美國
證券交易委員會
華盛頓特區20549
表格
根據證券法第13或15(d)節的季度報告 1934年交易所法案 |
截至季度結束
或
根據證券法第13或15(d)條的過渡報告 1934年交易所法案 |
過渡期從______到______.
委員會文件號碼：
（依憑章程所載的完整登記名稱）
(依據所在地或其他管轄區) |
(國稅局僱主身份識別號碼) |
的註冊地或組織地點) |
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(總部辦公地址) |
(郵遞區號) |
註冊者的電話號碼，包括區域號碼: (
根據法案第12(b)節註冊的證券：
每種類別的名稱 |
交易標的（s） |
每個註冊交易所的名稱 |
請勾選以下項目，以判定在過去12個月(或更短期間，該註冊人被要求提交報告)內所有根據1934年證券交易法第13條或第15(d)條要求提供報告的報告是否已經提交，並且該註冊人在過去90天中是否受到提交報告的要求。
請通過勾選來指明註冊者在前12個月（或註冊者被要求提交此類文件的較短期限內）是否電子提交了根據法規S-t第405條（本章第232.405條）要求提交的所有交互數據文件。
請選擇勾選適用的選項，以指示登記人是否為大型加速檔案提交人、加速檔案提交人、非加速檔案提交人、較小的報告公司或新興增長公司。請參閱交易所法規第 1202條中對「大型加速檔案提交人」、「加速檔案提交人」、「較小的報告公司」和「新興增長公司」的定義。
大型加速報告公司 |
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加速報告公司 |
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☒ |
小型報告公司 |
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新興增長公司 |
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如果一家新興成長型公司，請用勾選標記表示該申報人已選擇不使用根據證交所法案13(a)條款提供的任何新的或修訂過的財務會計準則的延長過渡期。 ☐
勾選表示申報人是否為外殼公司（定義於交易所法規第1202條）。
是 ☐ 否
請指明截至最新可行日期，每個發行人普通股類別的流通股數。
無面值普通股 -
KIRKLAND’S, INC.
目錄 內容
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2
第一部分 - 財務信息
項目 1. 財務報表
KIRKLAND’S, INC.
簡化合並資產負債表（未經審計）
(以千爲單位，除分享數據外)
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11月2日， |
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二月三日, |
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十月二十八日， |
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2024 |
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2024 |
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2023 |
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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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$ |
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$ |
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庫存，淨 |
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預付費用及其他流動資產 |
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總流動資產 |
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物業及設備： |
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設備 |
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傢俱及裝置 |
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租賃改良 |
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計算機軟體和硬件 |
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在建項目 |
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物業及設備，毛額 |
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累計折舊 |
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物業和設備，淨值 |
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經營租賃使用權資產 |
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其他資產 |
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總資產 |
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$ |
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$ |
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$ |
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負債與股東（虧損）權益 |
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流動負債： |
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應付賬款 |
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$ |
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$ |
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$ |
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應計費用 |
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經營租賃負債 |
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總流動負債 |
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經營租賃負債 |
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長期債務，淨 |
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其他負債 |
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總負債 |
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股東（赤字）權益： |
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優先股， |
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普通股， |
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累計負債 |
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( |
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( |
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( |
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股東（赤字）權益總額 |
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( |
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( |
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負債和股東（赤字）權益總額 |
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$ |
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$ |
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$ |
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隨附的說明是這些基本報表的重要組成部分。
3
KIRKLAND’S, INC.
濃縮合並財務報表運營狀態 (未經審計)
(以千爲單位，除每股數據外)
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結束的13週週期 |
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截至39周的期間 |
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11月2日， |
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十月二十八日， |
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11月2日， |
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十月二十八日， |
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2024 |
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2023 |
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2024 |
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2023 |
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淨銷售額 |
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$ |
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$ |
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$ |
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$ |
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銷售成本 |
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毛利潤 |
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營業費用： |
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薪酬和福利 |
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其他營業費用 |
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折舊（不包括銷售成本中的折舊） |
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資產減值 |
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營業費用總額 |
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營業虧損 |
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( |
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( |
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利息費用 |
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債務註銷損失 |
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其他收入 |
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( |
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( |
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( |
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( |
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稅前損失 |
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( |
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( |
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( |
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( |
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所得稅費用（收益） |
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( |
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淨虧損 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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每股損失： |
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基本 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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稀釋 |
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$ |
( |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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加權平均流通股數： |
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基本 |
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稀釋 |
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The accompanying notes are an integral part of these financial statements.
4
KIRKLAND’S, INC.
(in thousands, except share data)
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Common Stock |
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Accumulated |
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Total |
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Shares |
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Amount |
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Deficit |
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(Deficit) Equity |
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Balance at February 3, 2024 |
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$ |
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$ |
( |
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$ |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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( |
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Balance at May 4, 2024 |
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( |
) |
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( |
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Restricted stock issued |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at August 3, 2024 |
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( |
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( |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
) |
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( |
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Balance at November 2, 2024 |
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$ |
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$ |
( |
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$ |
( |
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Common Stock |
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Accumulated |
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Total |
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Shares |
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Amount |
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Deficit |
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(Deficit) Equity |
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Balance at January 28, 2023 |
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$ |
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$ |
( |
) |
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$ |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at April 29, 2023 |
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( |
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Restricted stock issued |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at July 29, 2023 |
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( |
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( |
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Restricted stock issued |
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— |
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— |
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— |
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Net share settlement of restricted stock units |
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( |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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Net loss |
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— |
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— |
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( |
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( |
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Balance at October 28, 2023 |
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$ |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these financial statements.
5
KIRKLAND’S, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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39-Week Period Ended |
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November 2, |
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October 28, |
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2024 |
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2023 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation of property and equipment |
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Amortization of debt issuance and original issue discount costs |
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Asset impairment |
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Loss (gain) on disposal of property and equipment |
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( |
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Stock-based compensation expense |
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Loss on extinguishment of debt |
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Changes in assets and liabilities: |
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Inventories, net |
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( |
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( |
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Prepaid expenses and other current assets |
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( |
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Accounts payable |
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Accrued expenses |
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( |
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Operating lease assets and liabilities |
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( |
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Other assets and liabilities |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Proceeds from sale of property and equipment |
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Capital expenditures |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Borrowings on revolving line of credit |
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Repayments on revolving line of credit |
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( |
) |
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( |
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Borrowings on FILO term loan |
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Repayments on FILO term loan |
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( |
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Payment of prepayment penalties on extinguishment of debt |
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( |
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Proceeds from Beyond transaction |
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Payments of debt and equity issuance costs |
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( |
) |
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( |
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Cash used in net share settlement of stock options and restricted stock units |
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( |
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( |
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Net cash provided by financing activities |
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Cash and cash equivalents: |
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Net increase |
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Beginning of the period |
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End of the period |
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$ |
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$ |
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Supplemental schedule of non-cash activities: |
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Non-cash accruals for purchases of property and equipment |
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$ |
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$ |
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Non-cash accruals for debt and equity issuance costs |
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The accompanying notes are an integral part of these financial statements.
6
KIRKLAND’S, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 – Description of Business and Basis of Presentation
Nature of business — Kirkland’s, Inc. (the “Company”, “we”, “our” or “us”) is a specialty retailer of home décor and furnishings in the United States operating
Principles of consolidation — The condensed consolidated financial statements of the Company include the accounts of Kirkland’s, Inc. and its wholly-owned subsidiaries, Kirkland’s Stores, Inc., Kirkland’s DC, Inc., and Kirkland’s Texas, LLC. Significant intercompany accounts and transactions have been eliminated.
Basis of presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and pursuant to the reporting and disclosure rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2024.
Seasonality — The results of the Company’s operations for the 13-week and 39-week periods ended November 2, 2024 are not indicative of the results to be expected for any other interim period or for the entire fiscal year due to seasonality factors.
Fiscal year — The Company’s fiscal year ends on the Saturday closest to January 31, resulting in years of either 52 or 53 weeks. Accordingly, fiscal 2024 represents the 52 weeks ending on February 1, 2025, and fiscal 2023 represents the 53 weeks ended on February 3, 2024.
Reclassifications — Certain amounts in the condensed consolidated statement of cash flows for the 39-week period ended October 28, 2023 in the operating activities section have been reclassified to conform to the current period presentation. Income taxes payable or receivable is no longer material to be presented as a separate line item and has been reclassified into prepaid and other current assets and accrued expenses.
