Kirkland’s, Inc. (NASDAQ:KIRK) Q1 2023 Earnings Call Transcript

Mike Madden: Yes. I’ll provide some high level and then I think we can talk also about how we’re thinking about the spend itself and the effectiveness of it, but we did plan it down. In the first quarter, that difference is a little bit more striking than what you’ll see for the rest of the year just because we were up against some dollars we spent on a branding test that ran in two markets. And we spent quite a bit of money on that. That was a rollout that we were testing. And we were up against that spend. So there’s a chunk of that comparison I called out today that was related just to that. As we look forward, we’re looking at roughly $13 million marketing spend this year that compares to a little over $18 million last year. And we’re constantly working on ways to make that spend more effective and maybe I’ll let Amy finish that.

Amy Sullivan: Hey, Jeremy, it’s Amy. So as we think about the back half of the year, particularly as it pertains to advertising budget. We very intentionally preserve dollars for Q3 and Q4 when we will be in a better position in terms of our category mix and our overall value proposition that we want to speak to the customer. Right now in Q2, we’re testing a few different tactics, some from our path, some sort of future thinking ideas and marketing as we think about how to demand to drive demand. Direct mail is one that we’ve got out in a test right now that I feel pretty good about. And then that’s something that has worked for us in the past. So I feel good that we have the dollars that we need for the back half of the year as we think about that’s the time for our sales peak to come into play. So I think we’re well positioned there.

Operator: The next question comes from John Lawrence with Benchmark. Please go ahead.

John Lawrence: Would you talk a little bit about just starting off maybe about the culture and some of the changes and just a deeper dive into this? I know you explained it, but this merchandise changes and known the company for a long time, but just a sense of what that customer is going to see in the store this year at holiday maybe than what they saw last year? And just a little deeper dive into those segments a little bit, please.

Ann Joyce: Sure, John. This is Ann. I’ll start, and then I’ll hand it over to Amy. So what I was hoping to make sure I got across is that the essence of what made Kirkland’s successful in its inception is still true today, maybe even more so given the macroeconomic conditions. And that’s really about the ever-changing seasonally relevant assortment. The customers relied on to be able to update their home decor affordably. No truer words. I mean I think they’re more relevant today than they even were in the inception. We had some missteps. And the good news is, we learned a lot in those missteps, right? So we want to take those learnings and move them forward, specifically into furniture. As it relates to the specifics around the back half of the assortment, I want Amy to talk about that, but I do feel very encouraged by the fact that the team has been able to pivot to the back half.