Kirkland's Q4 2025: Unraveling Contradictions in E-Commerce Impact, Consumer Trends, and Store Performance

E-commerce impact on sales, impact of weather and consumer confidence on sales, seasonality and gross margin expectations, store performance and fleet composition are the key contradictions discussed in Kirkland's, Inc.'s latest 2025Q4 earnings call.



Sales Performance and Channel Impact:
- Kirkland's Home reported a 13-week adjusted net sales of $148.9 million, down 11.1% year-over-year.
- Decline in sales was primarily due to a 7.9% drop in e-commerce sales, partially offset by a 1.6% increase in comparable store sales.
- The decrease in e-commerce sales was attributed to a decline in higher ticket items, while the improvement in brick-and-mortar sales was driven by a focus on faster-turning, lower-priced items.

Earnings and Financial Health:
- Adjusted EBITDA for fiscal 2024 showed a $6 million year-over-year improvement.
- Total operating expenses decreased by $6.4 million, driven by lower store and corporate compensation and benefit expenses.
- The company ended the quarter with $81.9 million in inventory, up 10.5% from the previous year, reflecting higher year-over-year freight costs and increased inventory levels.

Tariff and Sourcing Challenges:
- Kirkland's Home has reduced its sourcing exposure to China to approximately 70% in 2024.
- The company is actively working to mitigate the impact of tariffs by negotiating costs, resourcing opportunities, and strategically raising prices.
- Current tariffs and trade uncertainties have led to holding Chinese goods and metering seasonally relevant items to manage inventory flow.

Strategic Partnership and Brand Expansion:
- Kirkland's Home has partnered with Bed Bath & Beyond, opening new avenues for growth and reimagining its future as a retail health of brands.
- The company plans to introduce Bed Bath & Beyond Home stores and Overstock stores, leveraging the iconic brand names and expanding product offerings in bedroom, bathroom, and off-price deals.
- The first Bed Bath & Beyond Home conversion is expected in Nashville, with additional conversions planned based on market analysis and consumer demographics.