Use of estimates — The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from the estimates and assumptions used. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than those at fiscal year-end.
Changes in estimates are recognized in the period when new information becomes available to management. Areas where the nature of the estimate makes it reasonably possible that actual results could materially differ from amounts estimated include, but are not limited to, impairment assessments on long-lived assets, inventory reserves, self-insurance reserves and deferred tax asset valuation allowances.
Strategic partnership with Beyond, Inc. (“Beyond”) — The Company entered into a strategic partnership with Beyond on October 21, 2024, with the purpose of enabling cohesive collaboration between the companies, leveraging the strengths of each business to drive sustainable profitable growth and value for all stakeholders. As part of this partnership with Beyond, the companies entered into a $
7
Collaboration Agreement fees — Under the terms of the Collaboration Agreement, the Company gave Beyond the right to receive a percentage of future revenues generated by Kirkland’s over the life of the Collaboration Agreement. The sale of a percentage of Kirkland’s future revenue to Beyond has been accounted for as debt financing, as the Company has significant continuing involvement in the generation of the related cash flows. As a result, the Company recorded the proceeds from these fees as debt, which will be accreted in interest expense using the effective interest rate method over the life of the arrangement. The debt was initially recorded at its fair value, net of allocated discount and deferred costs.
The liability and the related interest expense for these fees are based on the Company’s current estimates of future payments expected to be made over the life of the Collaboration Arrangement. The Company will periodically assess the expected payments using internal projections. To the extent our future estimates of payments are greater or less than previous estimates, the Company will prospectively recognize related non-cash interest expense. For further discussion refer to “Note 5 — Fair Value Measures” and “Note 9 — Long-Term Debt”.
Trademark License Agreement — The Trademark License Agreement with Beyond grants Kirkland’s the exclusive license to operate small format, neighborhood brick-and-mortar retail stores and “Shops-within-a-Shop” locations under licensed Beyond-owned trademarks. Kirkland’s will pay royalty fees as a percentage of net store sales generated under the Bed Bath & Beyond banner during the term of the Collaboration Agreement with that rate increasing as a percentage of net sales after the Collaboration Agreement has terminated, if the locations are still operating. There is also a fixed guaranteed minimum royalty fee during the term of the Collaboration Agreement that takes effect after the opening of the first Bed Bath & Beyond retail store. There were no royalty fees during the 13-week period ended November 2, 2024.
Going concern assessment and management’s plans — The Company’s revenues, results of operations and cash flows have been materially adversely impacted by strategic and macroeconomic factors during the last several fiscal quarters. The persistently challenging home furnishings retail environment, including reduced consumer spending in the category and increased price sensitivity, has significantly impacted the Company’s performance and liquidity levels. Operating loss and negative cash flows from operations continue to reduce the Company’s liquidity levels. For the 39-week period ended November 2, 2024, the Company reported a net loss of $
When conditions and events, in the aggregate, raise substantial doubt about an entity’s ability to continue as a going concern, management evaluates the mitigating effect of its plans to determine if it is probable that the plans will be effectively implemented within the assessment period and, when implemented, will mitigate the relevant conditions and events to alleviate substantial doubt. The Company’s plans are focused on improving its operating results and liquidity through sales growth, cost reductions and additional financing. Throughout fiscal 2024, the Company implemented expense reductions to streamline its cost structure and improve its liquidity profile. The Company believes these actions are necessary as part of improving its profitability and liquidity trajectory, while minimizing any disruption to the Company’s focus on its strategic initiatives and the overall customer experience. The cost-savings initiatives included a reduction in corporate overhead, store payroll, marketing and third-party technology expenses. In addition, through the strategic partnership with Beyond, the Company received proceeds of $
The Company believes these plans and arrangements will result in adequate cash flows to support its ongoing operations and to meet its covenant requirements for one year following the date these financial statements are issued. However, the Company cannot provide any assurance that its plans will be successful, and if the Company encounters unforeseen circumstances that place further constraints on its capital resources, management will be required to take various additional measures to conserve liquidity. The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments or charges that might be necessary should the Company be unable to continue as a going concern, such as charges related to impairment of the Company’s assets, the recoverability and classification of assets or the amounts and classification of liabilities or other similar adjustments.
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Note 2 – Revenue Recognition
Net sales — The Company recognizes revenue at the time of sale of merchandise to customers in its stores. E-commerce revenue is recorded at the estimated time of delivery to the customer. Net sales includes the sale of merchandise, net of returns, shipping revenue, gift card breakage revenue and revenue earned from our private label credit card program and excludes sales taxes.
Sales returns reserve — The Company reduces net sales and estimates a liability for sales returns based on historical return trends, and the Company believes that its estimate for sales returns is a reasonably accurate reflection of future returns associated with past sales. However, as with any estimate, refund activity may vary from estimated amounts. The Company had a liability of approximately $
Deferred e-commerce revenue — E-commerce revenue is deferred until the customer takes possession of the merchandise and the sale is complete, as the Company receives payment before completion of its customer obligations. Deferred revenue related to e-commerce orders that have been shipped but not estimated to be received by customers included in accrued expenses on the condensed consolidated balance sheets was approximately $
Gift cards — Gift card sales are recognized as revenue when tendered for payment. While the Company honors all gift cards presented for payment, the Company determines the likelihood of redemption to be remote for certain gift card balances due to long periods of inactivity. The Company uses the redemption recognition method to account for breakage for unused gift card amounts where breakage is recognized as gift cards are redeemed for the purchase of goods based upon a historical breakage rate. In these circumstances, to the extent the Company determines there is no requirement for remitting unredeemed card balances to government agencies under unclaimed property laws, such amounts are recognized in the condensed consolidated statements of operations as a component of net sales.
The table below sets forth selected gift card liability information (in thousands) for the periods indicated:
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November 2, 2024 |
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February 3, 2024 |
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October 28, 2023 |
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Gift card liability, net of estimated breakage (included in accrued expenses) |
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$ |
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$ |
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$ |
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The table below sets forth selected gift card breakage and redemption information (in thousands) for the periods indicated:
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13-Week Period Ended |
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39-Week Period Ended |
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November 2, 2024 |
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October 28, 2023 |
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November 2, 2024 |
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October 28, 2023 |
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Gift card breakage revenue (included in net sales) |
$ |
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$ |
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$ |
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$ |
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Gift card redemptions recognized in the current period related to amounts included in the gift card contract liability balance as of the prior period |
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Customer loyalty program — The Company has a loyalty program called the K-club that allows members to receive points based on qualifying purchases that are converted into certificates that may be redeemed on future purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer. The related loyalty program deferred revenue included in accrued expenses on the condensed consolidated balance sheets was approximately $
Note 3 – Income Taxes
For the 13-week periods ended November 2, 2024 and October 28, 2023, the Company recorded an income tax expense of approximately $
9
39-week periods ended November 2, 2024, compared to the prior year periods, was primarily due to changes in valuation allowance adjustments and state income taxes.
The Company recognizes deferred tax assets and liabilities using estimated future tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities, including net operating loss carry forwards. Management assesses the realizability of deferred tax assets and records a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance. Adjustments could be required in the future if the Company estimates that the amount of deferred tax assets to be realized is more than the net amount recorded. Any change in the valuation allowance could have the effect of increasing or decreasing the income tax provision in the condensed consolidated statement of operations based on the nature of the deferred tax asset deemed realizable in the period in which such determination is made. As of November 2, 2024 and October 28, 2023, the Company recorded a full valuation allowance against deferred tax assets.
Note 4 – Loss Per Share
Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during each period presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares outstanding plus the dilutive effect of stock equivalents outstanding during the applicable periods using the treasury stock method and shares issuable upon conversion of convertible notes payable. Diluted loss per share reflects the potential dilution that could occur if options to purchase stock were exercised into common stock, if outstanding grants of restricted stock were vested and if the incremental shares issuable upon conversion of the currently convertible portion of the convertible notes were issued. Stock options, restricted stock units and the currently convertible portion of the convertible notes that were not included in the computation of diluted loss per share, because to do so would have been antidilutive, were approximately
Note 5 – Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short maturities. The revolving line of credit approximates fair value due to the one, three or six-month interest terms. The Company also has a non-depleting collateral trust with the Company’s workers’ compensation and general liability insurance provider named as beneficiary. The assets in this trust are invested in financial instruments that would fall within Level 1 of the fair value hierarchy, and they are included in other assets on the consolidated balance sheets.
