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<SEC-DOCUMENT>0001299933-09-001357.txt : 20090324
<SEC-HEADER>0001299933-09-001357.hdr.sgml : 20090324
<ACCEPTANCE-DATETIME>20090324152130
ACCESSION NUMBER:		0001299933-09-001357
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20090320
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20090324
DATE AS OF CHANGE:		20090324

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KIRKLAND'S, INC
		CENTRAL INDEX KEY:			0001056285
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-RETAIL STORES, NEC [5990]
		IRS NUMBER:				621287151
		FISCAL YEAR END:			0128

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-49885
		FILM NUMBER:		09701303

	BUSINESS ADDRESS:	
		STREET 1:		431 SMITH LANE
		CITY:			JACKSON
		STATE:			TN
		ZIP:			38301
		BUSINESS PHONE:		731-668-2444

	MAIL ADDRESS:	
		STREET 1:		431 SMITH LANE
		CITY:			JACKSON
		STATE:			TN
		ZIP:			38301

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIRKLANDS INC
		DATE OF NAME CHANGE:	19980219
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>htm_31967.htm
<DESCRIPTION>LIVE FILING
<TEXT>
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<TITLE> Kirkland's, Inc. (Form: 8-K) </TITLE>
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		UNITED STATES<BR>
	SECURITIES AND EXCHANGE COMMISSION
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<BR>
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	WASHINGTON, D.C. 20549
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	FORM 8-K
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	CURRENT REPORT
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	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
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	Date of Report (Date of Earliest Event Reported):
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	&nbsp;
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	March 20, 2009
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	Kirkland's, Inc.
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<BR>__________________________________________<BR>
	(Exact name of registrant as specified in its charter)
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	&nbsp;
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	Tennessee
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	000-49885
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	621287151
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_____________________<BR>
	(State or other jurisdiction
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_____________<BR>
	(Commission
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______________<BR>
	(I.R.S. Employer
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	of incorporation)
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	File Number)
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	Identification No.)
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	&nbsp;&nbsp;
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	431 Smith Lane, Jackson, Tennessee
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	&nbsp;
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	38301
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_________________________________<BR>
	(Address of principal executive offices)
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	&nbsp;
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___________<BR>
	(Zip Code)
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	Registrant&#146;s telephone number, including area code:
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	&nbsp;
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	731-988-3600
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<P ALIGN="CENTER">
<FONT SIZE="2">
	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
</FONT>
<P ALIGN="CENTER">
<FONT SIZE="2">
	&nbsp;
</FONT>
<!-- CoverPageRegistrant END --><P><FONT SIZE="2">
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:</FONT>
</P>
<P><FONT SIZE="2">
[&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
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<FONT SIZE="2">Top of the Form</FONT>
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<B>
	Item 2.02 Results of Operations and Financial Condition.
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On March 20, 2009, Kirkland's, Inc. (the "Company") issued a press release and conducted a conference call regarding its sales and earnings release results for its fourth fiscal quarter and year-to-date period ended January 31, 2009 (the "Press Release"). A copy of the Press Release and transcript of the conference call conducted by the Company are attached hereto as exhibit 99.1 and exhibit 99.2, respectively, and are being furnished, not filed, under item 2.02 of this Report on Form 8-K. <br><br>
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<B>
	Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits<br><br>99.1 Press Release dated March 20, 2009 announcing the Company's fourth fiscal quarter financial results.<br><br>99.2 Transcript of the March 20, 2009 conference call conducted by the Company. <br><br>
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	SIGNATURES
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	Pursuant to the requirements of the Securities Exchange Act of 1934, the
	registrant has duly caused this report to be signed on its behalf by the
	undersigned hereunto duly authorized.
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	Kirkland's, Inc.
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	&nbsp;&nbsp;
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<I>
	March 24, 2009
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	&nbsp;
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<I>
	By:
</I>
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	&nbsp;
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<I>
	/s/ W. Michael Madden
</I>
<BR>
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	&nbsp;
</FONT>
</TD>
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	&nbsp;
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	&nbsp;
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<I>
	Name: W. Michael Madden
</I>
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<I>
	Title: Senior Vice President and Chief Financial Officer
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	Exhibit&nbsp;Index
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<B>
	Exhibit No.
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	Description
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	99.1
</DIV>
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	&nbsp;
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<TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
<FONT SIZE="2">
Press release dated March 20, 2009 announcing the Company's fourth fiscal quarter financial results
</FONT>
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<DIV ALIGN="LEFT">
	99.2
</DIV>
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	&nbsp;
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Transcript of March 20, 2009 conference call conducted by the Company
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<DOCUMENT>
<TYPE>EX-99.1
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<FILENAME>exhibit1.htm
<DESCRIPTION>EX-99.1
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<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">
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<TITLE> EX-99.1 </TITLE>
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    <TD width="42%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 22pt">News Release<BR></FONT>
<FONT style="font-size: 11.5pt">Contact:</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11.5pt"><BR>
W. Michael Madden</FONT></TD>
</TR>
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</DIV>



<P align="left" style="margin-left:4%; font-size: 11.5pt; text-indent: 4%">Senior Vice President & CFO



<P align="left" style="margin-left:4%; font-size: 11.5pt; text-indent: 4%">(615)&nbsp;872-4800


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 12.5pt"><B>KIRKLAND&#146;S REPORTS FOURTH QUARTER RESULTS</B>
</FONT>

<P align="left" style="font-size: 12.5pt"><FONT style="font-size: 12pt"><B>Fourth Quarter Highlights:</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Comparable store sales increase 5.3%</I></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Diluted EPS increases 850% to $0.76</I></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Available cash improves to $36.4&nbsp;million, or $1.84 per diluted share</I></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 12pt"><B>Fiscal 2008 Highlights:</B>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Comparable store sales increase 3.6%</I></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>EPS of $0.47 reverses prior-year loss</I></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Ends the year with no debt and no draws all year on the line of credit</I></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Issues general operating and financial guidance for Fiscal 2009</I></TD>
</TR>

</TABLE>


<P align="left" style="font-size: 12pt"><FONT style="font-size: 11pt">JACKSON, Tenn. (March&nbsp;20, 2009) &#151; Kirkland&#146;s, Inc. (NASDAQ: KIRK) today reported financial
results for the 13-week and 52-week periods ended January&nbsp;31, 2009.
</FONT>

<P align="left" style="font-size: 11pt">Net sales for the 13-week period ended January&nbsp;31, 2009, were $133.6&nbsp;million compared with $138.3
million for the 13-week period ended February&nbsp;2, 2008. Comparable store sales for the fourth
quarter of fiscal 2008 increased 5.3% compared with a 12.6% comparable store sales decrease in the
fourth quarter of fiscal 2007. Comparable store sales in mall stores increased 8.2% for the fourth
quarter, and comparable store sales in off-mall stores increased 4.0%. The Company closed 22
stores during the quarter to end the period with 299 stores, compared with 335 stores at the end of
the prior-year quarter.


