Good day. And welcome to Kirkland's First Quarter 2020 Earnings Call [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference call over to Trip Sullivan of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Kirkland's conference call to review results for the first quarter of fiscal 2020. On the call this morning are Woody Woodward, Chief Executive Officer and Nicole Strain, Chief Financial Officer. The results as well as the notice of the accessibility of this conference call on a listen-only basis over the Internet were announced earlier this morning in a press release that has been covered by the financial media. Except for historical information discussed during this conference call, the statements made by the company management are forward-looking, and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause Kirkland's actual results in future periods to differ materially from forecasted results. Those risks and uncertainties are more fully described in Kirkland's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K filed on March 29, 2019. I will turn it over to Woody.

Thanks Trip. I'm proud of how nimble and resilient our team has been throughout the last several months. Many of our customers were at home looking at their walls through this period and decided to make some changes. When they were ready to shop, we were ready for them. The adjustments we made to our business model, the rightsizing and the significant upgrading of our merchandise assortment, all came together at the right time. I would also like to acknowledge the continued support and partnership with our vendors who enabled us to work through this unprecedented time. They deserve much of the credit for the improvement in our trends. We've learned a lot about ourselves, our customers and what our team is capable of achieving during one of the most challenging periods in the history of retail. There are many aspects of the home furnishings industry that are already returning to normal. But as we've seen with a number of announcements of store closings, competitors liquidating and consumers adopting new shopping behaviors and priorities, there are many aspects of the business that might not ever be the same again. We think that's a good thing for the future of Kirkland's. We started 2020 with tremendous momentum from the significant year of transformation achieved in 2019. The key priorities we outlined a few months ago continue to guide us for 2020 and beyond, and provide the foundation for the confidence we have in our business for the balance of the year. Before I get into what's driving that confidence level, let me update you on where we are with these priorities. Recall that our goal is to be in the consideration set for a complete decorating of project in addition to the finishing touches. We want our customers to see us…

Thank you, Woody. I would like to begin by also expressing our appreciation for our store employees, our distribution center employees and those in our corporate offices. The past few months have been more challenging than we ever would have expected, and I'm proud of the strength, flexibility and the loyalty of our teams. You are the core of Kirkland's and the reason we will be successful, I would also like to thank our vendors, landlords and other partners. What we have asked of them during this time has been difficult and in many cases added hardship to their businesses and we are grateful. Our first quarter results were significantly impacted by the temporary closure of our stores for the second half of the quarter. I want to touch on a few highlights of the quarter in the first month of our second quarter and then move to the actions we've taken and how we expect those actions to benefit the remainder of this fiscal year and beyond. For the quarter, our comparable sales were down just under 40% with February flat for the prior year and the other two months impacted by the slowing demand in early March, followed by the store closures on March 19th. The positive comps and momentum we experienced in the fourth quarter continued into February, which gives us confidence that the merchandise changes we made are working. The e-commerce comp for the quarter was 32.3% with a slow March as consumer demand focused on potential products and increasing to 97% in April. A third-party drop ship revenue has been particularly strong with an over 80% increase for the quarter and over 200% in the month of April. During the quarter, we closed 27 stores. Product margin for the quarter was down 340 basis points…

Thanks, Nicole. I want to thank our employees who work so hard everyday to make Kirkland's a special shopping experience and our customers who are visiting our stores and online. With that, I'll turn it over to any questions you may have.

We will now begin the question-and-answer session [Operator Instructions]. Our first question will come from John Lawrence from Baraboo Growth. Please go ahead.

Woody, would you start off just a little bit and you talked about I guess in February continuing the momentum from the fourth quarter. You gave us a lot of information at the end of the year about some of those categories that you stood up. Just can you sort of continue that discussion a little bit on the things that tabletop, I guess the bedding and just some of those trends and obviously, once it got into March everything changed. But just some of those merchandise categories that you feel good about and those changes, if you can?

I think that the answer is probably got two parts to it. One part is the ongoing upgrade of our design and style overall categories and the effort to really improve quality. You know one of our initiatives over the past couple of years has been to start doing some direct sourcing and that allows us to have more exclusive merchandise at better price points. And rather than take all that margin benefit, we put a lot of that back into the quality. And I think we're getting noticed from the customer that our products are better quality and still reasonably priced. And so that's kind of the overall. The other part of it is, before I talk about the new categories, is that furniture has continued to be strong for us. And part of that is the upgraded quality and more concise direction, and really a look that we're starting to own in the marketplace, and not looking like we're trying to please everybody. But we've got a really special look in our stores right now and it's resonating with the customer. On the new categories, the runaway success has been the tabletop. We entered that category because we knew that that was strong in other retailers and we were not in that particular category. So our dinnerware, tabletop, textiles, glassware, flatware have all been a runaway success. And for this third and fourth quarter, we are expanding the space within our stores to show a widened assortment of those goods. They're margin rich. They build a relationship with the customer. And that they can buy products and then come back and add to it and layer on for the holidays. So it's a really great category for us to be successful in. A little bit less successful, but…

And just to add onto that. Some of the old traditional categories I assume continue to get squeezed. Is that correct?

Well, yes and no. So we had to go through a real process of looking at every category and doing a financial look at everything. So some categories did get expanded. We're really well known for our harvest and our Christmas program. So those have expanded. Our candle category has really expanded, because it's something that the customers are telling us they love. Other categories were probably over spaced. I will tell you that we were able to get our entire upholstery presentation in our stores that are testing now that program without reducing, taking categories out of the store. So I felt really good about that. So I think we were just oversized. Art is an area that we're now getting some pretty good responses on, but it took a little bit of a space reduction and then lighting was something that we've been struggling with to be differentiated in. So we took some spacing away from lighting.

There are no further questions. I would like to turn the conference back over to Mr. Woodward for any closing remarks.

Just to thank you for calling or coming on the call today. We appreciate your attention and we look forward to the balance of the year. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.