Fair value of the Non-Convertible Term Loan, the Convertible Term Loan and the Collaboration Agreement fees, which were entered into on October 21, 2024, are determined on a non-recurring basis, which results are summarized as follows (in thousands):
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November 2, 2024 |
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Fair Value Hierarchy |
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Carrying Value (1) |
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Fair Value |
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Non-Convertible Term Loan (2) |
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Level 2 |
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$ |
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$ |
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Convertible Term Loan (2) |
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Level 2 |
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Collaboration Agreement fees (3) |
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Level 3 |
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The Company measures certain assets at fair value on a non-recurring basis, including the evaluation of long-lived assets for impairment using Company-specific assumptions, including forecasts of projected financial information that would fall within Level 3 of the fair value hierarchy. The Company uses market participant rents (Level 2 input) to calculate the fair value of right-of-use assets
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and discounted future cash flows of the asset or asset group using a discount rate that approximates the cost of capital of a market participant (Level 2 input) to quantify fair value for other long-lived assets. See “Note 11 — Impairment” for further discussion.
Note 6 – Commitments and Contingencies
The Company was named as a defendant in a class action filed in May 2018 in the Superior Court of California, Miles v. Kirkland’s Stores, Inc. The case has been removed to United States District Court for the Central District of California. The complaint alleges, on behalf of Miles and all other hourly Kirkland’s employees in California, various wage and hour violations and seeks unpaid wages, statutory and civil penalties, monetary damages and injunctive relief. Kirkland’s denies the material allegations in the complaint and believes that its employment policies are generally compliant with California law. On March 22, 2022, the District Court denied the plaintiff’s motion to certify in its entirety, and on January 8, 2024, the Ninth Circuit affirmed the District Court’s denial of certification as to the subclasses related to the security bag check but reversed the District Court as to the rest break claim. The Ninth Circuit did not address the issue of whether there is liability for the rest break claim. On June 7, 2024, the District Court certified a subclass relating to the rest break claim and has scheduled a trial on the rest break liability issue for July 2025. The Company continues to believe the case is without merit and intends to vigorously defend itself against the allegations.
The Company was named as a defendant in a putative class action filed in August 2022 in the United States District Court for the Southern District of New York, Sicard v. Kirkland’s Stores, Inc. The complaint alleges, on behalf of Sicard and all other hourly store employees based in New York, that Kirkland’s violated New York Labor Law Section 191 by failing to pay him and the putative class members their wages within seven calendar days after the end of the week in which those wages were earned, rather paying wages on a bi-weekly basis. Plaintiff claims the putative class is entitled to recover from the Company the amount of their untimely paid wages as liquidated damages, reasonable attorneys’ fees and costs. The Company believes the case is without merit and intends to vigorously defend itself against the allegations.
The Company is also party to other pending legal proceedings and claims that arise in the normal course of business. Although the outcome of such proceedings and claims cannot be determined with certainty, the Company’s management is of the opinion that it is unlikely that such proceedings and any claims in excess of insurance coverage will have a material effect on its consolidated financial condition, operating results or cash flows.
Note 7 – Stock-Based Compensation
The Company maintains equity incentive plans under which it may grant non-qualified stock options, incentive stock options, restricted stock, restricted stock units, or stock appreciation rights to employees, non-employee directors and consultants. Compensation expense is recognized on a straight-line basis over the vesting periods of each grant. There have been no material changes in the assumptions used to compute compensation expense during the current year.
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13-Week Period Ended |
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39-Week Period Ended |
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November 2, 2024 |
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October 28, 2023 |
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November 2, 2024 |
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October 28, 2023 |
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Stock-based compensation expense (included in compensation and benefits on the condensed consolidated statements of operations) |
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$ |
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$ |
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$ |
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$ |
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Restricted stock units granted |
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Stock options granted |
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Note 8 – Share Repurchase Plan
On January 6, 2022, the Company announced that its Board of Directors authorized a share repurchase plan providing for the purchase in the aggregate of up to $
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Note 9 – Long-Term Debt
Long-term debt, net consisted of the following (in thousands):
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November 2, 2024 |
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February 3, 2024 |
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October 28, 2023 |
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Revolving line of credit |
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$ |
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$ |
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$ |
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Non-Convertible Term Loan |
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Convertible Term Loan |
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Collaboration Agreement fees |
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Total outstanding borrowings |
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Less: unamortized debt discount and issuance costs |
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( |
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Total debt |
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Less: current portion of long-term debt, included in accrued expenses |
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( |
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Long-term debt |
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$ |
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$ |
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$ |
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Revolving Line of Credit
On March 31, 2023, the Company entered into a Third Amended and Restated Credit Agreement (the “2023 Credit Agreement”) with Bank of America, N.A., as administrative agent and collateral agent, and lender. The 2023 Credit Agreement amended the previous Second Amended and Restated Credit Agreement (the “2019 Credit Agreement”) from a $
On January 25, 2024, the Company entered into a First Amendment to the 2023 Credit Agreement that increased the advance rate and allowed the Company to enter into the FILO Term Loan (defined below) agreement. Subsequent to January 25, 2024, advances under the 2023 Credit Agreement accrue interest at an annual rate equal to the Secured Overnight Financing Rate (“SOFR”) plus a margin of
The Company is subject to a Third Amended and Restated Security Agreement (“Security Agreement”) with its lenders. Pursuant to the Security Agreement, the Company pledged and granted to the administrative agent, for the benefit of itself and the secured parties specified therein, a lien on and security interest in all of the rights, title and interest in substantially all of the Company’s assets to secure the payment and performance of the obligations under the 2023 Credit Agreement.
The maximum availability under the 2023 Credit Agreement is limited by a borrowing base formula, which consists of a percentage of eligible inventory and eligible credit card receivables, less reserves and an excess required availability covenant, which limits the borrowing base formula by the greater of
FILO Term Loan
On January 25, 2024, the Company entered into a $
12
Proceeds from the Beyond Credit Agreement (defined below) were used by the Company to repay and terminate the FILO Term Loan on October 21, 2024. The Company paid $
Beyond Credit Agreement
On October 21, 2024, the Company entered into the Beyond Credit Agreement with Beyond, as administrative agent and lender. The Beyond Credit Agreement consists of an $
Collaboration Agreement Fees
The Company entered into the Collaboration Agreement with Beyond, which outlines the parties’ intentions to collaborate on numerous operating arrangements. Under the Collaboration Agreement, Kirkland’s will pay Beyond a quarterly collaboration fee equal to
As payments are remitted to Beyond from the Company, the balance of the liability related to the sale of a percentage of future revenue will be repaid over the life of the Collaboration Agreement. In order to determine the amortization of the liability, the Company is required to estimate the total amount of future payments to Beyond over the life of the Collaboration Agreement. The $
General Terms and Conditions
Borrowings under the 2023 Credit Agreement and the Beyond Credit Agreement are subject to certain conditions and contain customary events of default, including, without limitation, failure to make payments, a cross-default to certain other debt, breaches of covenants, breaches of representations and warranties, a change in control, certain monetary judgments and bankruptcy and ERISA events. Upon any such event of default, the principal amount of any unpaid loans and all other obligations under the 2023 Credit Agreement and the Beyond Credit Agreement may be declared immediately due and payable.
Note 10 – Subscription Agreement
On October 21, 2024, the Company and Beyond entered into the Subscription Agreement, pursuant to which, upon the approval of Kirkland’s shareholders at the Special Shareholders Meeting, Beyond will purchase $
13
cap would be added to the Non-Convertible Term Loan in accordance with the terms of the Beyond Credit Agreement. If shareholder approval is not obtained by April 19, 2025, the Subscription Agreement shall automatically terminate.
Note 11 – Impairment
The Company evaluates the recoverability of the carrying amounts of long-lived assets when events or changes in circumstances dictate that their carrying values may not be recoverable. This review includes the evaluation of individual under-performing retail stores and the assessment of the recoverability of the carrying value of the assets related to the stores. Future cash flows are projected for the remaining lease life. If the estimated future cash flows are less than the carrying value of the assets, the Company records an impairment charge equal to the difference between the assets’ fair value and carrying value. The fair value is estimated using a discounted cash flow approach, considering such factors as future sales levels, gross margins, changes in rent and other expenses as well as the overall operating environment specific to that store. The amount of the impairment charge is allocated proportionately to all assets in the asset group with no asset written down below its individual fair value.