<P align="left" style="font-size: 11pt">Net sales for the 52-week period ended January&nbsp;31, 2009, were $391.3&nbsp;million compared with $396.7
million for the 52-week period ended February&nbsp;2, 2008. Comparable store sales for the 52-week
period ended January&nbsp;31, 2009, increased 3.6% compared with a 13.3% decrease in the prior-year
period. During the 52-week period ended January&nbsp;31, 2009, comparable store sales in mall stores
increased 6.9% while comparable store sales in off-mall stores increased 2.1%.


<P align="left" style="font-size: 11pt">The Company reported net income of $15.0&nbsp;million, or $0.76 per diluted share, for the 13-week
period ended January&nbsp;31, 2009, compared with net income of $1.5&nbsp;million, or $0.08 per diluted
share, in the 13-week period ended February&nbsp;2, 2008. Income tax expense for the 13-week period
ended January&nbsp;31, 2009 includes a benefit of approximately $3.4&nbsp;million, or $0.17 per diluted
share, related to the reversal of a portion of the valuation allowance on the Company&#146;s deferred
tax assets established in fiscal 2007. The prior-year period included an impairment charge of $1.4
million, or $0.07 per share, related to 100% of


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>



<P align="center" style="font-size: 11.5pt"><FONT style="font-size: 10pt">431 Smith Lane &#166; Jackson, Tennessee 38301 &#166; (731)&nbsp;988-3600</FONT>



<P align="left" style="font-size: 10pt"><FONT style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 2
<BR>
March&nbsp;20, 2009
</FONT>

<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">the carrying value of its goodwill, and impairment charges totaling $1.3&nbsp;million, or $0.07 per
share, related to fixed assets associated with underperforming stores.
</FONT>

<P align="left" style="font-size: 11pt">The Company reported net income of $9.3&nbsp;million, or $0.47 per diluted share, for the 52-week period
ended January&nbsp;31, 2009, compared with a net loss of $25.9&nbsp;million, or $1.33 per share, for the
52-week period ended February&nbsp;2, 2008. Income tax expense for the 52-week period ended January&nbsp;31,
2009 includes a benefit of approximately $3.4&nbsp;million, or $0.17 per diluted share, related to the
reversal of a portion of the valuation allowance on the Company&#146;s deferred tax assets established
in fiscal 2007. The results for the prior year included the following items:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company recorded an impairment charge of $1.4&nbsp;million, or $0.07 per share,
related to 100% of the carrying value of its goodwill.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company recorded impairment charges totaling $2.1&nbsp;million, or $0.11 per
share, related to fixed assets associated with underperforming stores.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In connection with a restructuring and personnel reduction completed in the
third quarter of fiscal 2007, the Company recorded severance charges totaling $1.0
million, or $0.05 per share.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(iv)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company recorded $1.3&nbsp;million, or $0.07 per share, in relocation costs
associated with its establishment of a corporate office in Nashville, Tennessee.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">(v)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company recorded a valuation allowance of $8.2&nbsp;million, or approximately
$0.42 per diluted share, on its deferred tax assets in fiscal 2007.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 11pt">Robert Alderson, Kirkland&#146;s President and Chief Executive Officer, said, &#147;We finished fiscal 2008
on a very strong note with our fourth consecutive quarter of positive comparable store sales,
strong year-over-year improvement in merchandise and operating margins, an extraordinary increase
in fourth quarter earnings and over $36&nbsp;million of cash. Our goal for the year was to show
improvement in every quarter, and we more than exceeded that target. Inventories remain on-plan and
current, and our liquidity position is the strongest it has been in several years. While it is
early yet, we are also encouraged by positive sales and margin trends experienced so far in the
first quarter of 2009.


<P align="left" style="font-size: 11pt">&#147;The decisions many retailers are being forced to make in today&#146;s economy related to paring
unproductive stores, renegotiating leases, and cutting overhead costs were already made or underway
at Kirkland&#146;s over the last 16&nbsp;months. With solid momentum and the merchandise reconnection we have
made with our core customers, we believe we are in the unique position of pursuing a disciplined
strategy with respect to new store openings. These openings will consist of replacements of closing
mall stores and selected new openings in core geographic areas. We expect to return to net store
growth in the 2010 to 2011 timeframe. The expectations set out below for fiscal 2009 reflect our
confidence in our business strategy and our excellent financial condition. While we cannot control
the macroeconomic environment and its effect on consumer spending, we believe we are
well-positioned. We are confident that we have assembled the right team, have the merchandise in
the stores that resonates with and delivers value for customers, and have the operational and
financial resources and requisite discipline to execute in this environment.&#148;


<P align="left" style="font-size: 11pt"><I>Fiscal 2009 Outlook</I>
<BR>
Based on current sales and margin trends, the Company has established the following targets and
expectations for fiscal 2009. These expectations do not account for a year-over-year deterioration
in the macroeconomic environment on the scale experienced in fiscal 2008. Should the recession
continue to worsen throughout fiscal 2009, the Company will revise its expectations accordingly.


<P align="left" style="font-size: 11pt"><B>Store Base: </B>The Company started fiscal 2009 with 299 stores compared with 335 stores a year ago.
For fiscal 2009, the store base is expected to average approximately 30 stores less per quarter
than the comparable quarters of fiscal 2008. Closings for the year are expected to


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>



<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 3
<BR>
March&nbsp;20, 2009



