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Kirkland's Inc. Message Board

  • newbaddog newbaddog Feb 17, 2005 4:54 PM Flag

    Who work's in Jackson, TN

    How is the working environment.
    I might take a job there.

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    • I dont think that the issue about off-mall store has as much to do with rent as it does sales. Rent in an off-mall store is significantly lower than mall stores. Additionally, no one is going to malls anymore.

      KIRK merchandise is home decor, but the new stores, the prototype in Memphis and Myrtle Beach are much more organized to finding merchandise, less of a hunt for the perfect item. I really think that the company is turning it around.

    • I think it is a little unfair to assume Kirkland's woes is the result of their merchandise being inexpensive. Frankly, Kirkland's works on the same import model as all other retailers. That $10 lamp earns Kirklands on average 35 to 40 points. But that is based on Landed Cost and not First Cost. So, China manufactured the lamp for under $5 per unit. Nothing is produced in the US anymore. With the shutdown of Fieldcrest Textiles, even your bed sheets are for the most part all imported. (Some finishing process still is done in the US and that is mostly done through Springs/Wamsutta.) So, you have all these retails running over to Asia several times a year looking to find the cheapest labor cost they can find and as a result we end up paying $10 for that lamp.

      I have addressed this before. A company's pricing model plays a BIG roll in the public's perception of "cheap". You have the "fake" MSRP which no one ever pays. Then you have the REG price which on one ever pays. Finally you have the SALE price. This is the three tier system. There is a single and two tier system also. Those company's on the single or two price system are perceived to be better quality. But you can only fool the customer so much. Only being off SALE 10 to 15 days out of 60 lends itself only to advertising (and satisfies legal issues).

      But to clarify my point. 99% of the merch at BBB, Pier One, World Market, Walmart etc all came over on the same boat so to speak. It's Marketing that defines quality MUCH of the time. (Notice I did not say ALL of the time!) I know too many people with lovely homes and apartments decorated in Kirkland's. That no-brand-named $10 lamp at Kirkland's is likely the same branded (licensed) $20 lamp at your local Department store.

      Did you know that Tommy Hilfiger Bedding is a product of Martex?

      I am very close to contradicting myself here. Sure, Kirkland's has some "cheap" stuff. But so does all the other guys. I have always said and maintain that upper management (HO level), very poor planning, and location drove this company to the disaster it is today.

    • You're pretty much on the right track. All of these former mall retailers pushing for non-mall growth, the improvement in numbers just isn't there in big enough numbers to make a big difference.

      I mean, if the Orange Julius closed in your local mall and moved to an off-mall location, would you care?

      Point being, the issue with these companies, KIRK included, is all on the top-line. Consumers don't want their product. Kirkland's is a niche retailer, and the product they offer, quite frankly, is cheap junk. Who wants that? The cash-strapped middle class homeowner or apartment dweller? Maybe. The better off homeowner? No way, they don't want this junk. The poor renter or family? Candlestick holders and wrought iron wall plaques aren't exactly a priority when you're trying to pay the heat bill and do all your shopping at Wal-Mart.

      So the target consumer is limited, for the ones they have, they buy infrequently, and the products they purchase are cheap and resold at modest margins. Where's the excitement in that?

      I would agree that bankruptcy is the most likely outcome here. It's not that Kirkland's is (necessarily) a poorly run company, it's that the consumer just isnt' that interested in the product. Not to sound too snobbish, but I wouldn't have any of that stuff in my home. A $10 table lamp, suuuure, wife would love that, haha!!!

    • Ooops! I realized I didn't take into account same store sales drop. Taking this into account, these new stores are averaging higher than Kirkland's average store, and the rent is averaging slightly less. So it does make sense to move into non-mall venues, but we'll have to see if it makes enough difference to save them.

      Ed

    • 1. Kudos to xavierretailcorp for insight that Kirklands unsuccessfully shifted from giftables to home decor. This is a hard thing for most people to see unless they are watching very closely. The only reason we saw this is because we are a gift wholesaler. One buyer can make ALL the difference.

      2. Kirkland's will likely make no profit this year. If they do, it is probably just smoke and mirrors. To make things worse, Kirkland's can't afford not to continue opening stores. I don't know when Kirkland's opens the majority of their new stores, but I would assume it is done in time for 3Q and 4Q sales, the most profitable time of the year.

      3. I wouldn't be surprised if the CEO was let go because he suggested going through bankruptcy. It is completely speculation, but it can often be in a retailer's best interest to go through bankruptcy. This allows the company to close underperforming stores and emerge more profitable.

