Shares of home furnishings retailer Kirkland’s were down about 3 percent in the last half hour of trading Tuesday.
That in itself isn’t all that remarkable. What makes it noteworthy is that, if the shares do indeed finish in the red, it’ll mark only the ninth down day for the stock in the seven weeks since the July Fourth holiday. And it’ll stand in sharp contrast to a massive summer surge that has included gains of:
• more than 9 percent on each of July 8, July 10 and July 15
• 13.5 percent on July 16 and 12.3 percent on July 22
• no less than 24.6 percent on July 30, a move that was backed up two days later with another 15.8 percent rise
• 16.1 percent on Aug. 10, 17.4 percent on Monday and another 21.9 percent on Wednesday
• at least 5 percent on four other trading days since the holiday weekend.
In all, shares of Brentwood-based Kirkland’s (Ticker: KIRK) have risen more than tenfold from below 80 cents in mid-May to more than $11, lifting the company’s market capitalization above $150 million. It would seem CEO Woody Woodward and his team need no longer fear the delisting that Nasdaq Stock Market officials in late April said loomed over Kirkland’s because its stock had traded under $1 for 30 straight business days.
What has driven this rapid run? As is so often the case, it appears to be combination of both fundamentals and sentiment. The basics of the Kirkland’s business have improved as work started last year by Woodward and his lieutenants to improve their product assortment and invest in e-commerce operations began paying off at just the right time. As Woodward told investors on his team’s first-quarter conference call in early June, after consumers had settled into lockdown life under COVID-19: “Many of our customers were at home looking at their walls through this period and decided to make some changes.”
The result: Year-over-year growth in online sales of 97 percent in April and 95 percent in May and growing profit margins thanks in part to what CFO Nicole Strain called a reset of the company’s mindset on discounts.
Sales are also being helped by the woes of some competitors in the market for furniture and home decor items. Pier 1 Imports, Tuesday Morning and Art Van Furniture are among the firms that have filed for bankruptcy this year — Pier 1 began liquidation sales in May and Art Van converted its Chapter 11 filing to a Chapter 7 in April — and several smaller players also are in trouble.
These shifts are happening as spending has rebounded sharply after an initial pandemic shock. The Commerce Department says sales at furniture and home furnishings stores were slightly higher in June and July than in the same months of 2019. In short: There are now bigger slices of a same-sized pie for Kirkland’s, At Home — which last month reported a 42 percent jump in same-store sales — and others to grab.
On the sentiment side, Kirkland’s has caught the eye of the short-term traders and other retail investors gathered in communities such as Robinhood. Social media conversations mentioning the local company were pretty much non-existent in the past but now buzz with giddiness. That heightened attention is reflected in Kirkland’s trading volume: Early in the year, a typical day saw between 200,000 and 400,000 shares trade. Since mid-July, volume has topped 1 million more often than not and has topped 2.8 million each day this week.
Kirkland’s executives declined to comment on the stock’s recent run and the current state of the business. Woodward and Strain will report second-quarter results for Kirkland’s Sept. 3. Investors will then have to decide whether those numbers are convincing enough confirmation of recent trends to stick around or whether Kirkland’s — which is now back at its February 2019 levels — will go down as just another artist who had that summer hit but couldn’t turn it into a career with staying power.