<P align="left" style="margin-left:8%; font-size: 11.5pt"><FONT style="font-size: 11pt">reach approximately 35 to 40 stores with approximately half of those closing
during the first half of 2009 and the other half closing after the holiday season in
January&nbsp;2010. New store openings are expected to be approximately 15 to 20 stores
in fiscal 2009 with the largest concentration in the third and fourth quarters.
</FONT>
<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="87%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Net Sales:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Full year sales are expected to be moderately below fiscal 2008<BR>
based on the smaller store base throughout the year and new store<BR>
openings weighted towards the second half of the year. While first<BR>
quarter sales trends to date are positive, future comparable store<BR>
sales gains are difficult to predict in the current environment.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Margins:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Full year merchandise and operating margins are expected to be<BR>
comparable to or modestly above fiscal 2008 levels. Should the<BR>
economy continue to weaken through the year, merchandise margin<BR>
would most likely come under more pressure compared with operating<BR>
margin, which should continue to benefit from lower store<BR>
occupancy costs and lower depreciation expenses.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Earnings:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Full year pre-tax earnings are expected to be comparable to or<BR>
modestly above fiscal 2008 levels. The Company&#146;s income tax rate<BR>
will be difficult to model in fiscal 2009 due to the status of the<BR>
remaining valuation allowance on the deferred tax assets and the<BR>
accounting rules that govern the timing of any changes to the<BR>
amount of the valuation allowance. Therefore, operating income and<BR>
pre-tax income will be more relevant measurements of business<BR>
performance in fiscal 2009.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Cash Flow:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The Company expects to generate positive cash flow for the year<BR>
with no borrowings expected on its revolving line of credit.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 11pt"><I>Investor Conference Call and Web Simulcast</I>
<BR>
Kirkland&#146;s will host a conference call today, at 11:00&nbsp;a.m. ET to discuss its results of operations
for the fourth quarter of fiscal 2008. The number to call for this interactive teleconference is
(303)&nbsp;262-2053. A replay of the conference call will be available through March&nbsp;27, 2009, by
dialing (303)&nbsp;590-3000 and entering the confirmation number, 11125881#.


<P align="left" style="font-size: 11pt">The live broadcast of Kirkland&#146;s quarterly conference call will be available online at the
Company&#146;s website, <U>www.kirklands.com</U>, or at
<U>http://www.videonewswire.com/event.asp?id=55365</U> on March&nbsp;20, 2009, beginning at 11:00&nbsp;a.m.
ET. The online replay will follow shortly after the call and continue for one year.


<P align="left" style="font-size: 11pt">Kirkland&#146;s, Inc. was founded in 1966 and is a specialty retailer of home d&#233;cor in the United
States.&nbsp; Although originally focused in the Southeast, the Company has grown beyond that region and
currently operates 295 stores in 34 states.&nbsp; The Company&#146;s stores present a broad selection of
distinctive merchandise, including framed art, mirrors, candles, lamps, picture frames, accent
rugs, garden accessories and artificial floral products.&nbsp; The Company&#146;s stores also offer an
extensive assortment of gifts, as well as seasonal merchandise.&nbsp; More information can be found at
<U>www.kirklands.com</U>.


<P align="left" style="font-size: 11pt"><I>Except for historical information contained herein, the statements in this release 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&#146;s actual results to differ materially from forecasted
results. Those risks and uncertainties include, among other things, the competitive environment in
the home d&#233;cor industry in general and in Kirkland&#146;s specific market areas, inflation, product
availability and growth opportunities, seasonal fluctuations, and economic conditions in general.
Those and other risks are more fully described in</I>


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>



<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 4
<BR>
March&nbsp;20, 2009


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt"><I>Kirkland&#146;s filings with the Securities and Exchange Commission, including the Company&#146;s Annual
Report on </I><I>Form 10-K</I><I> filed on May&nbsp;1, 2008. Kirkland&#146;s disclaims any obligation to update any such
factors or to publicly announce results of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.</I>
</FONT>

<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>



<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 5
<BR>
March&nbsp;20, 2009


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<BR>
(dollars in thousands, except per share amounts)
</FONT>
<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">13 Weeks Ended</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">13 Weeks Ended</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">January 31,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">February 2,</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">133,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">138,285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,429</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,277</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Relocation expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Impairment charge</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,641</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,901</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,647</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(178</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,522</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:50px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,489</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Shares used to calculate earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>




<P align="center" style="font-size: 10pt; display: none">1
<!-- PAGEBREAK -->




<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 6
<BR>
March&nbsp;20, 2009


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<BR>
(dollars in thousands, except per share amounts)
</FONT>
<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="55%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">52 Weeks Ended</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">52 Weeks Ended</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">January 31,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">February 2,</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD>Net sales</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="right">$391,277</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">396,701</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Cost of sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">256,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">283,040</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,661</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,484</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Severance charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Relocation expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,306</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Impairment charges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,453</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,741</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25,938</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">644</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(73</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(204</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(469</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(112</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,266</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income tax provision (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(360</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000; border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:50px; text-indent:-10px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(25,906</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Earnings (loss)&nbsp;per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.33</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1.33</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" nowrap align="left" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000; border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Shares used to calculate earnings
(loss)&nbsp;per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,516</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,516</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>




<P align="center" style="font-size: 10pt; display: none">2
<!-- PAGEBREAK -->




<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 7
<BR>
March&nbsp;20, 2009


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
<BR>
(dollars in thousands)
</FONT>
<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">January 31, 2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">February 2, 2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Inventories, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income tax receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:40px; text-indent:-10px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,934</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,002</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Non-current deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other long-term assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,196</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">126,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">122,132</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LIABILITIES AND SHAREHOLDERS&#146; EQUITY</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,786</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,566</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Deferred rent and other long-term
liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,210</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,562</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">126,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">122,132</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-END-</FONT>



<P align="left" style="font-size: 11.5pt">KIRK Reports Fourth Quarter Results
<BR>
Page 8
<BR>
March&nbsp;20, 2009


<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<BR>
(dollars in thousands)
</FONT>
<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000">52 Week Period Ended</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">January 31, 2009</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">February 2, 2008</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net cash provided by (used in):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">29,562</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(4,879</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,762</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash and cash equivalents:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Net increase (decrease)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">30,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(19,538</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,358</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">End of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-END-</FONT>




<P align="center" style="font-size: 10pt; display: none">3




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<P align="left" style="font-size: 10pt"><FONT style="font-size: 10pt"><B>Operator</B>
</FONT>

<P align="left" style="font-size: 10pt">Good day, everyone and welcome to the Kirkland&#146;s Incorporated conference call. Today&#146;s call is
being recorded. At this time for opening remarks and introductions, I would now like to turn the
call over to Mr.&nbsp;Tripp Sullivan of Corporate Communications. Please go ahead, sir.


<P align="left" style="font-size: 10pt"><B>Tripp Sullivan  &#151; Corporate Communications &#151; IR</B>


<P align="left" style="font-size: 10pt">Thank you, Brandy. Good morning and welcome to this Kirkland&#146;s Incorporated conference call to
review the company&#146;s results for the fourth quarter of fiscal 2008. On the call this morning are
Robert Alderson, President and Chief Executive Officer, and Mike Madden, Senior Vice President and
Chief Financial Officer. The results as well as notice to the accessibility of this conference call
on a listen-only basis over the internet were released earlier this morning and the press release
has been covered by the financial media.


