<SEC-DOCUMENT>0001299933-12-002625.txt : 20121126
<SEC-HEADER>0001299933-12-002625.hdr.sgml : 20121126
<ACCEPTANCE-DATETIME>20121126131325
ACCESSION NUMBER:		0001299933-12-002625
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20121120
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20121126
DATE AS OF CHANGE:		20121126

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:			0130

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-49885
		FILM NUMBER:		121223884

	BUSINESS ADDRESS:	
		STREET 1:		2501 MCGAVOCK PIKE
		STREET 2:		SUITE 1000
		CITY:			NASHVILLE
		STATE:			TN
		ZIP:			37214
		BUSINESS PHONE:		615-872-4800

	MAIL ADDRESS:	
		STREET 1:		2501 MCGAVOCK PIKE
		STREET 2:		SUITE 1000
		CITY:			NASHVILLE
		STATE:			TN
		ZIP:			37214

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	KIRKLANDS INC
		DATE OF NAME CHANGE:	19980219
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>htm_46515.htm
<DESCRIPTION>LIVE FILING
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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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	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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	November 20, 2012
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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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	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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	2501 McGavock Pike, Suite 1000, Nashville, Tennessee
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	&nbsp;
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	37214
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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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	615-872-4800
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	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
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	&nbsp;
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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>
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[&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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<B>
	Item 2.02 Results of Operations and Financial Condition.
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On November 20, 2012, Kirkland's Inc. (the "Company") issued a press release and conducted a conference call regarding its sales and earnings results for its third fiscal quarter period ended October 27, 2012 (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.
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	Item 9.01 Financial Statements and Exhibits.
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(d) Exhibits<br><br>99.1 	Press Release dated November 20, 2012 announcing the Company's third fiscal quarter financial results.<br><br>99.2 	Transcript of the November 20, 2012 conference call conducted by the Company. <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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<I>
	November 26, 2012
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<I>
	By:
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	&nbsp;
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<I>
	/s/ W. Michael Madden
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<BR>
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	&nbsp;
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<I>
	Name: W. Michael Madden
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<I>
	Title: Senior Vice President and Chief Financial Officer, and Acting President and Chief Executive Officer
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	Exhibit&nbsp;Index
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	Exhibit No.
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	Description
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	99.1
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	&nbsp;
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<TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
<FONT SIZE="2">
Press Release dated November 20, 2012 announcing the Company's third fiscal quarter financial results.
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	99.2
</DIV>
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	&nbsp;
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Transcript of the November 20, 2012 conference call conducted by the Company.
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<P align="left" style="font-size: 10pt"><FONT style="font-size: 12pt"><img src="e37345-123281141111709316_1.jpg">
</FONT>

<P align="right" style="font-size: 12pt"><FONT style="font-size: 22pt">News Release</FONT>


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    <TD width="13%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>

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<TR valign="bottom" style="font-size: 22pt">
    <TD align="left" valign="top"><FONT style="font-size: 11.5pt">Contact:</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size: 11.5pt">W. Michael Madden<BR>
Senior Vice President &#038; CFO<BR>
(615)&nbsp;872-4800</FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="font-size: 11.5pt">Tripp Sullivan<BR>
Corporate Communications, Inc.<BR>
(615)&nbsp;324-7335</FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 11.5pt"><FONT style="font-size: 14pt"><B>KIRKLAND&#146;S REPORTS THIRD QUARTER 2012 RESULTS</B></FONT>



<P align="left" style="font-size: 14pt"><FONT style="font-size: 11pt">NASHVILLE, Tenn. (November&nbsp;20, 2012) &#151; Kirkland&#146;s, Inc. (NASDAQ: KIRK) today reported
financial results for the 13-week and 39-week periods ended October&nbsp;27, 2012.
</FONT>

<P align="left" style="font-size: 11pt">Net sales for the 13&nbsp;weeks ended October&nbsp;27, 2012, was $96.7&nbsp;million compared with $97.1&nbsp;million
for 13-week period ended October&nbsp;29, 2011. Comparable store sales, including e-commerce, for the
third quarter of fiscal 2012 decreased 4.7% compared with a decrease of 3.6% in the prior-year
quarter. Kirkland&#146;s opened 10 stores and closed 4 during the third quarter of 2012, bringing the
total number of stores to 308 at quarter end.


