The Brand House Collective, formerly Kirkland’s, has reported lower sales and profit in the second quarter, which management attributed to adverse weather that struck its distribution center and the deliberate liquidation of certain inventory.

The company’s net sales slid 12 per cent to $75.7 million for the quarter ended August 2, amid a 5 per cent reduction in store count. 

Consolidated comparable sales plunged 9.7 per cent, with in-store comparable sales up 0.4 per cent and e-commerce down 38.5 per cent.

Gross profit decreased from $17.7 million to $12.4 million, primarily due to liquidation activity to optimize inventory ahead of expanding Bed Bath & Beyond assortments, as well as the write off of the inventory damaged by tornado and incremental tariff costs.

The company noted it incurred expenses of $2 million related to damage caused by the tornado that hit its distribution center in Jackson, Tennessee in May.

Net loss for the quarter widened from $14.5 million a year earlier to $20.2 million.

“Our Q2 results reflect two major events that weighed heavily on the quarter: the tornado damage at our distribution center and our deliberate decision to liquidate select inventory ahead of expanding Bed Bath & Beyond assortments,” said CEO Amy Sullivan.

“Together, these factors were the dominant drivers of the year-over-year decline in profitability and created near-term pressure on sales, particularly in e-commerce.”

The company announced it completed the sale of Kirkland’s Home intellectual property to Bed Bath & Beyond for $10 million this week. The transaction was closed alongside a $20 million expansion of the existing credit agreement with Beyond, as part of the companies’ agreement announced in May. 

The firm added that it is in the early stages of planning and expansion of Kirkland’s Home into the wholesale market.