<P align="left" style="font-size: 10pt">Except for historical information discussed during this conference call, the statements made by
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&#146;s actual results in future periods to
differ materially from forecasted results. Those risks and uncertainties are fully described in
Kirkland&#146;s filings with the Securities and Exchange Commission, including the Company&#146;s Annual
Report on Form 10-K filed on May&nbsp;1, 2008.


<P align="left" style="font-size: 10pt">With that said, I&#146;ll turn the call over to you Robert.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks Tripp, good morning everyone. We appreciate you joining us today. We&#146;re pleased to
report strong earnings results for both Q4 2008 and fiscal 2008 on top of the positive comparable
store sales performance we announced last month. We also achieved strong improvements in our
merchandise and operating margins versus the prior year. We ended the year in a very solid
financial position having increased our ending cash balance for over $30&nbsp;million from the end of
the prior year.


<P align="left" style="font-size: 10pt">Mike Madden, our CFO, will now walk you through the Fourth Quarter results and our financial
position. Mike?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Thank you, Robert. Good morning. I&#146;ll start with a review of the fourth quarter income
statement. For the fourth quarter ended January&nbsp;31, 2009, we reported net income of $15&nbsp;million or
$0.76 per share, versus net income of $1.5&nbsp;million or $0.08 per share for the prior year quarter.
Net sales for the quarter decreased to $133.6&nbsp;million from $138.3&nbsp;million for the quarter ended
February&nbsp;2, 2008.


<P align="left" style="font-size: 10pt">Comparable store sales increased 5.3% for the quarter. Comparable store sales increased 8.2% in our
mall stores and increased 4% in our off mall stores. The increase in the average ticket was the
primary driver to the comp sales increase. The higher ticket was comprised of a strong increase in
items per transaction offset by a slight decline in the average retail selling price. Transactions
were flat for the quarter, reflecting a slight increase in customer conversion rates, offset by a
slight decline in traffic. The transaction count and average ticket results were consistent between
our off mall and our mall stores. From a geographic standpoint, our best performing area was the
South Central part of the country, including Texas and Louisiana. Our Florida stores had positive
comp sales for the first time in many quarters, but still trailed the overall Company performance.
Our weakest performing area was in the Phoenix/Arizona market.


<P align="left" style="font-size: 10pt">Merchandise categories performing strongest were art, lamps, wall decor, frames, and gift novelty.
The strong results in these categories more than offset the weaker results we had in our holiday
seasonal assortment, which did not meet our expectations. In real estate we closed 22 stores during
the quarter. At the end of the quarter we operated 299 stores, 208 off mall stores and 91 mall
stores, representing a 70% off mall, 30% mall venue distribution. Total square footage under lease
decreased 8% from the prior year, while total store units declined by 11%.


<P align="left" style="font-size: 10pt">Gross profit margin for the fourth quarter increased to 38.6% of sales from 31% in the fourth
quarter of last year. The components of reported gross profit margin were as follows: First,
merchandise margin increased 470 basis points as a percentage of sales as a result of strong
sell-through in our key merchandise categories, resulting in fewer markdowns and less reactive
promotional activity. The value message was prominent in our stores throughout the quarter, in
keeping with our customers&#146; expectations in this difficult environment. We supported that value
message with planned events that were designed to maximize merchandise margin.


<P align="left" style="font-size: 10pt">Second, store occupancy costs decreased 230 basis points as a percentage of sales. This decline
resulted from comp sales leverage, the closure of underperforming stores, favorable lease renewal
terms and our continued shift to less costly but more productive off mall real estate locations.
Third, freight costs decreased 60 basis points as a percentage of sales, reflecting comp sales
leverage, a decline in fuel costs, and the continued shift to direct to store delivery methods from
our distribution center. And lastly, central distribution costs were flat as a percentage of sales,
as compared to the prior year quarter.


<P align="left" style="font-size: 10pt">Operating expenses for the quarter were $31&nbsp;million or 23.2% of sales as compared to $29.3&nbsp;million
or 21.2% of sales in the prior year quarter. An increase in corporate and store level bonus
accruals due to the improvement in our overall operating results was the primary reason for the
change in operating expenses. This factor accounted for 150 basis points of the increase in
operating expense ratio. Secondly, an increase in our workers comp claims reserves due to adverse
development on several outstanding claims accounted for approximately 70 basis points of the
increase in the ratio. Additionally, in the prior year quarter, we recorded a change in estimate
regarding the breakage associated with discount certificates issued to our private label credit
card customers. This item favorably impacted the operating expense ratio in the prior year by
approximately 50 basis points. Excluding these items, operating expenses declined as a percentage
of sales, primarily reflecting the comp sales leverage on fixed expense components such as
corporate payroll, travel, maintenance, and utilities.


<P align="left" style="font-size: 10pt">Depreciation and amortization decreased 40 basis points as a percentage of sales, reflecting the
reduction in capital expenditures during 2008, impairment charges taken in prior periods, and the
decline in the store count over the last two years. Prior year results also included charges
totaling $2.6&nbsp;million related to the impairment of goodwill and the fixed assets of underperforming
store locations. No such charges were recorded during the fourth quarter of 2008. Net interest
expense was lower than the prior year quarter, reflecting zero borrowings on our line of credit in
2008 as compared to high borrowing levels in 2007. We recorded income tax expense of $887,000 or
5.6% of pre-tax income during the quarter versus $3.5&nbsp;million or 70% of pre-tax income in the prior
year quarter.


<P align="left" style="font-size: 10pt">In the prior year, our tax benefit was limited to our ability to carry back losses for two tax
years. This limitation, combined with the evaluation allowance established for our deferred tax
assets resulted in a high effective rate for the fourth quarter of 2007. As a result of our
positive operating performance in 2008, we were able to reverse $3.4&nbsp;million of the valuation
allowance that was established in 2007. As of January&nbsp;31, 2009, we had deferred tax assets valuing
$9.9&nbsp;million, offset by a valuation allowance of 5.4&nbsp;million. Our ability to reverse the remaining
portion of this valuation allowance in future periods will depend on our operating performance and
the resulting levels of taxable income or loss. Net income for the quarter was $15&nbsp;million or $0.76
per diluted share as compared to net income of $1.5&nbsp;million or $0.08 per diluted share in the prior
year quarter.


<P align="left" style="font-size: 10pt">Turning to the balance sheet and cash flow metrics. Inventories at January&nbsp;31, 2009, were $38.7
million or $129,000 per store as compared to $41.2&nbsp;million or $123,000 per store in the prior year.
The increase on a per store basis is primarily due to an increase in average square footage per
store. This level of inventory is consistent with our plan. We plan to end the first quarter of
2009 with inventory levels in the range of $40&nbsp;million to $42&nbsp;million. At year end we had $36.4
million in cash on the balance sheet and zero borrowings outstanding under our line of credit.


