Executive Summary

Q4 FY2024 (13 weeks ended Feb 1, 2025) delivered net sales of $148.9M, diluted EPS of $0.51, gross margin of 30.3%, and operating income of $9.2M; comparable sales were -0.6% with store comps +1.6% and e-commerce -7.9% . Versus prior year’s 14-week quarter, sales were down largely due to calendar and e-commerce weakness .
Management disclosed substantial doubt about going concern and covenant non-compliance pending expected waivers tied to a $5M term loan expansion from Beyond; as of May 1, 2025 revolver debt was $38.9M with $5.1M LCs and minimal availability ahead of the new funding .
Strategy pivot to a capital-light store conversion under Bed Bath & Beyond Home and Overstock banners; first Nashville conversion identified with additional Overstock pilots, leveraging Beyond partnership to drive higher productivity and brand awareness .
No formal guidance due to tariff/macro uncertainty; early FY2025 commentary shows flat brick-and-mortar comps in Mar–Apr with continuing e-commerce headwinds .
Potential stock catalysts: going-concern disclosure and tariff risk, near-term liquidity events (term loan expansion/waivers), acceleration of Bed Bath & Beyond Home/Overstock conversions, and progress on e-commerce optimization .

What Went Well and What Went Wrong

What Went Well

Positive brick-and-mortar comps (+1.6%) and sequential operating cost control reduced OpEx to 24.1% of sales; operating income of $9.2M despite promotional intensity .
Strategic partnership with Beyond supports brand expansion and capital-light store conversions; CEO: “We are… accelerating a capital light store conversion strategy… under the Bed Bath & Beyond Home and Overstock banners” . CFO: additional $5M term loan expected to close “next week” to build inventory and support conversions .
Category strength in holiday, fragrance, gift, textiles; store traffic and conversion gains offset average ticket decline, demonstrating merchandising traction in lower-ticket, faster-turning goods .

What Went Wrong

Gross margin contracted 180 bps YoY to 30.3% on higher promotional activity and occupancy deleverage; merchandise margin -150 bps YoY, partially offset by lower outbound freight (-30 bps) .
E-commerce remained a material drag (Q4 -7.9% YoY), continuing the year-long pressure; management expects near-term e-comm revenue declines as profitability actions take hold .
Liquidity and covenant concerns: substantial doubt about going concern, non-compliance at year-end, minimal revolver availability pending Beyond term loan expansion; tariff uncertainty (notably cited “current 145% tariff on Chinese imported goods”) impairs visibility .

Financial Results

Quarterly Trend (oldest → newest)

Metric	Q2 FY2024	Q3 FY2024	Q4 FY2024
Revenue ($USD Millions)	$86.3	$114.4	$148.9
Gross Profit Margin (%)	20.5%	28.1%	30.3%
Operating Income (Loss) ($USD Millions)	$(13.3)	$(2.4)	$9.2
EBITDA ($USD Millions)	$(10.8)	$(0.1)	$11.5
Adjusted EBITDA ($USD Millions)	$(10.2)	$0.5	$12.0
Net Income ($USD Millions)	$(14.5)	$(7.7)	$7.9
Diluted EPS ($USD)	$(1.11)	$(0.59)	$0.51
Adjusted Diluted EPS ($USD)	n/a	$(0.29)	$0.54

Q4 YoY Comparison

Metric	Q4 FY2023 (14 weeks)	Q4 FY2024 (13 weeks)	YoY Δ
Revenue ($USD Millions)	$165.9	$148.9	-$17.0
Gross Profit Margin (%)	32.0%	30.3%	-170 bps
Operating Income ($USD Millions)	$10.7	$9.2	-$1.5
EBITDA ($USD Millions)	$13.5	$11.5	-$2.0
Adjusted EBITDA ($USD Millions)	$14.2	$12.0	-$2.2
Net Income ($USD Millions)	$10.1	$7.9	-$2.2
Diluted EPS ($USD)	$0.78	$0.51	-$0.27
Adjusted Diluted EPS ($USD)	$0.82	$0.54	-$0.28

KPIs and Channel Mix

KPI	Q2 FY2024	Q3 FY2024	Q4 FY2024
Comparable Sales (%)	-1.7%	-3.0%	-0.6%
Store Comp (%)	+1.8%	+1.6%	+1.6%
E-commerce Growth (%)	-10.6%	-14.9%	-7.9%
E-commerce % of Sales	25%	24%	n/a
Operating Expenses (% Sales)	35.9%	30.2%	24.1%
Inventory ($USD Millions)	$92.8	$111.2	$81.9
Revolver Debt ($USD Millions)	$52.7	$65.0	$43.0