<P align="left" style="font-size: 11pt">Net sales for the 39-week period ended October&nbsp;27, 2012, increased 1.5% to $285.5&nbsp;million compared
with $281.2&nbsp;million for the 39-week period ended October&nbsp;29, 2011. Comparable store sales,
including e-commerce, for the 39&nbsp;weeks ended October&nbsp;27,&nbsp;2012, decreased 3.2% compared with a
decrease of 6.7% in the prior-year period. The Company opened 25 stores and closed 26 stores during
the 39-week period.


<P align="left" style="font-size: 11pt">The Company reported a net loss of $0.4&nbsp;million, or $0.02 per diluted share, for the third quarter
of fiscal 2012 compared with net income of $1.2&nbsp;million, or $0.06 per diluted share, for the third
quarter of fiscal 2011.


<P align="left" style="font-size: 11pt">For the 39-week period ended October&nbsp;27, 2012, the Company reported a net loss of $0.5&nbsp;million, or
$0.03 per diluted share, compared with net income of $3.9&nbsp;million, or $0.19 per diluted share, for
the 39-week period ended October&nbsp;29, 2011.


<P align="left" style="font-size: 11pt">Robert Alderson, Kirkland&#146;s President and Chief Executive Officer, noted, &#147;Overall results for the
third quarter were in line with our previously issued guidance. We successfully implemented our
merchandise management system as scheduled. Although our outlook remains conservative and somewhat
cautious due to limited visibility less than a month into the quarter, we are focused on maximizing
fourth quarter performance. As we approach fiscal 2013, our priorities for driving future sales
and earnings results continue to be elevating our brand awareness, expanding our e-commerce
business and improving our merchandising process and execution.&#148;


<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">2501 McGavock Pike, Suite&nbsp;1000 &#166; Nashville, Tennessee 37214 &#166; (615)&nbsp;872-4800</FONT>



<P align="left" style="font-size: 10pt"><FONT style="font-size: 11pt">KIRK Reports Third Quarter Fiscal 2012 Results
<BR>
Page 2
<BR>
November&nbsp;20, 2012
</FONT>
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    <TD colspan="3" valign="top" align="left"><I>Fourth Quarter and Fiscal 2012 Outlook</I></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Store Growth:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">For the 14-week period ending February&nbsp;2, 2013 (&#147;the<BR>
fourth quarter&#148;), the Company expects to open 17 new<BR>
stores and close approximately 2 stores. For fiscal 2012,<BR>
this represents 42 new store openings and 28 closings, a<BR>
unit increase of approximately 4.5% and a square footage<BR>
increase of approximately 10%.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD align="left" valign="top"><B>Sales</B>:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">The Company expects total sales for the fourth quarter to<BR>
range between $160&nbsp;million and $163&nbsp;million, inclusive of<BR>
the additional week in the retail calendar this year.<BR>
This implies a comparable store sales decrease of 2% to<BR>
5% using a 13-week to 13-week comparison. Total sales<BR>
for fiscal 2012 are expected to be in the range of $445.5<BR>
million to $448.5&nbsp;million, implying a comparable store<BR>
sales decrease of 3% to 4% on a 52-week to 52-week<BR>
comparative basis.</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">The Company expects earnings per share for the fourth<BR>
quarter to be in the range of $0.71 to $0.76, which would<BR>
equate to earnings per share for fiscal 2012 of $0.67 to<BR>
$0.72. The Company expects its effective tax rate for<BR>
fiscal 2012 to range between 38% and 38.5%.</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">Capital expenditures in fiscal 2012 are estimated to<BR>
range between $30&nbsp;million and $32&nbsp;million. Based on the<BR>
above assumptions, the Company expects to have<BR>
approximately $61&nbsp;million to $64&nbsp;million in cash and cash<BR>
equivalents at year-end fiscal 2012.</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 at 11:00&nbsp;a.m.&nbsp;ET today to discuss the third quarter results.
The number to call for the interactive teleconference is (212)&nbsp;231-2919. A replay of the conference
call will be available through Tuesday, November&nbsp;27, 2012, by dialing (402)&nbsp;977-9140 and entering
the confirmation number, 21575900.