<P align="left" style="font-size: 10pt">Currently, net availability under the line of credit is approximately $21.5&nbsp;million. During 2008,
we did not draw on our line of credit facility at any point during the year. Accounts payable level
declined versus the prior year as a result of the reduction in store count and the related
inventory receipt flows. Income taxes payable was $5.3&nbsp;million at the end of 2008 as compared to
receivable of $2.9&nbsp;million in the prior year. This change in tax position was the result of the
rapid improvement in our operating performance combined with limitations on a utilization of the
net operating loss carry forward that was generated in 2007.


<P align="left" style="font-size: 10pt">For the full year, Capital Expenditures were $2.7&nbsp;million, about half of which related to the
construction of three new stores. The remainder of our Capital Expenditures related to the
maintenance of our logistics and information technology infrastructures, and leasehold improvements
to our stores and corporate facilities. During 2008, we also received proceeds from the sale of our
former headquarters building, corporate aircraft and other fixed assets of approximately $3.7
million.


<P align="left" style="font-size: 10pt">The final item I&#146;ll cover before turning it over to Robert relates to our expectations for fiscal
2009. Based on current sales and margin trends, we have established some targets and expectations
for the upcoming fiscal year. These expectations do not account for a year-over-year deterioration
in the macroeconomic environment as was seen during fiscal 2008. Should the recession more severely
impact consumer spending in our stores in the upcoming year, we will revise our expectations
accordingly.


<P align="left" style="font-size: 10pt">As it relates to store count, we began fiscal 2009 with 299 stores compared with 335 stores in the
prior year. For fiscal 2009, the store base is expected to average approximately 30 stores less per
quarter than the comparable quarters of 2008. Closings for the year are expected to reach
approximately 35 to 40 stores with about half of these occurring in the first half of the year, and
the remainder occurring after the holiday season, in January&nbsp;2010. New store openings are expected
to be approximately 15 to 20 in fiscal 2009 with a larger concentration of these openings in the
third and early fourth quarters. Our topline expectations are for total sales to decline moderately
from fiscal 2008 due to the store count decline and new store openings weighted toward the second
half of the year. Comparable store sales thus far in the first quarter are positive and
encouraging; however we think future comparable store sales gains are difficult to predict in the
current retail environment.


<P align="left" style="font-size: 10pt">Full year merchandise and operating margins are expected to be comparable to or modestly above
fiscal 2008 levels. Should the economy continue to weaken during 2009, merchandise margins would
likely come under more pressure than operating margin, which should continue to benefit from lower
occupancy costs and lower depreciation expenses. Full year pre-tax earnings are expected to be
comparable to or modestly above the levels of fiscal 2008.


<P align="left" style="font-size: 10pt">Our income tax rate will be difficult to model in 2009 due to the status of the valuation allowance
on our deferred tax assets and the accounting rules that govern the timing of any changes of the
amount of the valuation allowance; therefore, we are viewing operating income and pre-tax income as
more relevant measurements of our business performance in 2009. We expect to be cash flow positive
in 2009 with capital expenditures for new store openings covered by existing cash flow. We do not
expect any borrowings on our line of credit during 2009. Our total capital expenditures are
expected to be in the range of $9&nbsp;million to $10&nbsp;million which includes 15 to 20 new store
openings. Net of landlord allowances, we expect capital expenditures to be in the range of $5
million to $6&nbsp;million.


<P align="left" style="font-size: 10pt">While on paper this plan represents a further reduction in our store base, we are viewing 2009 as
the year with a store base bottoms out. Our measured reentry into the real estate market takes some
time to gain traction and by the end of 2009, we expect to have deals in the pipeline for early
2010 that will serve to offset some of the late closing in 2009. Our approach to store growth in
the 2009-2010 period will be a much different one that we had in the post-IPO years earlier this
decade. We will be concentrated on a controlled profitable growth, focused on cash flow
accumulation and the replacement of profitable mall stores with off mall locations that have more
upside potential and very selective store openings in core markets.


<P align="left" style="font-size: 10pt">I&#146;ll now turn the call over to Robert for an update on our current business initiatives and our
plans for the upcoming year.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks, Mike. We had an outstanding fourth quarter to cap a very successful 2008. That being
said, Q4 was anything but ordinary. November was somewhat uneventful and in line with expectations,
given the tumultuous events in the financial community during September and October. The month was
notable for a very strong Thanksgiving weekend, which generated hopes for stronger than expected
Christmas seasonal sales; however, December sales were weaker than expected prior to December&nbsp;20 in
Kirkland&#146;s case. An explosion in sales started on December&nbsp;20, and did not wind down until the last
week of January. Those results plus our very successful after Christmas sale events insured a
strong comp for December, Q4, and the year, improved margins that had been challenged by early
December sales, and brought inventory levels into alignment with our year-end plan.


<P align="left" style="font-size: 10pt">There are a few takeaways from the season. First the Christmas seasonal category did not perform in
sales and gross margin as planned, despite being bogged down from the prior year, and with special
attention to pricing to allow necessary promotion as economic conditions definitely impacted
seasonal decorating. Second, our merchandising decision to heavily supplement the seasonal offering
with well priced giftable items was extremely helpful to financial results as that category
delivered strong sales and margin results and drove traffic. Third, throughout both Q4 and the
after Christmas period, we experienced strong sales and margin performance from our core
categories. Fourth, after adding an after Christmas sale event as a prelude to our annual Big Sale,
delivered traffic and strong sales momentum in what turned out to be a critical business period
between December&nbsp;24 and Big Sale start on January 5. Both events provided sustainable inventory
positions on well priced merchandise for a value conscious customer that was suddenly inclined to
spend if the price and intrinsic value is right.


<P align="left" style="font-size: 10pt">We learned some lessons during 2008 but also recognized that every holiday season is different. We
had great success with our seasonal Harvest Halloween offering and expect that to continue into
2009. We expect the major changes as to how we approach the holiday season of 2009 will be a
further reduction in the amount of Christmas seasonal goods and the mix, a significant increase in
the gift category portion, and increased importance of specific timed promotions utilizing our core
categories. As Mike described, 2008 was a real turnaround year. We comped sales for four
consecutive quarters despite the severe second half economic dislocations. We focused intently and
constantly throughout the year on newness, quality, flow, and pricing of the merchandise offering,
and consequently made huge strides in returning the Company to historic product and operating
margins.


