The Brand House Collective (KIRK) investor relations material

Executive summary

• Accelerated transformation through partnership with Bed Bath & Beyond, with the first store conversion in Brentwood/Nashville exceeding expectations and driving strong sales and new customer growth, supported by significant media attention.

• Net sales declined 12.2% year-over-year to $75.8 million for the quarter, driven by lower e-commerce sales, challenging macroeconomic conditions, and tornado disruption.

• Operating loss increased to $18.7 million for the quarter, with net loss widening to $20.2 million and diluted loss per share of $0.90.

• All Kirkland's Home stores are planned for conversion to Bed Bath & Beyond over 24 months, with 250–275 locations expected to remain post-review.

• Expansion plans include new omnichannel initiatives for Bye Bye Baby, a wholesale channel for Kirkland's Home, and the sale of Kirkland's Home IP for $10 million.

Financial highlights

• Q2 net sales were $75.8 million, down from $86.3 million year-over-year, with a 9.7% decline in comparable sales and a 5% reduction in store count.

• E-commerce comparable sales declined 38.5%, with tornado disruption estimated to have a 750 basis point negative impact on e-commerce and 190 basis points on total comparable sales.

• Gross margin fell to 16.3% of sales, mainly due to liquidation, tornado-related write-offs, and tariffs.

• Net loss was $20.2 million, with adjusted net loss at $17.8 million, compared to $14.5 million and $13.9 million, respectively, in the prior year.

• Adjusted EBITDA loss was $14.3 million for the quarter, compared to a $10.2 million loss year-over-year.

Outlook and guidance

• Management expresses substantial doubt about the ability to continue as a going concern due to ongoing losses, negative cash flows, and liquidity constraints.

• Continued liquidation of non-go-forward inventory and promotional activity expected in the second half, with incremental tariff costs anticipated in Q3.

• Margin pressure from tariffs expected to peak in Q3 (about 100 basis points), with limited impact in Q4.

• Plans to accelerate store conversions, with 30 planned for Q1 2026 and as many as possible for back-to-campus season.

• Cost-saving initiatives and new financing arrangements are being implemented to improve liquidity and profitability.