<P align="left" style="font-size: 11pt">A live broadcast of Kirkland&#146;s quarterly conference call will be available online at the Company&#146;s
website <U>www.kirklands.com</U> under Investor Relations or
<U>http://www.videonewswire.com/event.asp?id=90209</FONT><FONT style="font-size: 12pt"></U> </FONT><FONT style="font-size: 11pt">on November&nbsp;20, 2012, beginning
at 11:00&nbsp;a.m.&nbsp;ET. The online replay will follow shortly after the call and continue for one year.
</FONT>

<P align="left" style="font-size: 11pt"><I>About Kirkland&#146;s, Inc.</I>
<BR>
Kirkland&#146;s, Inc. was founded in 1966 and is a specialty retailer of home d&#233;cor in the United
States. Although originally focused in the Southeast, the Company has grown beyond that region and
currently operates 313 stores in 33 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"><FONT style="font-size: 10pt"><I>Forward-Looking Statements</I>
<BR>
<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 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 April&nbsp;12, 2012.
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: 10pt"><FONT style="font-size: 11pt">-MORE-</FONT>



<P align="left" style="font-size: 11pt">KIRK Reports Third Quarter Results
<BR>
Page 3
<BR>
November&nbsp;20, 2012


<P align="left" style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<BR>
(numbers in thousands, except per share amounts)

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="68%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&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="5%">&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">13 Week Period Ended</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">October 27,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">October 29,</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">2012</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2011</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">$</TD>
    <TD align="right">96,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">97,071</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">62,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,938</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">34,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,133</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">31,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,295</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,914</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">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other expense, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</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">Income (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(765</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,920</TD>
    <TD>&nbsp;</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(349</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673</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 (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(416</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,247</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 (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>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.06</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 nowrap align="right">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.06</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
(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>
</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">17,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,918</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">17,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,204</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="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRK Reports Third Quarter Results
<BR>
Page 4
<BR>
November&nbsp;20, 2012
</FONT>

<P align="left" style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<BR>
(numbers in thousands, except per share amounts)

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&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" style="border-bottom: 1px solid #000000">39 Week Period Ended</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">October 27,</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">October 29,</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">2012</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">2011</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">$</TD>
    <TD align="right">285,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">281,175</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">182,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176,109</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">102,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,066</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">94,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,728</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,888</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">Operating income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,528</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,450</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other expense (income), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</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 (loss)&nbsp;before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,566</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,451</TD>
    <TD>&nbsp;</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,108</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,514</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 (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,937</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 (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>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.03</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.20</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 nowrap align="right">$</TD>
    <TD align="right">(0.03</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.19</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
(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>
</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">17,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,930</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">17,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,498</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="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRK Reports Third Quarter Results
<BR>
Page 5
<BR>
November&nbsp;20, 2012
</FONT>

<P align="left" style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
<BR>
(dollars in thousands)

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&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">October 27, 2012</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">January 28, 2012</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">October 29, 2011</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>
    <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>
    <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">$</TD>
    <TD align="right">34,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">83,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">60,343</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">64,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,940</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income taxes receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,479</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">2,664</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">1,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,174</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">9,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,176</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>
    <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">114,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,297</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">76,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,366</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">803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,176</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>
    <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">192,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">202,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">198,251</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>
    <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>
    <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 liabilities:</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:10px; text-indent:-10px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">27,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24,975</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">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,146</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">19,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,805</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,145</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>
    <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">47,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,120</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">42,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,023</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>
    <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">89,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,143</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>
    <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">Net shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">117,108</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>
    <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">192,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">202,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">198,251</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
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    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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    <TD>&nbsp;</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>
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<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-MORE-</FONT>



<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 11pt">KIRK Reports Third Quarter Results
<BR>
Page 6
<BR>
November&nbsp;20, 2012
</FONT>

<P align="left" style="font-size: 11pt">KIRKLAND&#146;S, INC.
<BR>
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<BR>
(dollars in thousands)

<DIV align="center">
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<TR valign="bottom">
    <TD width="62%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&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">39 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">October 27, 2012</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">October 29, 2011</TD>
</TR>

