Kirkland’s, Inc. (NASDAQ:KIRK) Q2 2023 Earnings Call Transcript

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Amy Sullivan: Hi, John. It’s Amy. I’ll start and Mike can add any color. As we move into the back half of the year, we did plan our most significant comp growth in our Christmas assortment within holiday. Other growth would really come from the Decorative Accessories and giftable parts of the business. So, as we mentioned earlier, we’re obviously making sort of live pivot throughout the quarter. But I would say the Christmas growth of about a 5% year-over-year comp is really getting it back to a healthy percent to total. The bigger component of that being this December opportunity to really maximize on the décor and gifts. While at the same time, as I mentioned, furniture still being an important part of our business, getting it back into the teams within our brick-and-mortar assortment so that it allows space and opportunity for the holiday and giftable businesses to really shine.

Mike Madden: Yes. It it’s going to be a noticeable shift in terms of the penetration of these categories that the seasonal, the [Indiscernible] that we’ve talked about in Q4. And we did a, I think, a really good job of trying to go deeper in some of those key items for the season as well. So, that’s something we just didn’t have in place last year. So, we are optimistic about that.

John Lawrence: And to follow that are there any guidepost of some of that area — some of those areas you’ve really touched I guess they were positive to what it — can you give any kind of sort of quantify, to what extent they were they were positive and sort of returns on that, how you’re looking to measure that particular category, as far as success?

Amy Sullivan: Yes. If you look specifically at the Q2 period and even early sales at the beginning of Q3, Decorative Accessories delivered a double-digit comp increase year-over-year. And so that category, in particular, will continue to grow in its penetration as we get to the balance of the year. And then the other indicator I would share that gives me a lot of optimism for our holiday products in general is we saw really fast turn and success early in the season in Halloween. And as you know, our seasonal businesses really are a high low and we promote them effectively and still ended at a solid margin rate at the end of each season. But the Halloween product in particular sold with minimal discount. And we took the same approach in the pricing strategy and the assortment mix to Christmas that gives me just a lot of optimism that we should see some of that early season selling come through as we get to the latter half of this quarter in our holiday products.

John Lawrence: Yes. Last question for me. As you — Amy, as you looked at that, some of those marketing efforts trying to bring back some of those customers and direct mail pieces to those long time shoppers. What was your sort of bounce back, right, — or — so how did you view that sort of — I know you’re changing some things and all of that, but how did you view that sort of spin to do that?

Amy Sullivan: Our approach was several different layers and so we started with a customer survey that we call really fast and high levels of reaction to of our customer that was six to 12 months lapsed, that was really willing to engage and give us feedback on what she was missing from us. Additionally, the Q2 direct mail piece, which in our past, we would normally have targeted to solely our top customers. We sent it to a mix of lapsed and top customers and saw a really promising response to both, with a higher than average conversion rate on that coupon offer. And then the last example I would share would be we sent a customer letter, acknowledging that we are back to our heritage routes and that she can expect seasonally relevant, high-value décor from us for years to come and offered her a coupon offer with that.

And these were our most lapsed customers and we really saw a solid response to that as well. So, I think where that leaves us is we have a very active loyalty base. Some who are currently spending at her normal rates than others who have been lapsed longer than we like, and we’re really encouraged by her willingness to come back as we get the assortment and the pricing strategy right.

John Lawrence: Great. Thanks. Good luck.

Amy Sullivan: Thank you.

Mike Madden: Thank you, John.

Operator: Thank you. At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Ann for closing remarks.

Ann Joyce: Again, I just want to reiterate our gratitude for the support of our teams, the hard work from our teams, as well as our vendors, and our stakeholders. Thank you all for joining today. We’ll talk to you next quarter.

Operator: Thank you, ma’am. This concludes today’s conference call. You may now disconnect your lines at this time and thank you for your participation.

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