<P align="left" style="font-size: 10pt">We strongly reversed the operating loss of 2007 and delivered our best earnings year since 2003
when economic conditions were decidedly different. Most importantly, the combination of better
operating results and steadfastly executing a plan we announced to you in early 2008, the slow
growth downsize and cut expenses, controlled inventories and liquidate unneeded assets, restored
the company&#146;s balance sheet after the 2007 cash burn. We improved our cash position by over $30
million year-over-year and operated our business throughout the entire year without using our line
of credit. 2008 was a tremendous accomplishment and well received in the vendor and landlord
communities.


<P align="left" style="font-size: 10pt">With this call and our end of year filings, 2008 will be officially over. All of our attention is
necessarily on 2009. Your attention naturally is on what you can expect from Kirkland&#146;s in 2009 and
beyond. In our press release earlier today, we set fourth some expectations for the new fiscal year
and Mike expanded on some of them in his comments. I have just a few other observations, all of
which are likewise conditioned on the economy not deteriorating dramatically in 2009. Despite
positive comp sales in Q1 to date, we do expect the year to be difficult on the sales line due to
shredded consumer confidence and diminished financial ability. The employment picture remains grim
at present, and is likely to worsen during the year. There&#146;s little evidence to suggest that
related housing and credit markets will recover in the near term.


<P align="left" style="font-size: 10pt">We have no particular vision into the course of the economy in 2009 or 2010 for that matter, but it
is arguable that current spending actions of epic proportion aimed at fixing the economy, coupled
with a new administration&#146;s policy agenda are delivering mixed signals to markets with uncertain
results, at least in the short to near term. Thus we do not expect an early turn in the economy. We
will continue to manage our business with the restraint suggested by these conditions. Our store
base will be smaller on average throughout the year by about 30 stores, which impacts revenue.


<P align="left" style="font-size: 10pt">In 2009, we will strategically open new stores, but at a rate less than the planned rate of closure
of marginally unproductive stores located mostly in malls. We will continue to carefully renew mall
leases on a short-term basis at much lower rents, which is will support higher operating margins.
We expect to continue to be profitable in 2009 at a level comparable to or modestly above 2008
while operating fewer stores. We expect to generate additional free cash but not at 2008 levels,
since we have no large assets to sell, we&#146;ll pay income taxes without the benefit of a significant
and operating loss carry forward and we&#146;ll open 15 to 20 versus three new stores and have a smaller
store base to operate.


<P align="left" style="font-size: 10pt">We want to emphasize these strategies imply an operating philosophy by Management that&#146;s different
in focus and time frame than in the post IPO years 2002 to 2006, where emphasis was directed toward
year-over-year percentage growth in store units, square footage, comp sales and operating profits.
We have no idea how long the economic downturn will last or how deep it will ultimately be.
Historic metrics for public Company performance and valuation do not seem to be applicable in this
period of economic first impression for most operators and investors. Therefore being cognizant of
our day-to-day enhanced shareholder value, we&#146;re very committed to a course of action that
emphasizes continuing to have no debt of any kind, maximizing cash accumulation substantially
beyond the end of year 2008 balance of $36.4&nbsp;million, continuing to improve merchandising results
and particularly merchandise margin, holding the line on expenses, continuing to rationalize the
store base by closing unproductive stores through natural lease terminations and without additional
cost, moving the balance of the store base off mall as rapidly as prudently possible while taking
advantage of historic opportunities to open stores in outstanding locations, largely at the
landlords&#146; cost and at rental prices not seen since the early 1990&#146;s, and operating the Company
with the goal of maximizing profit while making internal investments in people, systems and process
that takes a long view and increases productivity, and allows the Company to continue to position
for long term success.


<P align="left" style="font-size: 10pt">As a Management team, we&#146;ve done much of the heavy lifting to position the Company to thrive in the
sector as it is reconstituted by economic events and consumer trends over the coming months or
years. We&#146;re very pleased to be where we are financially in today&#146;s economy and look forward to the
challenges that are sure to be presented. I said in the 2008 call about this time last year, that
we were strengthened by our challenges. We expect that to be the case again in 2009, even as we
meet those challenges from a significantly stronger financial position. We thank you for your
interest and time and look forward to seeing you in our stores.


<P align="left" style="font-size: 10pt">Operator, Mike and I are ready to take questions.
<BR>


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">Thank you, sir. We will now begin the question and answer session. (Operator Instructions).
Our first question comes from the line of David Magee with SunTrust Robinson Humphrey. Please go
ahead.


<P align="left" style="font-size: 10pt"><B>Davis Magee  &#151; SunTrust Robinson Humphrey &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Yeah, hi, guys, congratulations on a good quarter.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks David.


<P align="left" style="font-size: 10pt"><B>Davis Magee  &#151; SunTrust Robinson Humphrey &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Could you talk a little bit about with regard to the comp increase, what you&#146;re seeing with
regard to the customers? Are you seeing new faces do you think in the stores taking share from
other companies, or are your existing customers just reacting more now and spending more on more
trips? Any sense to tell that?


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">I think that&#146;s a little difficult to tell right now. Our traffic trends were terrific, and
increasing through the first seven months of last year, and then took a dip as you would expect in
mid September, October and early November time frame and then we were heavily into the season.
We&#146;ve had a little better traffic in the first quarter to date but it&#146;s not particularly better
traffic every day, and some of that traffic has been driven by planned promotions so some of it is
reactive to e-mail blasts that we&#146;ve done to our customers, so David I wouldn&#146;t say that things are
normalizing nor would I say that we particularly know that we have a tremendous number of new
customers we&#146;ve never seen before, but it&#146;s probably some combination of that and selling some more
to the people that we know and have traded with for a long time. time.


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">David the thing that is clear is customers responding to merchandise that we&#146;re offering.
We&#146;ve got a higher margin. We&#146;ve seen that throughout the year and we&#146;ve also got higher emerging
rate which suggests that the customers that are coming in are making a purchase.


<P align="left" style="font-size: 10pt"><B>Davis Magee  &#151; SunTrust Robinson Humphrey &#151; Analyst</B>


<P align="left" style="font-size: 10pt">The weaker dollar aside, are you seeing an opportunity to lower your product acquisition cost
this year given all of the&#151;


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">I think there&#146;s an opportunity. We are certainly not seeing up price pressure that we were
seeing this time last year at the source in China and India. We are actually seeing some better
transportation rates to move the product from source to our distribution center and we think that
represents an opportunity for us on the margin line this year.


