Home decor retailer Kirkland’s Inc. is focusing on digital advertising to reach more consumers at a lower cost.
Kirkland’s is eliminating freestanding printed promotions, which are inserted in newspapers and mailed directly to consumers. The retailer will instead spend that money on digital advertising, CEO Mike Madden told analysts on the retailer’s fiscal Q2 2016 earnings call. He did not say what Kirkland’s spends on advertising.
“[This] will allow us to double our impressions, broaden our reach and increase frequency, all at a lower cost,” Madden said, according to a transcript from Seeking Alpha. “A majority of our advertising in the back half [of 2016] will focus on mobile and it will target customers with specific behaviors indicative of those with intentions to shop home decor.”
Digital advertising also offers Kirkland’s greater flexibility, Madden said.
“You can do a lot more through a digital ad than you can in a [freestanding insert into a newspaper] that’s static and only can carry so much information for the customer, if they even see it,” he said. “I think it’s just going to be a better message overall that should create more excitement with the customer than we have, because we haven’t done a whole lot of marketing in prior years.”
Chief financial officer Adam Holland told analysts on the call that Kirkland’s, No. 508 in the Internet Retailer 2016 Second 500 Guide, generated $10.5 million in online sales during the quarter, up 37% from $7.7 million last year. Holland attributed those gains to higher conversion rates and web traffic, though he did not give specifics.
Strong e-commerce growth helped offset in-store traffic declines and a flat average sales ticket across the company’s 392 stores in 36 states.
Despite these declines, stores continue to be integral to Kirkland’s e-commerce success, with 70% of online orders picked up in stores. “We continue to see success in leveraging those stores as a vehicle for delivering the goods to the customer,” Holland said.
For the fiscal second quarter ended July 30, Kirkland’s reported:
- Net sales of $123.0 million, up 6.7% from $115.3 million.
- Online sales of $10.5 million, up 37% from $7.7 million last year.
- Gross profit of $42.3 million, down slightly from $42.5 million.
For the first six months of 2016, Kirkland’s reported:
- Net sales of $252.9 million, up 8.3% from $233.6 million last year.
- Gross profit of $91.8 million, up 1.8% from $90.2 million last year.