The table below sets forth impairment information (in thousands, except store counts) for the periods indicated:
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13-Week Period Ended |
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39-Week Period Ended |
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November 2, 2024 |
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October 28, 2023 |
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November 2, 2024 |
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October 28, 2023 |
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Impairment of leasehold improvements, fixtures and equipment at stores |
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$ |
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$ |
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$ |
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$ |
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Impairment of other long-lived assets(1) |
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Total impairment |
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$ |
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$ |
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$ |
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$ |
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Number of stores with leasehold improvements, fixtures and equipment impairment |
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Note 12 – New Accounting Pronouncements
New Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. The Company is currently evaluating the impact of adoption on its financial disclosures.
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” The ASU requires that an entity disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. Further, the ASU requires certain disclosures of state versus federal income tax expense and taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued. The amendments should be applied on a prospective basis although retrospective application is permitted. The Company is currently evaluating the impact of adoption on its financial disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” which requires entities to disclose more detailed information about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses and depreciation. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of adoption to determine the impact it may have on its financial disclosures.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to provide the reader with information that will assist in understanding the significant factors affecting our consolidated operating results, financial condition, liquidity, and capital resources during the 13-week and 39-week periods ended November 2, 2024 and October 28, 2023. For a comparison of our results of operations for the 53-week period ended February 3, 2024 and the 52-week period ended January 28, 2023, see “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC on March 29, 2024 (the “Annual Report”). The following discussion should be read with our consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.
Cautionary Statement Regarding Forward-Looking Statements
Except for historical information contained herein, certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements deal with potential future circumstances and developments and are, accordingly, forward-looking in nature. You are cautioned that such forward-looking statements, which may be identified by words such as “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “seek,” “may,” “could,” “strategy,” and similar expressions, involve known and unknown risks and uncertainties, many of which are outside of the Company’s control, which may cause our actual results to differ materially from forecasted results. Those risks and uncertainties include, among other things, risks associated with the ability to consummate all elements of the Beyond transaction and the satisfaction of the conditions precedent to consummation of the Beyond transaction, including the ability to obtain the various synergies envisioned in the Collaboration Agreement; the ability of Kirkland’s to successfully open Bed Bath & Beyond stores; the ability to successfully market the Company’s products to Beyond’s customers and to implement the Company’s plans, forecasts and other expectations with respect to its business after the completion of the transaction and realize additional opportunities for growth and innovation; the risk of Kirkland’s shareholders not approving the proposed transaction; risks related to Beyond’s optional conversion of a portion of the Convertible Term Loan under the Beyond Credit Agreement; risks related to the Collaboration Agreement and the Trademark License Agreement; the effect of the announcement or pendency of the transaction on the Company’s business relationships, operating results and business generally; risks related to the Special Shareholders Meeting diverting management’s attention from ongoing business operations; unexpected costs, charges or expenses resulting from the proposed transaction; potential litigation relating to the proposed transaction against Kirkland’s or Kirkland’s directors, managers or officers, including the effects of any outcomes related thereto; risks associated with the Company's liquidity including cash flows from operations and the amount of borrowings under the secured revolving credit facility and Beyond term loans, the Company’s ability to successfully implement cost savings and other strategic initiatives intended to improve operating results and liquidity positions, the Company’s actual and anticipated progress towards its short-term and long-term objectives including its brand strategy, the risk that natural disasters, pandemic outbreaks (such as COVID-19), global political events, war and terrorism could impact the Company’s revenues, inventory and supply chain, the continuing consumer impact of inflation and countermeasures, including high interest rates, the effectiveness of the Company’s marketing campaigns, risks related to changes in U.S. policy related to imported merchandise, particularly with regard to the impact of tariffs on goods imported from China and strategies undertaken to mitigate such impact, the Company’s ability to retain its senior management team, continued volatility in the price of the Company’s common stock, the competitive environment in the home décor industry in general and in our specific market areas, inflation, fluctuations in cost and availability of inventory, increased transportation costs and potential interruptions in supply chain, distribution systems and delivery network, including our e-commerce systems and channels, the ability to control employment and other operating costs, availability of suitable retail locations and other growth opportunities, disruptions in information technology systems including the potential for security breaches of our information or our customers’ information, seasonal fluctuations in consumer spending, and economic conditions in general. Those and other risks are more fully described in our filings with the Securities and Exchange Commission, including the Company’s Annual Report and subsequent reports. Forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. Any changes in assumptions or factors on which such statements are based could produce materially different results. Except as required by law, we disclaim any obligation to update any such factors or to publicly announce results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Overview
We are a specialty retailer of home décor and furnishings in the United States. As of November 2, 2024, we operated a total of 325 stores in 35 states, as well as an e-commerce website, www.kirklands.com, under the Kirkland’s Home brand. We provide our customers with an engaging shopping experience characterized by a curated, affordable selection of home décor and furnishings along with inspirational design ideas. This combination of quality and stylish merchandise, value pricing and a stimulating in-store and online environment provides our customers with a unique brand experience.
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Strategic Partnership with Beyond
We entered into a strategic partnership with Beyond on October 21, 2024, with the purposes of enabling cohesive collaboration between the companies, leveraging the strengths of each business to drive sustainable profitable growth and value for all stakeholders. As part of this partnership with Beyond, we entered into the Beyond Credit Agreement, Subscription Agreement, Collaboration Agreement and Trademark License Agreement. Proceeds of $17 million from the Beyond Credit Agreement, in the form of an $8.5 Non-Convertible Term Loan and an $8.5 million Convertible Term Loan were used by us to repay our existing FILO Term Loan, including prepayment fees and transaction expenses, and to reduce borrowings under our existing revolving credit facility. The $8 million equity purchase under the Subscription Agreement and the mandatory conversion of the Convertible Term Loan are both subject to the approval of our shareholders at our Special Shareholders Meeting in accordance with Nasdaq Listing Rules and other customary closing conditions. For further discussion on the agreements with Beyond, refer to “Note 1 — Description of Business and Basis of Presentation”, “Note 5 — Fair Value Measures”, “Note 9 — Long-Term Debt” and “Note 10 — Subscription Agreement”.
Challenging Macroeconomic Conditions
The macroeconomic environment in which we operate remains uncertain as a result of numerous factors, including inflationary pressures, high interest rates, declines in consumer spending behavior and aggressive promotional activity. These negative macroeconomic factors have impacted our business, results of operations, cash flows and liquidity levels over the last several fiscal quarters. They have also made it difficult to execute our strategic initiatives, including our financial turnaround strategy. See “Liquidity and Capital Resources” for additional information regarding our plans to mitigate these factors.
For additional information regarding risks related to macroeconomics, liquidity and strategy and strategy execution, see “Item 1A. Risk Factors” in our Annual Report.
Key Financial Measures
Net sales and gross profit are the most significant drivers of our operating performance. Net sales consists of all merchandise sales to customers, net of returns, shipping revenue associated with e-commerce sales, gift card breakage revenue, revenue earned from our private label credit card program and excludes sales taxes. Gross profit is the difference between net sales and cost of sales. Cost of sales has five distinct components: merchandise costs (including product costs, inbound freight expenses, inventory shrink and damages), store occupancy costs, outbound freight costs (including both store and e-commerce shipping expenses), central distribution costs and depreciation of store and distribution center assets. Merchandise and outbound freight costs are variable, while occupancy and central distribution costs are largely fixed. Accordingly, gross profit expressed as a percentage of net sales can be influenced by many factors including overall sales performance.
We use comparable sales to measure sales increases and decreases from stores that have been open for at least 13 full fiscal months, including our online sales. We remove closed stores from our comparable sales calculation the day after the stores close. Relocated stores remain in our comparable sales calculation. E-commerce sales, including shipping revenue, are included in comparable sales. Increases in comparable sales are an important factor in maintaining or increasing our profitability.