<P align="left" style="font-size: 10pt"><B>Davis Magee  &#151; SunTrust Robinson Humphrey &#151; Analyst</B>


<P align="left" style="font-size: 10pt">And lastly, Mike, if you were in our shoes, what would you use for a tax rate assumption for
2009?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Well, it&#146;s really difficult as I said earlier, it&#146;s really difficult for Dick. It&#146;s going to
depend on our performance obviously. I think it just, I&#146;ll put out there, that if we had a year
similar to &#145;08, the tax rate would probably be somewhere near zero because of the valuation
allowance, but that is, it&#146;s hard to pinpoint right now so I would focus on operating income and
pre-tax income as the main metrics for our performance review next year.


<P align="left" style="font-size: 10pt"><B>Davis Magee  &#151; SunTrust Robinson Humphrey &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Great. Thank you. Good luck.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thank you, David.


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">Thank you. Our next question comes from the line of Neely Tamminga with Piper Jaffrey. Please
go ahead.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Great. Good morning and not just a good quarter but congratulations on just an amazing feat. I
think there are companies that are quadruple and factors larger than you guys that could learn a
lot from what you&#146;ve accomplished over the last two years, so just public acknowledgment of that
and it&#146;s just been amazing to watch. Launching into just some of the questions on our minds over
here. Robert, within some of your category performance that you&#146;re seeing strength, are you seeing
kind of a driving merchandising theme that it seems to be emerging by what she is converting on
when she comes into the store? Is it price or is it product? And then within some of the product
categories are you seeing success and maybe contrasting that with product categories are you seeing
less success, is it a price point broad based conversion? Is she gravitating towards the low end of
the price points or is it kind of across-the-board?


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Well, in terms of what I think maybe your first question was sort of what&#146;s working best and
where we&#146;re seeing most success is would that be fair to characterize?


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Yes.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">We&#146;re in sort of the enviable position right now, Neely, where virtually everything is working
well. We&#146;re historically strong on the wall. We didn&#146;t have quite the lamp sales in the first
quarter to date that we would love but we had some late inventory arrivals which I think impacted
that. We&#146;re showing great success in decorative accessories, and our furniture is doing well. Our
wall decor, which is part of our wall group has been especially strong. Probably frames have been
great. Probably the only thing that&#146;s lagging a bit has been textiles in the early part of the
year, and some of that represents the number of SKUs that we&#146;re offering and how we&#146;re approaching
that particular category this season, so across-the-board right now, we&#146;re in a state of a lot of
newness. The ratio of markdown product that is in markdown to full price is very much, is very
favorable for us right now and we&#146;re very clean, and the product that we have in the store we think
is really good and it&#146;s very well priced across-the-board, and the customer has reacted to that,
and I don&#146;t think it&#146;s particularly all the time about price, because while we&#146;ve had success with
some promotional things that we&#146;ve done, such as a sale that we did last week, a one day sale,
we&#146;ve had very strong sales across-the-board across all categories at very strong margins, so
that&#146;s a very good state to be in.


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">And the ticket was up in both the Q4 and the full year, so that speaks to what Robert just
said.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">I guess, Mike, thank you, Robert. For some housekeeping type issues, could you just rattle off
what you would expect the net stores to basically be for the four quarters? I was following some of
your language but just wondering if you could boil it down to in general what net store base would
be per quarter this year would be helpful, at least what you have in the plan and secondly maybe
asking David&#146;s question a little bit differently on the tax rate, what&#146;s the highest tax rate it
could be?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Well, first question, on the store count, I think the way to think about it, and what we said
in the release is if you took the ending store balance at the end of each quarter in &#145;08 last year,
and kind of assumed that the ending store balance in &#145;09 would be about 30 stores less than &#145;08 in
each quarter, that would be the way to think about it. Now, there could be swings of a couple
stores here and there depending on timing of when we get some of these opened and when some of
these close, but that is my best way to tell you to think about that.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">And then you&#146;re opening the 10 to 15 mainly in the back half?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Mainly in the back half, but well 15 to 20 and mainly in the back half but we&#146;ve opened one
year-to-date and there&#146;s some under construction now so there are some in the first half. It&#146;s not
like all of them are in the back half but I would, it&#146;s maybe 60% to 70% of them are.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Okay.


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">And on the tax rate, well, again, I&#146;m kind of waffle a bit because it&#146;s hard to predict how
that&#146;s going to turn, because it depends on operating performance and how much profit we actually
generate in &#145;09. It certainly couldn&#146;t get up to a standard tax rate of 38% or 39% that you would
normally see. I don&#146;t see how our rate would get up to that level, or certainly not above it,
because of the situation we&#146;re in. Most likely between zero and there. I know that&#146;s a wide range.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">It&#146;s narrower, now. All right.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Neely?


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Yes, sir.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">About the openings, I think it&#146;s really hard for us to, well because of the environment it&#146;s
difficult to predict where we&#146;re going to be with some of these openings, because as you would
imagine, developers own projects that have been in motion to open this year and we&#146;re pushed over
from last year. These guys are still having some difficulty getting things done, because of credit
environments, and also leasing up, so they are in a position to open, so new space is a little bit
difficult to know exactly what you&#146;re going to have, and when you&#146;re going to have it, and even on
some of the old space, spaces that would become available, is being delayed or uncertainty is cast
into it by what&#146;s that retail chain going to do. Are they going to Chapter&nbsp;11, or are we going to,
what&#146;s the landlord going to do in terms of being able to get it free to hand it to us to occupy,
so I think we&#146;ve been cautious to say that a lot of this may happen toward the end of the year
because of that.


<P align="left" style="font-size: 10pt"><B>Neely Tamminga  &#151; Piper Jaffray &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Okay. I understand, thank you. Good luck.


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Thanks, Neely.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thank you, we appreciate it.


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">Thank you our next question comes from the line of &#091;Jeremy Jeter with JRS Investments&#093;. Please
go ahead.


<P align="left" style="font-size: 10pt"><B>Ronnie Scott  &#151; JRS Investments &#151; Analyst</B>


<P align="left" style="font-size: 10pt">This is Ronnie Scott with JRS Investments. First of all, to Bob and the team and the whole
Kirkland&#146;s team, congratulations on fantastic performance and what you guys have done to turn
things around. Can&#146;t say enough about it.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks.


<P align="left" style="font-size: 10pt"><B>Ronnie Scott  &#151; JRS Investments &#151; Analyst</B>


<P align="left" style="font-size: 10pt">I&#146;ve got a couple of questions here. On the 15 to 20 stores you think you&#146;ll open in the year,
any plans to own some of those or lease those or just whatever the market dictates, a comment on
that?


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Yes, sir. We don&#146;t own any stores. We do lease those, and we try to drive the most favorable
lease terms that we can. They are typically five year deals with options or they could be a 10&nbsp;year
deal with a kick out. The marketplace in certain markets will dictate which way you go depending on
how good the space is, but I don&#146;t think there will be any circumstance that we&#146;ll actually be an
investor in the real estate.