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<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 nowrap align="right">$</TD>
    <TD align="right">(7,430</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,917</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,996</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21,175</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 nowrap align="right">&nbsp;</TD>
    <TD align="right">(16,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,787</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: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 decrease</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48,784</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30,879</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">83,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,222</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">$</TD>
    <TD align="right">34,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">60,343</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>
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<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt">-END-</FONT>




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<P align="center" style="font-size: 10pt"><FONT style="font-size: 12pt"><B>KIRKLAND&#146;S THIRD QUARTER 2012 CONFERENCE CALL</B></FONT>



<P align="center" style="font-size: 12pt"><B>Moderator: Robert Alderson<BR>
November&nbsp;20, 2012<BR>
11:00 am CT</B>


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    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ladies and gentlemen thank you for standing by and welcome to<BR>
Kirkland&#146;s Inc. Third Quarter 2012 Earnings Conference Call.</DIV></TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">During the presentation all participants will be in listen-only<BR>
mode. Afterwards we will conduct a question and answer session. At<BR>
that time if you have a question, please press the 1 followed by<BR>
the 4 on your telephone. And if at any time during the conference<BR>
you need to reach an operator, please press Star 0.</DIV></TD>
</TR>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">As a reminder, this conference is being recorded, Tuesday, November<BR>
20, 2012.</DIV></TD>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">I would now like to turn the conference over to (Tripp Sullivan) of<BR>
(Corporate Communications).</DIV></TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Please go ahead sir.</DIV></TD>
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    <TD>(Tripp Sullivan): Thank you, good morning and welcome to this Kirkland&#146;s conference call to review
the company&#146;s results for the third quarter of fiscal 2012. On the call this morning are
(Robert Alerson), President and Chief Executive Officer and (Mike Madden), Senior Vice
President and Chief Financial Officer.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">The results as well as notice of the accessibility in this conference call on a
listen-only basis over the Internet were released earlier this morning and is my
belief that it has been covered by the financial media. 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.



<P align="left" style="margin-left:10%; font-size: 12pt">Forward-looking statements involve known and unknown risk and uncertainties
which may cause Kirkland&#146;s actual results in future periods to differ materially
from forecast results. Those risks and uncertainties are more fully described in
Kirkland&#146;s filings with the Securities and Exchange Commission including the
company&#146;s annual report on Form&nbsp;10K filed on April&nbsp;12, 2012.



<P align="left" style="margin-left:10%; font-size: 12pt">With that said, I&#146;ll turn the call over to (Mike) for review of the financial
results. (Mike).


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    <TD>(Mike): Thanks (Tripp) and good morning. I&#146;ll begin with a review of the third quarter financial
statements and then finish with financial guidance for the fourth quarter in the full year of
fiscal 2012.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">For the third quarter, net sales were 96.7&nbsp;million a 0.4% decrease versus the
prior year quarter. Comparable store sales, including ecommerce decreased 4.7%.
Ecommerce sales were 3.8&nbsp;million for the quarter, a 76% increase over the prior
year. Comparable (brick and mortar) sales were down 6.6% with average sales per
(brick and mortar) store down 4%. The store (comp)&nbsp;sales decline was driven by
7% decrease in transactions partially offset by slight increase in the average
ticket.



<P align="left" style="margin-left:10%; font-size: 12pt">The decrease in transactions resulted from equal declines in the conversion rate
and the traffic count. The increase in the average ticket was the result of an
increase in items per transaction offset partially by a decline in the average
retail selling price. Sales performance by geographic area was relatively
consistent across the chain. Merchandise categories primarily contributing to
the (comp)&nbsp;decline were decorative accessories, wall d&#233;cor and furniture. In
real estate, we opened ten stores and closed four stores during the quarter,
bringing us to 308 stores at quarter end.



<P align="left" style="margin-left:10%; font-size: 12pt">Eighty-six percent of the total stores at quarter end were off mall and 14% were
located in malls. At the end of the quarter we had 2.2&nbsp;million square feet under
lease an 8% increase over the prior year. Average store size was up 6% to just
over 7100 square feet. Gross profit margin for the third quarter decreased
approximately 200 basis points to 35.2% of sales from 37.2 in the prior year.
The components of gross profit margins were as follows: First, merchandise
margin decreased approximately 120 basis points as a percentage of sales.