Operating expenses, including the costs of operating our stores and corporate headquarters, are also an important component of our operating performance. Compensation and benefits comprise the majority of our operating expenses. Operating expenses contain fixed and variable costs, and managing the operating expense ratio (operating expenses expressed as a percentage of net sales) is an important focus of management as we seek to increase our overall profitability. Operating expenses include cash costs as well as non-cash costs, such as depreciation and amortization associated with omni-channel technology, corporate property and equipment, and impairment of long-lived assets. Because many operating expenses are fixed costs, and because operating costs tend to rise over time, increases in comparable sales typically are necessary to prevent meaningful increases in the operating expense ratio. Operating expenses can also include certain costs that are of a one-time or non-recurring nature. While these costs must be considered to fully understand our operating performance, we typically identify such costs separately where significant in the consolidated statements of operations so that we can evaluate comparable expense data across different periods.
16
Stores
The following table summarizes store information during the periods indicated:
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
||||
New store openings |
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Store closures |
|
|
— |
|
|
|
1 |
|
|
|
6 |
|
|
|
7 |
|
Store relocations |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Decrease in store units |
|
|
0.0 |
% |
|
|
(0.3 |
)% |
|
|
(1.5 |
)% |
|
|
(2.0 |
)% |
The following table summarizes our open stores and square footage under lease as of the dates indicated:
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
||
Number of stores |
|
|
325 |
|
|
|
339 |
|
Square footage |
|
|
2,635,551 |
|
|
|
2,744,048 |
|
Average square footage per store |
|
|
8,109 |
|
|
|
8,095 |
|
13-Week Period Ended November 2, 2024 Compared to the 13-Week Period Ended October 28, 2023
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
|
|
13-Week Period Ended |
|
|
|
|
|
|
|
|||||||||||||||
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
|
Change |
|
|||||||||||||||
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
Net sales |
|
$ |
114,423 |
|
|
|
100.0 |
% |
|
$ |
116,365 |
|
|
|
100.0 |
% |
|
$ |
(1,942 |
) |
|
|
(1.7 |
)% |
Cost of sales |
|
|
82,288 |
|
|
|
71.9 |
|
|
|
85,712 |
|
|
|
73.7 |
|
|
|
(3,424 |
) |
|
|
(4.0 |
) |
Gross profit |
|
|
32,135 |
|
|
|
28.1 |
|
|
|
30,653 |
|
|
|
26.3 |
|
|
|
1,482 |
|
|
|
4.8 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
|
19,409 |
|
|
|
17.0 |
|
|
|
19,841 |
|
|
|
17.0 |
|
|
|
(432 |
) |
|
|
(2.2 |
) |
Other operating expenses |
|
|
14,275 |
|
|
|
12.5 |
|
|
|
16,104 |
|
|
|
13.8 |
|
|
|
(1,829 |
) |
|
|
(11.4 |
) |
Depreciation (exclusive of depreciation |
|
|
843 |
|
|
|
0.7 |
|
|
|
1,043 |
|
|
|
0.9 |
|
|
|
(200 |
) |
|
|
(19.2 |
) |
Asset impairment |
|
|
1 |
|
|
|
— |
|
|
|
316 |
|
|
|
0.3 |
|
|
|
(315 |
) |
|
|
(99.7 |
) |
Total operating expenses |
|
|
34,528 |
|
|
|
30.2 |
|
|
|
37,304 |
|
|
|
32.0 |
|
|
|
(2,776 |
) |
|
|
(7.4 |
) |
Operating loss |
|
|
(2,393 |
) |
|
|
(2.1 |
) |
|
|
(6,651 |
) |
|
|
(5.7 |
) |
|
|
4,258 |
|
|
|
(64.0 |
) |
Interest expense |
|
|
1,719 |
|
|
|
1.5 |
|
|
|
1,163 |
|
|
|
1.0 |
|
|
|
556 |
|
|
|
47.8 |
|
Loss on extinguishment of debt |
|
|
3,338 |
|
|
|
2.9 |
|
|
|
— |
|
|
|
— |
|
|
|
3,338 |
|
|
|
100.0 |
|
Other income |
|
|
(126 |
) |
|
|
(0.1 |
) |
|
|
(127 |
) |
|
|
(0.1 |
) |
|
|
1 |
|
|
|
(0.8 |
) |
Loss before income taxes |
|
|
(7,324 |
) |
|
|
(6.4 |
) |
|
|
(7,687 |
) |
|
|
(6.6 |
) |
|
|
363 |
|
|
|
(4.7 |
) |
Income tax expense (benefit) |
|
|
356 |
|
|
|
0.3 |
|
|
|
(1,290 |
) |
|
|
(1.1 |
) |
|
|
1,646 |
|
|
|
(127.6 |
) |
Net loss |
|
$ |
(7,680 |
) |
|
|
(6.7 |
)% |
|
$ |
(6,397 |
) |
|
|
(5.5 |
)% |
|
$ |
(1,283 |
) |
|
|
20.1 |
% |
Net sales. Net sales decreased 1.7% to $114.4 million for the third 13 weeks of fiscal 2024 compared to $116.4 million for the prior year period. Comparable sales decreased 3.0%, or $3.5 million, for the third 13 weeks of fiscal 2024 compared to the prior year period. For the third 13 weeks of fiscal 2024, e-commerce comparable sales decreased 14.9% compared to the prior year period, and store comparable sales increased 1.6% compared to the prior year period. The decrease in comparable sales was driven by a decrease in consolidated average ticket and a decline in e-commerce conversion, which was partially offset by higher consolidated traffic and store conversion. Comparable sales performance was also negatively impacted by approximately 1.0% related to hurricane disruptions across a significant portion of the store base. Merchandise categories performing below prior period levels include furniture, mirrors, art and ornamental wall décor, while gift, fragrance and floral performed above prior period levels.
Gross profit. Gross profit as a percentage of net sales increased 180 basis points from 26.3% in the third 13 weeks of fiscal 2023 to 28.1% in the third 13 weeks of fiscal 2024. The overall increase in gross profit margin was due to favorable distribution center costs,
17
outbound freight costs, and depreciation, partially offset by unfavorable merchandise margin and store occupancy costs. Distribution center costs decreased 130 basis points to 4.8% of net sales due to improved levels of cost capitalization in inventory in the current year period due to a later inventory increase compared to the prior year quarter. Outbound freight costs, including both store and e-commerce shipping expenses, decreased approximately 120 basis points to 6.8% of net sales due to the decline in shipping expense related to the decrease in e-commerce sales and improved management of store routes and rate reductions. Depreciation of store and distribution center assets decreased approximately 20 basis points to 1.3% of net sales in the third 13 weeks of fiscal 2024, due to certain assets becoming fully depreciated. Merchandise margin decreased approximately 50 basis points from 54.0% in the third 13 weeks of fiscal 2023 to 53.5% in the third 13 weeks of fiscal 2024, mainly due to increased promotional activity and to a lesser extent, higher inbound freight costs. Store occupancy costs increased approximately 40 basis points to 12.5% of net sales due to the sales deleverage on these fixed costs.
Compensation and benefits. Compensation and benefits as a percentage of net sales remained flat at 17.0% in the third 13 weeks of fiscal 2023 and the third 13 weeks of fiscal 2024, primarily due to higher store bonus and employee benefits expenses, partially offset by reductions in corporate compensation and benefits costs.
Other operating expenses. Other operating expenses as a percentage of net sales decreased approximately 130 basis points from 13.8% in the third 13 weeks of fiscal 2023 to 12.5% in the third 13 weeks of fiscal 2024. The decrease as a percentage of net sales was primarily related to reduced advertising costs.
Loss on extinguishment of debt. Loss on extinguishment of debt, related to the payoff of our FILO Term Loan, was $3.3 million in the third 13 weeks of fiscal 2024, of which $2.6 million was related to a prepayment penalty and the remainder was for the write-off of the remaining unamortized debt issuance costs.
Income tax expense (benefit). We recorded an income tax expense of approximately $356,000, or (4.9)% of the loss before income taxes, during the third 13 weeks of fiscal 2024, compared to an income tax benefit of approximately $1.3 million, or 16.8% of the loss before income taxes, during the prior year period. The change in the tax rate for the third 13 weeks of fiscal 2024 compared to the prior period was primarily due to changes in valuation allowance adjustments and state income taxes.