Note: CFO discussed quarter-end debt of $58.5M (comprised of $43.0M revolver and $15.5M Beyond obligations net of issuance/discount) vs press release balance sheet presentation of $43.0M revolver and $17.0M Beyond debt; difference reflects net vs gross presentation .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	None provided	None provided (withheld due to tariffs/macro)	Maintained “no formal guidance”
Gross Margin	FY2025	None provided	None provided (promotional and freight pressures discussed qualitatively)	Maintained “no formal guidance”
Liquidity / Covenants	Near-term	n/a	Waivers expected; $5M term loan expansion targeted “next week”	New disclosure (waivers + incremental funding)
Store Strategy	2025 pilots	BB&B TrueBlue and BuyBuy Baby pilots may be slightly pushed; pivot to capital-light conversions (BB&B Home, Overstock)	Reprioritized to conversions (Nashville BB&B Home first; 4 Overstock)	Reprioritized execution path

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 FY2024)	Previous Mentions (Q3 FY2024)	Current Period (Q4 FY2024)	Trend
E-commerce optimization	Pricing tool, replatform planning; conversion improved but high-ticket drag; e-comm 25% of sales	Continued drag; leveraging Beyond expertise; replatform decision by year-end	Profitability-first actions (SKU rationalization, BOPIS, metering dropship); near-term e-comm headwinds	Improving profitability, near-term revenue pressure
Store conversions (BB&B Home/Overstock)	Identified white space; capital allocation needed	Exclusive brick-and-mortar licensee; piloting BB&B neighborhood stores in 2025	Capital-light conversions prioritized; Nashville BB&B Home imminent; 4 Overstock pilots	Accelerating execution
Tariffs/macro	Freight/tightening inbound pressure anticipated in H2	Category shifts; promotional intensity; hurricane disruptions	145% China tariff cited; metering/holding China POs; resourcing to India/Vietnam/Cambodia; surgical price increases	Elevated uncertainty; active mitigation
Merchandising mix shift	Focus on holiday, floral, gift; high-ticket softness	Strong holiday/gift; furniture/art soft; faster-turning emphasis	Holiday/fragrance/gift/textiles strength; lower ticket focus maintained	Consistent execution
Liquidity/debt	Seasonal borrowing build; aim to reduce borrowings in H2	Retired FILO; Beyond transaction; debt $80.4M at Q3	Revolver availability minimal; waivers expected; $5M Beyond term loan expansion	Near-term constrained, improving with funding

Management Commentary

“We are… shifting our priorities to deliver value… through an aggressive, but capital-light store conversion strategy leveraging Bed Bath & Beyond Home and Overstock.” — CEO Amy Sullivan .
“Adjusted EBITDA… was $12 million… Approximately half of the year-over-year decline in adjusted EPS was driven by the increase in diluted share count… due to the… Beyond transaction.” — CFO Mike Madden .
“Given the current 145% tariff on Chinese imported goods… we are unable to forecast sufficient liquidity to maintain our debt covenant compliance over the next 12 months.” — CFO Mike Madden .
“We have identified a Nashville location as the first of many Bed Bath & Beyond Home conversions as well as 4 initial locations for the Overstock brand.” — CEO Amy Sullivan .

Q&A Highlights

Tariff mitigation: “We have been holding goods from China… and are going to begin very surgical… metering of goods… more generous with… India, Vietnam, Cambodia” (prioritize fall harvest, then holiday) .
Liquidity mechanics: Clarified debt movements, letters of credit, and inventory-based borrowing base seasonality; Beyond funding to provide short-term flexibility .
Conversion timing: Nashville BB&B Home conversion “very near future”; floor plan modification and signage underway; broader acceleration post-validation .
Near-term sales trends: Brick-and-mortar roughly flat Mar–Apr; e-commerce remains a headwind .

Estimates Context

Wall Street consensus (S&P Global) was unavailable due to a Capital IQ mapping issue for KIRK; as a result, estimate comparisons and beat/miss analysis could not be completed. We attempted to retrieve S&P Global quarterly EPS, revenue, and EBITDA consensus but the mapping error prevented access.
Implications: In absence of published consensus, investors should anchor on reported drivers (promotional intensity, tariff risk, e-comm headwinds, capital-light conversions) to gauge likely estimate revisions for margin and sales trajectories .

Key Takeaways for Investors

Liquidity and covenant risk is the near-term driver; waivers plus the $5M Beyond term loan expansion are pivotal for inventory build and conversion execution — monitor closing/timing .
Strategy shift to capital-light store conversions under Bed Bath & Beyond Home/Overstock could re-rate productivity; first conversions (Nashville, 4 Overstock pilots) are proof points to watch .
E-commerce profitability actions should improve margins but may pressure near-term revenue; track SKU rationalization impact and BOPIS uptake .
Tariff uncertainty (explicit 145% cited for China imports) is a material headwind; mitigation via resourcing and pricing is underway but execution risk remains .
Brick-and-mortar momentum persists (store comps +1.6%) with faster-turning categories outperforming; merchandising against value price points in high-ticket could ease softness later in FY2025 .
Share count dilution from the Beyond transaction weighed on EPS; future capital raises or conversions may further affect per-share metrics — incorporate into modeling .
Without formal guidance, a conservative stance on gross margin (promotional/freight pressures) and cautious top-line assumptions (e-comm drag) are prudent pending clearer tariff and funding visibility .

KIRKLAND'S, INC (KIRK)·Q4 2025 Earnings Summary