A home retailer is now at high risk of bankruptcy after ending the third quarter with $62 million in debt, sources report.
Kirkland’s Home, a specialty retailer of home décor and furnishings operating 338 stores in 35 U.S. states, has found itself in a fight for survival, reports TheStreet.
The home retailer had no other option than to increase its credit availability after the quarter ended.
“To support its strategic repositioning efforts, Kirkland’s Home secured additional debt financing through a new first-in last-out, asset-based, delayed-draw term loan facility.
The new facility is in addition to the company’s existing $90 million asset-based revolving credit facility,” the retailer shared in a press release.
Even with the new loan, Kirkland’s has very little available money, reports TheStreet.
“Proceeds from the new facility, when drawn, will be used to provide additional liquidity for ongoing working capital needs,” according to Kirkland’s.
“As of closing, the company’s combined credit availability under both credit agreements was approximately $21.5 million.”
Kirkland’s Home lost $6.7 million in Q3.
In addition to appearing on Retail Dive’s bankruptcy watch list, Kirkland’s also has a “high default risk,” according to Rapid Ratings.
‘Kirkland’s Inc. is situated in our High-Risk group, displays weakness in five of our seven performance categories, demonstrates significant underperformance in [return on capital employed], and was downgraded in the most recent period,” the site, which uses financial metrics to predict default risk, reported.
“If current trends persist it would be logical to expect that Kirkland’s Inc. will face serious default risk this coming year and will struggle with efficiency and competitiveness problems over the medium term; thus, the outlook is negative.”
The company says it’s on the right path toward returning to profitability.
“The third quarter demonstrated execution of our strategic repositioning as we experienced sequential improvements in traffic and comparable sales each month of the quarter, along with expanded gross margins,” interim Chief Executive Ann Joyce said in the chain’s third-quarter-earnings release.
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Also Read: A Home Improvement Retailer Now Closes All 157 Stores
Other Economy News Today
A massive clothing retailer will now lay off 357 employees, including 200 at its corporate headquarters, sources report.
Outdoor recreation retailer REI is cutting its workforce for the third time in less than 12 months, reports RetailDive.
Recreational Equipment, Inc., doing business as REI, is an American retail and outdoor recreation services corporation.
It is organized as a consumers’ co-operative.
REI sells camping gear, hiking, climbing, cycling, water, running, fitness, snow, travel equipment, and men, women and kids clothing.
In a Thursday announcement from CEO Eric Artz that was shared with employees, the executive said 357 people will be laid off — 200 employees at its Sumner, Washington, headquarters, 121 in distribution centers and 36 in other roles, including experiences.
Non-headquarters store-specific roles are not affected by the layoffs, the company said.
Those being let go were notified in one-on-one conversations on Thursday, REI said.
Employees whose jobs were cut will receive separation benefits that include severance, continuation of health coverage, and outplacement support and services.
Last February, REI laid off 167 people at its corporate headquarters as part of a restructuring.
In October, the outdoor retailer cut 275 people in a store operations overhaul.
REI has about 16,000 employees and about 180 locations in the U.S., according to its website.
In addition to this round of job cuts, Artz said the company will pursue additional cost-cutting measures this year.
They include not funding merit increases for headquarters employees, including for leaders, this year.
REI also said it will not backfill recently vacated leadership positions and it will reduce the size of its senior leadership team by 22% this year.
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Also Read: A Massive Furniture Company Now Lays Off 1,650 Employees
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