Net loss and loss per share. We reported net loss of $7.7 million, or a loss of $0.59 per diluted share, for the third 13 weeks of fiscal 2024 as compared to net loss of $6.4 million, or a loss of $0.50 per diluted share, for the third 13 weeks of fiscal 2023.
39-Week Period Ended November 2, 2024 Compared to the 39-Week Period Ended October 28, 2023
Results of operations. The table below sets forth selected results of our operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:
|
|
39-Week Period Ended |
|
|
|
|
|
|
|
|||||||||||||||
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
|
Change |
|
|||||||||||||||
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
Net sales |
|
$ |
292,465 |
|
|
|
100.0 |
% |
|
$ |
302,744 |
|
|
|
100.0 |
% |
|
$ |
(10,279 |
) |
|
|
(3.4 |
)% |
Cost of sales |
|
|
215,602 |
|
|
|
73.7 |
|
|
|
228,781 |
|
|
|
75.6 |
|
|
|
(13,179 |
) |
|
|
(5.8 |
) |
Gross profit |
|
|
76,863 |
|
|
|
26.3 |
|
|
|
73,963 |
|
|
|
24.4 |
|
|
|
2,900 |
|
|
|
3.9 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Compensation and benefits |
|
|
57,348 |
|
|
|
19.6 |
|
|
|
59,097 |
|
|
|
19.5 |
|
|
|
(1,749 |
) |
|
|
(3.0 |
) |
Other operating expenses |
|
|
39,977 |
|
|
|
13.7 |
|
|
|
44,932 |
|
|
|
14.8 |
|
|
|
(4,955 |
) |
|
|
(11.0 |
) |
Depreciation (exclusive of depreciation |
|
|
2,729 |
|
|
|
0.9 |
|
|
|
3,471 |
|
|
|
1.2 |
|
|
|
(742 |
) |
|
|
(21.4 |
) |
Asset impairment |
|
|
32 |
|
|
|
— |
|
|
|
1,542 |
|
|
|
0.5 |
|
|
|
(1,510 |
) |
|
|
(97.9 |
) |
Total operating expenses |
|
|
100,086 |
|
|
|
34.2 |
|
|
|
109,042 |
|
|
|
36.0 |
|
|
|
(8,956 |
) |
|
|
(8.2 |
) |
Operating loss |
|
|
(23,223 |
) |
|
|
(7.9 |
) |
|
|
(35,079 |
) |
|
|
(11.6 |
) |
|
|
11,856 |
|
|
|
(33.8 |
) |
Interest expense |
|
|
4,266 |
|
|
|
1.5 |
|
|
|
2,415 |
|
|
|
0.8 |
|
|
|
1,851 |
|
|
|
76.6 |
|
Loss on extinguishment of debt |
|
|
3,338 |
|
|
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
3,338 |
|
|
|
100.0 |
|
Other income |
|
|
(362 |
) |
|
|
(0.1 |
) |
|
|
(346 |
) |
|
|
(0.1 |
) |
|
|
(16 |
) |
|
|
4.6 |
|
Loss before income taxes |
|
|
(30,465 |
) |
|
|
(10.4 |
) |
|
|
(37,148 |
) |
|
|
(12.3 |
) |
|
|
6,683 |
|
|
|
(18.0 |
) |
Income tax expense |
|
|
549 |
|
|
|
0.2 |
|
|
|
720 |
|
|
|
0.2 |
|
|
|
(171 |
) |
|
|
(23.8 |
) |
Net loss |
|
$ |
(31,014 |
) |
|
|
(10.6 |
)% |
|
$ |
(37,868 |
) |
|
|
(12.5 |
)% |
|
$ |
6,854 |
|
|
|
(18.1 |
)% |
18
Net sales. Net sales decreased 3.4% to $292.5 million for the first 39 weeks of fiscal 2024 compared to $302.7 million for the prior year period. Comparable sales decreased 2.7%, or $8.2 million, for the first 39 weeks of fiscal 2024 compared to the prior year period. For the first 39 weeks of fiscal 2024, e-commerce comparable sales decreased 15.0% compared to the prior year period, and store comparable sales increased 2.0% compared to the prior year period. The decrease in comparable sales was driven by a decrease in consolidated average ticket and a decline in online conversion, which was partially offset by higher consolidated traffic and store conversion. Merchandise categories performing below prior period levels include furniture, mirrors, ornamental wall décor, art, lamps and outdoor textiles, while gift, floral and holiday décor performed above prior period levels.
Gross profit. Gross profit as a percentage of net sales increased 190 basis points from 24.4% in the first 39 weeks of fiscal 2023 to 26.3% in the first 39 weeks of fiscal 2024. The overall increase in gross profit margin was due to favorable outbound freight costs, distribution center costs, merchandise margin and depreciation, partially offset by unfavorable store occupancy costs. Outbound freight costs, including both store and e-commerce shipping expenses, decreased approximately 120 basis points to 6.7% of net sales due to the decline in shipping expense related to the decrease in e-commerce sales, improved management of store routes and rate reductions. Distribution center costs decreased approximately 70 basis points to 5.3% of net sales due to increased efficiency and a smooth inventory flow which led to lower compensation and benefits costs and lower fixed costs due to the closure of two e-commerce fulfillment location in the prior year period. Merchandise margin increased approximately 30 basis points from 54.1% in the first 39 weeks of fiscal 2023 to 54.4% in the first 39 weeks of fiscal 2024, mainly due to a higher initial product markup and favorable shrink and damages. Depreciation of store and distribution center assets decreased approximately 30 basis points to 1.6% of net sales in the first 39 weeks of fiscal 2024, due to certain assets becoming fully depreciated. Store occupancy costs increased approximately 60 basis points to 14.5% of net sales due to the sales deleverage on these fixed costs.
Compensation and benefits. Compensation and benefits as a percentage of net sales increased approximately 10 basis points from 19.5% in the first 39 weeks of fiscal 2023 to 19.6% in the first 39 weeks of fiscal 2024, primarily due to sales deleverage of higher store payroll costs, partially offset by reductions in corporate compensation costs.
Other operating expenses. Other operating expenses as a percentage of net sales decreased approximately 110 basis points from 14.8% in the first 39 weeks of fiscal 2023 to 13.7% in the first 39 weeks of fiscal 2024. The decrease as a percentage of net sales was primarily due to reduced advertising costs, partially offset by increased consulting costs for strategic advisory services. In addition, we received a state tax refund due to a recent change in state tax law that offset operating expenses in the first 39 weeks of fiscal 2024.
Loss on extinguishment of debt. Loss on extinguishment of debt, related to the payoff of our FILO Term Loan, was $3.3 million in the first 39 weeks of fiscal 2024, of which $2.6 million was related to a prepayment penalty and the remainder was for the write-off of the remaining unamortized debt issuance costs.
Income tax expense. We recorded income tax expense of approximately $549,000, or (1.8)% of the loss before income taxes, during the first 39 weeks of fiscal 2024, compared to an income tax expense of approximately $720,000, or (1.9)% of the loss before income taxes, during the prior year period. The change in the tax rate for the first 39 weeks of fiscal 2024 compared to the prior period was primarily due to changes in valuation allowance adjustments and state income taxes.
Net loss and loss per share. We reported net loss of $31.0 million, or a loss of $2.38 per diluted share, for the first 39 weeks of fiscal 2024 as compared to net loss of $37.9 million, or a loss of $2.95 per diluted share, for the first 39 weeks of fiscal 2023.
Non-GAAP Financial Measures
To supplement our unaudited consolidated condensed financial statements presented in accordance with GAAP, we provide certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted operating loss, adjusted net loss and adjusted diluted loss per share. These measures are not in accordance with, and are not intended as alternatives to, GAAP financial measures. We use these non-GAAP financial measures internally in analyzing our financial results and believe that they provide useful information to analysts and investors, as a supplement to GAAP financial measures, in evaluating our operational performance.
We define EBITDA as net loss before interest and the provision for income tax, which is equivalent to operating loss, adjusted for depreciation and asset impairment. Adjusted EBITDA is defined as EBITDA adjusted to remove stock-based compensation expense, due to the non-cash nature of this expense, to remove severance, as it fluctuates based on the needs of the business and does not represent a normal recurring operating expense, and to remove any financing related legal or professional fees not subject to capitalization. Adjusted operating loss is defined as adjusted EBITDA including depreciation. We define adjusted net loss as net loss adjusted for stock compensation, severance, any financing related legal or professional fees not subject to capitalization and the loss on extinguishment of
19
debt, due to either the non-recurring or non-cash nature of these expenses and the related tax adjustments. We define adjusted loss per diluted share as adjusted net income divided by weighted average diluted share count.