      4. Non-mall stores are no saviour. Here is what I have found based on their annual report. It may or may not be accurate due to mistakes I have made in calculating.

      -Average non-mall store is 5189 sf for stores opened between 1/31/04 and 1/29/05.
      There were 4 mall stores closed that averaged 1842 sf per store.

      -The total change in rent was $3,637,000 for that same period, and the total change in sf was 220,950 sf. Assuming that the rate of non-mall store openings hasn�t changed from the prior year (which they likely have), the AVERAGE price they paid for non-mall sf was $16.46 per sf (this number is very rough due to 4 mall store closings and likely annual increases that should roughly balance each other out). In addition, this number could be high because it assumes a constant rate of store openings, and it assumes that prior year�s store openings were also primarily non-mall store openings.

      -The average rent for Kirkland�s is approximately $97,965 per store, or $20.86 per sf. This number is pulled down due to mid-year store openings, but it should be relatively accurate. I would guess the real number could be 20% higher, or around $25.

      57.5% of revenue is in the second half based on 2004 fiscal year numbers. Thus, new non-mall stores likely averaged approximately $999,000 per store. These stores will probably increase sales from their 1st year substantially.

      Compare this to an average sales per store (chainwide) of $1,322,000, and averaged $286 sales per sf.

      I don't know the actual numbers, and these are just rough approximations, but it doesn't look good.

      Ed

    • Again. Listen! Nothing else matters but the stock price. You want to type a long drawn out evaluation about renting vs. leasing when the stock is tanked and going lower. 8 qtrs. they have lost money and the stock price is at 6 is bad information ??????

    • I don't know his neighbors. Just speculating on what little second-hand knowledge I have.
      But pilot is right. Unless Carl can regain control and bring back some of the 'old guard', Kirklands is doomed.
      Kirklands was never run like any other retail establishment. That is what made it a unique shopping, as well as career environment. I'll never forget my thoughts when my wife told me many years ago that Kirklands was going public: the good days are over. My wife was assured by many officers of the company that it was a good thing. Carl was going to see that the people that made Kirklands into a strong company were rewarded handsomely for their efforts.
      I've never met the man but I truly feel bad for him...

    • oh. i thought pilot was talking to someone who knew what was going on. sorry

    • I believe fedexpilot is referring to Ed.
      8^)

    • The misinformation you present is alarming.
      Stand alone venues are leased from a developer as well. They are, on average 50-60% less expensive rental wise than their mall counterparts and sales are significantly higher than the former mall locations. This is a fact taken from public information.
      The stand alone or freestanding venues are Kirklands most productive venues and will be accelerated as they offer convenience,visibility and expanded assortments to the suburban housewife.
      Current mall traffic has 2x (not 3x) the traffic of the off mall format but 1/2 the transactions that the off mall store has.
      Currently Kirklands has 60% Mall locations and 40% off mall....listen to any report and theres no contest which venue is better.
      Kirklands has essentially 2 company's mall (old stores) and off mall (new stores).
      As the regional mall continues to decline ...a now 15+ year trend(department store consolidation,proliferation of teenage themed stores and departure of fashion goods concepts for off mall strategies (recent defections include Casual Corner, Old Navy, August Max,Petite Sophisticate,Lane Bryant, NY & Co.,Bombay,Childrens Place, Kay Bee Toys...i could name 10 others) as well as the dismantling and departure of the jewelry, book, electronic, toy and shoe business. These vacating categories have led the customer away from the traditional mall and left the mall to large roving herds of teenagers milling about, who buy a slice of pizza and a cell phone.
      As the dual income, 3 kid soccer mom is more pressed for time she longer can afford to spend hours at a mall and fight the traffic, deal with the perception of safety issues or be dissapointed that the mall no longer has anything of interest for her (save the infrequent department store trip)...she now opts for the neighborhood center that has 100% of what she wants...Target,Old Navy,Stein Mart,Marshalls,Ross,Kohls and Kirkland's.
      The regional mall is dead..unfortunately the retailers inside the mall typically sign 10 year deals and are still stuck for a number of years until those leases expire.
      If you listen to any Kirklands public calls they will explain, in detail, how well the off mall strategy is working.
      60% of Kirkland's current portfolio is inside a venue (THE REGIONAL MALL) that is no longer viable for its end user...this 60% is being pared annually but is dragging down the results for the rest of the company.
      Tell Chris I said Hi.

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