Kirkland’s, Inc. (NASDAQ:KIRK) Q3 2022 Earnings Call Transcript

Anthony Lebiedzinski: Got it. All right. Well, thank you very much and best of luck going forward.

Mike Madden: Thanks, Anthony.

Operator: Our next question comes from Jeremy Hamblin from Craig-Hallum Capital Group, please go ahead.

Jeremy Hamblin: Thanks. Nice progress on the inventory management. I wanted to just first start with the quarter-to-date trends. So progress there on a flat comp in November, I think if we go back to last year, November was actually maybe your easiest comp of Q4, I think it was down 9.5%. December, I think maybe improved to like down 3% to 4%. And then maybe January was softer again, maybe down high single-digits. But I wanted to see if you could just clarify, in terms of the comparisons that you’re looking at this year, that would be helpful context.

Steven Woodward: Yes, the comparisons if, boy, talk about volatility. One thing that happened in December last year, was that we were out of some what people considered perfect gifts from Kirkland. As we had mentioned, I think on previous calls, we were out of or we didn’t have the right number of throws and some other things that people wouldn’t typically come to Kirkland’s for Christmas divide. So we’re in pretty good stock shape there. So we anticipate better response in December, but we know, it’s still a cautious environment. So we’re trying to maintain some cautiousness. The December number was when we were up against some real volatility last year, we got our Spring assortments that should be setting hopefully the week after Christmas, where that’s mostly coming into the DC right now.

So I’m hoping that we can see some improvement in January. But December, being a five week month is still the month that we’re really focused on. We will make sure that we are appropriately discounting to be able to hit the $70 million to $80 million in inventory and to get it close to no debt as possible as Mike had mentioned. But these are all moving parts. And I think what happens when we get into these very unstable development is that we have to be really on the business daily, closely watching, how did we do yesterday? And what are we going to do tomorrow to make sure that we’re kind of right in line with what the customers are expecting.

Jeremy Hamblin: Okay, but compares are tougher in December than in November, fair?

Mike Madden: I would say that’s probably fair, just given as Woody just mentioned, there are things going both ways, right. So we’re going to be better stock position on things like throws and giftable items this year versus last year. But we did benefit somewhat this year from having the Christmas and holiday assortments in for most — for the month of November, whereas last year, it was later. So we’re up against that later hitting now, but then have a benefit and maybe offsetting that with the throws being in stock.

Jeremy Hamblin: Okay, and then wanted to also just ask about like holiday hours and typically have a little more staffing, little more payroll in Q4 was down in Q3 on a year-over-year basis. Wanted to just get a sense for how we should be thinking about that on your OpEx side in Q4?

Steven Woodward: Yes, this has been a good year for us last year, we were really having a hard time staffing up for seasonal hires. This year, we did a much better job of making sure that just those extra people in the stores branch out during our holiday hours. We were not as extreme as we did, maybe after we would stay up until like 10 or 11 o’clock at night. So we moderated that a little bit while extending some holiday hours. I’ll let Mike answer the OpEx part of that, but generally we feel good about our staff. And there’s a whole new energy, we didn’t cover too much in the call with the store effort to really deliver a better customer experience and better customer service. And I feel that there’s just a whole energy in our stores right now that’s really good. And so they’ve been a really good partner with us in terms of the additional training that we’re doing, and the additional service levels that we’re offering to our customers, Mike?