Non-GAAP financial measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Each non-GAAP financial measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
The following table shows a reconciliation of operating loss to EBITDA, adjusted EBITDA and adjusted operating loss and a reconciliation of net loss and diluted loss per share to adjusted net loss and adjusted diluted loss per share (in thousands, except for share data) for the periods indicated:
|
|
13-Week Period Ended |
|
|
39-Week Period Ended |
|
||||||||||
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
||||
Operating loss |
|
$ |
(2,393 |
) |
|
$ |
(6,651 |
) |
|
$ |
(23,223 |
) |
|
$ |
(35,079 |
) |
Depreciation |
|
|
2,339 |
|
|
|
2,769 |
|
|
|
7,476 |
|
|
|
9,118 |
|
Asset impairment (1) |
|
|
1 |
|
|
|
316 |
|
|
|
32 |
|
|
|
1,542 |
|
EBITDA |
|
|
(53 |
) |
|
|
(3,566 |
) |
|
|
(15,715 |
) |
|
|
(24,419 |
) |
Non-GAAP adjustments to operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation expense(2) |
|
|
253 |
|
|
|
277 |
|
|
|
809 |
|
|
|
891 |
|
Beyond transaction costs not subject to capitalization(3) |
|
|
266 |
|
|
|
— |
|
|
|
266 |
|
|
|
— |
|
Severance charges(4) |
|
|
— |
|
|
|
50 |
|
|
|
390 |
|
|
|
957 |
|
Total non-GAAP adjustments |
|
|
519 |
|
|
|
327 |
|
|
|
1,465 |
|
|
|
1,848 |
|
Adjusted EBITDA |
|
|
466 |
|
|
|
(3,239 |
) |
|
|
(14,250 |
) |
|
|
(22,571 |
) |
Depreciation |
|
|
2,339 |
|
|
|
2,769 |
|
|
|
7,476 |
|
|
|
9,118 |
|
Adjusted operating loss |
|
$ |
(1,873 |
) |
|
$ |
(6,008 |
) |
|
$ |
(21,726 |
) |
|
$ |
(31,689 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss |
|
$ |
(7,680 |
) |
|
$ |
(6,397 |
) |
|
$ |
(31,014 |
) |
|
$ |
(37,868 |
) |
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Asset impairment(1) |
|
|
1 |
|
|
|
316 |
|
|
|
32 |
|
|
|
1,542 |
|
Stock-based compensation expense(2) |
|
|
253 |
|
|
|
277 |
|
|
|
809 |
|
|
|
891 |
|
Beyond transaction costs not subject to capitalization(3) |
|
|
266 |
|
|
|
— |
|
|
|
266 |
|
|
|
— |
|
Severance charges(4) |
|
|
— |
|
|
|
50 |
|
|
|
390 |
|
|
|
957 |
|
Loss on extinguishment of debt(5) |
|
|
3,338 |
|
|
|
— |
|
|
|
3,338 |
|
|
|
— |
|
Total adjustments |
|
|
3,858 |
|
|
|
643 |
|
|
|
4,835 |
|
|
|
3,390 |
|
Tax benefit (expense) of adjustments |
|
|
2 |
|
|
|
(122 |
) |
|
|
20 |
|
|
|
66 |
|
Total non-GAAP adjustments, net of tax |
|
|
3,860 |
|
|
|
521 |
|
|
|
4,855 |
|
|
|
3,456 |
|
Adjusted net loss |
|
$ |
(3,820 |
) |
|
$ |
(5,876 |
) |
|
$ |
(26,159 |
) |
|
$ |
(34,412 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted loss per share |
|
$ |
(0.59 |
) |
|
$ |
(0.50 |
) |
|
$ |
(2.38 |
) |
|
$ |
(2.95 |
) |
Adjusted diluted loss per share |
|
$ |
(0.29 |
) |
|
$ |
(0.45 |
) |
|
$ |
(2.00 |
) |
|
$ |
(2.68 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted weighted average shares outstanding |
|
|
13,116 |
|
|
|
12,921 |
|
|
|
13,052 |
|
|
|
12,852 |
|
Adjusted diluted weighted average shares outstanding |
|
|
13,116 |
|
|
|
12,921 |
|
|
|
13,052 |
|
|
|
12,852 |
|
20
Liquidity and Capital Resources
Our principal capital requirements are for working capital and capital expenditures. Working capital consists mainly of merchandise inventories offset by accounts payable, which typically reach their peak by the early portion of the fourth quarter of each fiscal year. Capital expenditures primarily relate to existing store maintenance, refreshes and remodels, technology and omni-channel projects, and new or relocated stores. Historically, we have funded our working capital and capital expenditure requirements with internally generated cash and borrowings under our asset-based revolving credit facility.
In fiscal 2023, we entered into the FILO Term Loan to provide additional liquidity, as internally generated cash and borrowings under our existing asset-based revolving credit facility did not provide enough liquidity to effectively execute our financial turnaround strategy in fiscal 2024. Throughout fiscal 2024, we implemented expense reductions to streamline our cost structure and improve our liquidity profile. The cost-savings initiatives included a reduction in corporate overhead, store payroll, marketing and third-party technology expenses. On October 21, 2024, we entered into the Beyond Credit Agreement and Subscription Agreement. We believe these actions are necessary as part of improving our profitability and liquidity trajectory, while minimizing any disruption to our focus on our strategic initiatives and the overall customer experience. As part of this partnership, Beyond is investing $25 million in us through a combined debt and equity transaction. Proceeds of $17 million from the Beyond Credit Agreement were used by us to repay our FILO Term Loan, including prepayment fees and transaction expenses, and to reduce borrowings under our existing revolving credit facility. The $8 million equity purchase under the Subscription Agreement and the mandatory conversion of the Beyond Convertible Term Loan are both subject to the approval of Kirkland's shareholders at the Company’s Special Shareholders Meeting in accordance with Nasdaq Listing Rules and other customary closing conditions.
We believe that the combination of our cash balances, cash flow from operations, availability under our 2023 Credit Agreement and the aforementioned expense reductions will be sufficient to fund our projected operating requirements for one year following the date these financial statements are issued. However, we cannot provide any assurance that our plans will be successful, and if we encounter unforeseen circumstances that place further constraints on our capital resources, we will be required to take various additional measures to conserve liquidity. The accompanying unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments or charges that might be necessary should we be unable to continue as a going concern, such as charges related to impairment of our assets, the recoverability and classification of assets or the amounts and classification of liabilities or other similar adjustments.
Cash flows from operating activities. Net cash used in operating activities was approximately $39.0 million and $42.7 million during the first 39 weeks of fiscal 2024 and the first 39 weeks of fiscal 2023, respectively. Cash flows from operating activities depend heavily on operating performance and changes in working capital. The decrease in the amount of cash used in operations as compared to the prior year period was mainly due to improved operating results, partially offset by a decline in working capital.
Cash flows from investing activities. Net cash used in investing activities for the first 39 weeks of fiscal 2024 consisted primarily of $1.7 million in capital expenditures as compared to $3.3 million in capital expenditures for the prior year period. The table below sets forth capital expenditures by category (in thousands) for the periods indicated:
|
|
39-Week Period Ended |
|
|||||
|
|
November 2, 2024 |
|
|
October 28, 2023 |
|
||
Existing stores |
|
$ |
1,012 |
|
|
$ |
896 |
|
Technology and omni-channel projects |
|
|
322 |
|
|
|
1,619 |
|
New and relocated stores |
|
|
305 |
|
|
|
484 |
|
Corporate |
|
|
12 |
|
|
|
243 |
|
Distribution center and supply chain enhancements |
|
|
2 |
|
|
|
71 |
|
Total capital expenditures |
|
$ |
1,653 |
|
|
$ |
3,313 |
|
The capital expenditures in the current and prior year period related primarily to the maintenance of existing stores and technology and omni-channel projects.
