Kirkland's Inc. (NASDAQ:KIRK) Q2 2020 Earnings Conference Call - Final Transcript
Sep 03, 2020 • 09:00 am ET
Good morning and welcome to Kirkland's Second Quarter 2020 Earnings Conference Call. [Operator Instructions]
I would now like to turn the conference over to Tripp Sullivan with SCR Partners. Please go ahead.
Thank you. Good morning and welcome to Kirkland's conference call to review results for the second quarter of fiscal 2020.
On the call this morning are Woody Woodward, Chief Executive Officer and Nicole Strain, Chief Financial Officer. The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were announced earlier this morning in a press release that's been covered by the financial media. Except for historical information discussed during this conference call, the statements made by Company management are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which may cause Kirkland's actual results in the future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in Kirkland's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K filed on April 10, 2020 and Quarterly Report on Form 10-Q filed on June 4, 2020.
I'll now turn it over to Woody.
Steven C. Woodward
Once again, I would like to begin my remarks by thanking all of our Kirkland's team members. The operating performance we will discuss this morning is a direct result of their commitment to taking care of our customers and each other in our stores, distribution center and home office. Historically, the second quarter is a tough one for Kirkland's due to category mix and seasonality. That's why this quarter was such a significant achievement. We reported a 10.2% comparable sales increase with a 77% increase in our e-comm business. Calculating that comp increase solely based on the stores that were open for the entire period, comparable sales overall would have increased 16%. We had a flat comp in May and accelerating positive comp in the remainder of the quarter and August was up low double-digits.
For the first time since 2010, we were profitable on an adjusted basis in the second quarter. We also significantly narrowed our year-over-year GAAP net loss, increased our cash position, and eliminated our outstanding debt ahead of schedule. None of this was a coincidence. We earned it with a lot of heavy lifting over the past year, focused on improving merchandise assortments, increasing brand awareness, driving our omni-channel strategy, improving our infrastructure, and significantly reducing our operating costs.
Last quarter, I noted that our confidence was growing on the direction of the business for the balance of the year. This improving confidence was based on the steps we took to rightsize the Company and make it more nimble than it's ever been. It was also based on the fact that a number of our store-based competitors are in bankruptcy or liquidation, which is allowing us to gain market share. The return of