online eventually by working with third-party vendors that will drop ship orders placed through the Kirkland’s site, shipping directly from their fulfillment centers, he said.

For the second quarter ended Aug. 1, Kirkland’s reported:

  • Comparable-store sales growth, including e-commerce, of 6.7% compared to a 3.6% increase during the same time last year.
  • Net sales of $115.289 million, up 11.4% from $103.485 million.
  • Gross profit of $42.512 million, up 12.2% from $37.873 million.
  • A net loss of $2.288 million, down from $1.055 million.

For the first half of fiscal 2015, Kirkland’s reported:

  • Comparable-store sales growth, including e-commerce, of 4.8% compared to a 4.3% increase last year.
  • Net sales of $233.599 million, up 10.3% from $211.740 million during the same time last year.
  • Gross profit of $90.175 million, up 12.1% from $80.475 million during the same time last year.
  • Net income of $241,000 compared to $1 million during the same time last year.
 

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