21
Cash flows from financing activities. During the first 39 weeks of fiscal 2024, net cash provided by financing activities was $43.6 million, as we borrowed $17.0 million under our Beyond Credit Agreement and borrowed a net $31.0 million under our revolving credit facility, partially offset by prepayment penalties payments of $2.6 million and $1.7 million of debt and equity issuance cost payments. During the first 39 weeks of fiscal 2023, net cash provided by financing activities was approximately $46.5 million, as we borrowed a net $47.0 million under our revolving credit facility, partially offset by $0.5 million of debt issuance cost payments.
Long-term debt. The following table summarizes our outstanding debt as of the dates indicated (in thousands):
|
|
November 2, 2024 |
|
|
February 3, 2024 |
|
|
October 28, 2023 |
|
|||
Revolving line of credit |
|
$ |
65,000 |
|
|
$ |
34,000 |
|
|
$ |
62,000 |
|
Non-Convertible Term Loan |
|
|
8,500 |
|
|
|
— |
|
|
|
— |
|
Convertible Term Loan |
|
|
8,500 |
|
|
|
— |
|
|
|
— |
|
Collaboration Agreement fees |
|
|
3,806 |
|
|
|
— |
|
|
|
— |
|
Total outstanding borrowings |
|
|
85,806 |
|
|
|
34,000 |
|
|
|
62,000 |
|
Less: unamortized debt discount and issuance costs |
|
|
(5,013 |
) |
|
|
— |
|
|
|
— |
|
Total debt |
|
|
80,793 |
|
|
|
34,000 |
|
|
|
62,000 |
|
Less: current portion of long-term debt, included in accrued expenses |
|
|
(396 |
) |
|
|
— |
|
|
|
— |
|
Long-term debt |
|
$ |
80,397 |
|
|
$ |
34,000 |
|
|
$ |
62,000 |
|
For additional information about our outstanding borrowings see “Note 9 — Long-term Debt” in the condensed consolidated financial statements.
Subscription Agreement. See “Note 10 — Subscription Agreement” in the condensed consolidated financial statements for a description of the Subscription Agreement.
Share repurchase plan. See “Note 8 — Share Repurchase Plan” in the condensed consolidated financial statements for a description of our share repurchase plan.
Critical Accounting Policies and Estimates
There have been no material changes to our critical accounting policies or estimates during the 39-week period ended November 2, 2024. Refer to our Annual Report for a summary of our critical accounting policies and a discussion of the critical accounting estimates and assumptions impacting our consolidated financial statements.
New Accounting Pronouncements
See “Note 12 — New Accounting Pronouncements” in the condensed consolidated financial statements for accounting pronouncements not yet adopted.
22
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to interest rate changes, primarily as a result of borrowings under our long-term debt agreements, as discussed in “Note 9 — Long-Term Debt,” in the notes to the condensed consolidated financial statements, which bear interest based on variable rates.
We manage cash and cash equivalents in various institutions at levels beyond federally insured limits per institution, and we may purchase investments not guaranteed by the Federal Deposit Insurance Company. Accordingly, there is a risk that we will not recover the full principal of our investments or that their liquidity may be diminished.
We were not engaged in any foreign exchange contracts, hedges, interest rate swaps, derivatives or other financial instruments as of November 2, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. Both our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), after the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) was performed by management with the participation of our Chief Executive Officer and Chief Financial Officer, have concluded that, as of November 2, 2024, our disclosure controls and procedures were effective as of the end of the period covered by this report.
Change in internal controls over financial reporting. There have been no changes in internal control over financial reporting that have occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
23
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of the Company’s legal proceedings, refer to “Note 6 — Commitments and Contingencies,” in the notes to the condensed consolidated financial statements.
ITEM 1A. RISK FACTORS
The risk factors described in Part I, “Item 1A. Risk Factors” in our Annual Report should be carefully considered together with the other information contained or incorporated by reference in this Quarterly Report on Form 10-Q and in our other filings with the SEC, in connection with evaluating the Company, our business, and the forward-looking statements contained in this Quarterly Report on Form 10-Q. There have been no material changes to our risk factors as previously disclosed in the Annual Report, except for the updates set forth below regarding the transaction with Beyond. The risks described in this report and in our Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
We may not be able to consummate all elements of the Beyond transaction or satisfy all of the conditions precedent to consummation of the proposed transaction.
We entered into a strategic partnership with Beyond on October 21, 2024, with the purpose of enabling cohesive collaboration between the companies, leveraging the strengths of each business to drive sustainable profitable growth and value for all stakeholders. As part of this partnership, Beyond is investing $25 million in us through a combined debt and equity transaction. Proceeds of $17 million from the Beyond Credit Agreement were used by us to repay our existing FILO Term Loan, including prepayment fees and transaction expenses, and to reduce borrowings under our existing revolving credit facility. The $8 million equity purchase under the Subscription Agreement and the mandatory debt conversion of the Convertible Term Loan are both subject to the approval of Kirkland's shareholders at the Company’s Special Shareholders Meeting in accordance with Nasdaq Listing Rules and other customary closing conditions. If our shareholders do not approve the mandatory conversion of the Convertible Term Loan under the Beyond Credit Agreement and the $8 million equity purchase under the Subscription Agreement, it would have a negative impact on our cash flows and financial condition.
We might not be able to obtain various synergies as contemplated in the Collaboration Agreement.
Our ability to obtain the various synergies envisioned in the Collaboration Agreement is dependent on successfully identifying, developing and implementing plans and initiatives intended to drive such synergies. If such plans and initiatives are not properly identified, developed and successfully executed, or if execution or realization of positive synergies takes longer than expected, our financial condition and results of operations could be adversely affected. There can be no assurance that we will be able to successfully open and operate Bed Bath & Beyond retail stores under the Trademark License Agreement, which grants us the exclusive license to operate small format, neighborhood brick-and-mortar stores under licensed Beyond-owned trademarks. If we do open and operate the stores, there can be no assurance that they will be profitable. The success of our plans and initiatives is subject to risks and uncertainties with respect to execution, market conditions, customer acceptance and other factors that may cause actual results, performance or achievements to differ materially, and adversely, from our plans or expected results.
In addition, our ability to successfully market our products to Beyond’s customers and to grow our customer base might not be successful. We can provide no assurance that we can realize additional opportunities for growth and innovation through this partnership. Further, we could lose current customers because of this partnership by alienating our current customer base, which could negatively impact our operating performance.
There might be unintended and unanticipated negative side effects related to the Beyond transaction.
The announcement or pendency of the Beyond transaction could have a negative impact on the Company’s business relationships, operating results and business generally. The Special Shareholders Meeting, or any other component of the Beyond transaction, could divert management’s attention from ongoing business operations. Also, there could be unexpected costs, charges or expenses resulting from the proposed transaction. Finally, there could be potential litigation relating to the proposed transaction against the Company or the Company’s directors, managers or officers, including the effects of any outcomes related thereto. Any one of these risks could negatively impact our operating performance and liquidity.
24
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Repurchases of Equity Securities
On January 6, 2022, the Company announced that its Board of Directors authorized a share repurchase plan providing for the purchase in the aggregate of up to $30.0 million of the Company’s outstanding common stock. Repurchases of shares are made in accordance with applicable securities laws and may be made from time to time in the open market or negotiated transactions. The amount and timing of repurchases are based on a variety of factors, including stock price, regulator limitations and other market and economic factors. The share repurchase plans do not require us to repurchase any specific number of shares, and the Company may terminate the repurchase plans at any time. For the 39-week period ended November 2, 2024, the Company did not repurchase any shares of common stock under the share repurchase plan. As of November 2, 2024, the Company had approximately $26.3 million remaining under the current share repurchase plan.
ITEM 5. OTHER INFORMATION
None of our directors or officers
ITEM 6. EXHIBITS
Exhibit No. |
|
Description of Document |
10.1* |
|
|
10.2* |
|
|
10.3* |
|
|
10.4* |
|
|
10.5* |
|
|
10.6* |
|
|
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) |
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 |
|
|
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 |
|
101.INS |
|
Inline XBRL Instance Document |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
|
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
* Incorporated by reference.
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
KIRKLAND’S, INC. |
Date: December 6, 2024 |
|
/s/ Amy E. Sullivan |
|
|
Amy E. Sullivan President, Chief Executive Officer and Director |
Date: December 6, 2024 |
|
/s/ W. Michael Madden |
|
|
W. Michael Madden Executive Vice President and Chief Financial Officer |
26