<P align="left" style="font-size: 10pt"><B>Ronnie Scott  &#151; JRS Investments &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Okay, great. Second thing, your merchandise, what countries, if you could kind of give us a
flavor for percentage most of it comes from, and how do you view the economic picture in those
places and currency, whatever, give us a comment on what you see for &#145;09 there?


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">We&#146;ll continue to source a substantial amount of our merchandise out of China. China still
represents the best place to source at prices that allow us to deliver great value to our
customers. We&#146;ll continue to do some sourcing in India and we have some vendors that work a bit in
Vietnam and Thailand and the Philippines. We do some domestic sourcing, more on wall items than
anything else. I don&#146;t expect that to change very much, and while things are a bit different in
China than they were a year ago, when we were at this time we were pre-Olympics, the dollar was
extraordinarily weak. There was fuel prices and petroleum prices generally were rising putting all
of that putting price pressure, everything that you could think of is going in the wrong direction
in terms of pricing and so we had very difficult issues trying to determine what land would cost us
on everything that we bought. That&#146;s reversed a bit right now and we&#146;ve experienced some factory
closures which have affected a little bit of our sourcing but we don&#146;t anticipate that being a
major problem.


<P align="left" style="font-size: 10pt">We work with major factories pretty much all the time so we don&#146;t see any particular uncertainty
being generated at source for us right now. We&#146;ll have some things late from time to time but
that&#146;s actually normal. So I don&#146;t, even though China&#146;s economy reportedly will not grow at the
same rate that it&#146;s grown in the past several years, it&#146;s still going to perform pretty well and I
don&#146;t expect there to be any problems for us.


<P align="left" style="font-size: 10pt"><B>Ronnie Scott  &#151; JRS Investments &#151; Analyst</B>


<P align="left" style="font-size: 10pt">I see. So in summary, really, the currency and the conditions and so fourth, it really looks
like it could be maybe positive as far as your costs of your stuff coming up for &#145;09 for your
sourcing.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Yeah. I would say in general, as we look at it this moment, the dollar has weakened recently
over where it had moved. That&#146;s going to be, who can say what&#146;s going to happen given the amount of
money we&#146;re printing right now. I don&#146;t know exactly how that&#146;s going to go. I don&#146;t think anybody
does. I expect fuel prices, although they have been moving in our direction for a few months, I
expect as we get into mid year and the latter part of the year that we&#146;ll see stabilization if not
beginning to see some increases again in petroleum costs, so it&#146;s very difficult to tell right now.
The whole world economy is in a state of flux and I think you work as hard as you can at the moment
and try to protect yourself on the downside and keep moving forward.


<P align="left" style="font-size: 10pt"><B>Ronnie Scott  &#151; JRS Investments &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Right.


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">(Operator Instructions). Our next question comes from the line of Brad Leonard with BML
Capital Management. Please go ahead.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Hi guys. First off, congratulations on a great quarter and year. I&#146;m sure you guys have been
working your tails off and it&#146;s appreciated.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks, Brad. Appreciate it.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">You&#146;re welcome. Just real quick, on the closings that we did in Q4 that are going to take
place in the first half, would you say as a large part, are those four wall negative or breakeven?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">I would say for the large part, they&#146;re four wall negative or just right at the breakeven
level, or in some cases, and this is very few of them, they&#146;re mall stores that were at the end of
their lease that we were already working on a replacement for, so they may have been profitable,
but our plan is to replace that with a more profitable off mall location.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Okay. Very good. And then on the store count as far as the 30 less per quarter, is that on a
beginning quarter as a forward look because if I just kind of, if you just do the math, by the end
of the year you aren&#146;t going to be 30 below the 299.


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">That was on an end of quarter basis.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">So you&#146;re saying end of the next year you&#146;ll be 30 below so you think you&#146;ll have 270?


<P align="left" style="font-size: 10pt"><B>Mike Madden  &#151; Kirkland&#146;s, Inc. &#151; CFO</B>


<P align="left" style="font-size: 10pt">Well, and as I said in my comments, yes, it could be a little bit higher than 270, but the
point that we made was by that time, you&#146;re working on deals that you&#146;re going to open in the early
part of &#145;10 and offset that.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Got you. And then just a little bit on the competitive landscape. You&#146;ve had a lot, I added up
some of the doors that have gone dark over the last I guess 12 or 14&nbsp;months when I think about
Bombay, about 500 stores Pier 1, 125 and maybe another 100 or so. Cost Plus 30 and maybe another 30
coming, Linens &#145;n Things, I know it&#146;s not a direct overlap but 500, you guys have closed 50. How
many smaller mom and pops or regional stores have gone dark I don&#146;t know and I haven&#146;t seen a good
number on that but what do you guys think? I mean as far as, if consumer spending is down 10% in
the sector or 15%, how many doors have gone dark in your overlapping category, would you say and
what kind of benefit are you getting or do you expect to get in the future from that?


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">I don&#146;t know the number. And I guess to maybe look at it a little bit different ways that we
don&#146;t spend a lot of time worrying about that or focusing on it because it&#146;s sort of all you can do
to plan your store base, and deal with the a merchandise work that needs to be done and we&#146;re
really focusing on staying on the right things and the right things are merchandise improvement
both on the sales and particularly the margin line, where we think the opportunity remains, and
also improving our store base, and not just changing locations, which is a big part of it, but
making all the existing stores more productive and that is digging in hard on the leadership and
the quality of people that we have, and their ability to do the job and to deliver the results that
we need, and so it&#146;s sort of like tend to knitting and it is what it is because none of that is in
our control, and stay focused with what&#146;s in your control.


<P align="left" style="font-size: 10pt"><B>Brad Leonard  &#151; BML Capital Management &#151; Analyst</B>


<P align="left" style="font-size: 10pt">Okay. Makes sense. Keep up the good work.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thank you very much.


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">Thank you and at this time there are no further questions. I&#146;d like to turn the call back over
to Mr.&nbsp;Alderson. Please go ahead.


<P align="left" style="font-size: 10pt"><B>Robert Alderson  &#151; Kirkland&#146;s, Inc. &#151; President, CEO</B>


<P align="left" style="font-size: 10pt">Thanks everybody, for your interest today and for joining us on the call and we look forward
to seeing you in stores and we&#146;ll talk to you again shortly. Thanks.


<P align="left" style="font-size: 10pt"><B>Operator</B>


<P align="left" style="font-size: 10pt">Ladies and gentlemen, this concludes the Kirkland&#146;s Incorporated conference call. You may now
disconnect. Thank you for using ACT conferencing.



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