<P align="left" style="margin-left:10%; font-size: 12pt">An increase in promotional activity as well the markdown rate as compared to the
prior year lead to the majority of the merchandise margin decline. Inbound
freight container rates also increased relative to the prior year, contributing
approximately 50 basis points to the merchandise margin decline. Second, store
occupancy costs increased approximately 30 basis points as a percentage of
sales, reflecting the (comp)&nbsp;sales decline.



<P align="left" style="margin-left:10%; font-size: 12pt">Third, outbound freight costs increased 20 basis points, reflecting an increase
in ecommerce sales, which carry higher shipping costs. And fourth, central
distribution costs increased 30 basis points versus the prior year quarter,
reflecting the comparable store sales decline combined with the increase in
ecommerce sales.



<P align="left" style="margin-left:10%; font-size: 12pt">Operating expenses for the quarter were 31.6&nbsp;million or 32.7% of sales as
compared to 31.3&nbsp;million or 32.2% of sales for the prior year quarter. The
increase in operating expenses as a percentage of sales related primarily to
(d-leverage) on fixed costs due to the comparable store sales decline.
Depreciation and amortization increased 20 basis points as a percentage of
sales, reflecting an increase in capital expenditures combined with a slight
increase &#151; or decrease in total sales.



<P align="left" style="margin-left:10%; font-size: 12pt">Operating loss for the second quarter &#151; or third quarter was $746,000 dollars or
0.8% of sales as compared to operating income of 1.9&nbsp;million or 2% of sales for
the prior year quarter. We reported an income tax benefit of $349,000 dollars or
45.6% at a pre-tax loss versus an expense of $673,000 dollars or 35.1% of
pre-tax income for the prior year quarter. Net loss for the quarter was $416,000
dollars or 2 cents per share, compared to earning of 1.2&nbsp;million or 6 cents per
share in the prior year quarter.



<P align="left" style="margin-left:10%; font-size: 12pt">At the end of the quarter, there were 17,070,553 shares outstanding. Turning
over to the balance sheet and the cash close statement, at the end of the third
quarter &#151; which is typically our low point during the year &#151;we had $34.3
million dollars in cash on hand, as compared to 60.3&nbsp;million at the end of the
prior year quarter and 83.1&nbsp;million at year-end 2011.



<P align="left" style="margin-left:10%; font-size: 12pt">Notably impacting these comparisons, during the trailing 12-month period, we
repurchased $32&nbsp;million dollars of our common stock as part of our stock
repurchase program, in addition to investing heavily in several strategic
information technology and infrastructure projects. Inventories at the end of
the quarter were 64.2&nbsp;million, compared to 59.9&nbsp;million in the prior year.
Including ecommerce, this represents a 7% increase in total inventory versus the
prior year.



<P align="left" style="margin-left:10%; font-size: 12pt">As the business continues to grow and mature, ecommerce inventories have
increased almost two-fold over last year. At the store level we ended the third
quarter up 2% versus the prior year on a per store basis and down 3% on a per
square foot basis. We ended the quarter on the higher end of our range of
expectations but we are nonetheless comfortable with the levels of inventory we
are carrying into the fourth quarter.



<P align="left" style="margin-left:10%; font-size: 12pt">We expect to end the fiscal year with inventories in the range of 48 to 50
million, the mid-point of which reflects a 3-1/2% increase in inventories over
the prior year, supporting a 4-1/2% increase in the store base and a 10%
increase in square footage. We continue to operate the business without any
long-term debt and no (barrings)&nbsp;were outstanding on our revolving line of
credit at the end of the quarter.



<P align="left" style="margin-left:10%; font-size: 12pt">Capital expenditures were 10.2&nbsp;million for the quarter and included the
following, 6.8&nbsp;million for new store construction, 1.9&nbsp;million for information
technology projects, primarily our (oracle)&nbsp;merchandising system which went live
during November &#151; or October, $500,000 dollars for store improvements including
the introduction of new more flexible merchandise fixtures that allow for better
clarity and presentation as well as the reset and refreshing of many of our
older, smaller locations.



<P align="left" style="margin-left:10%; font-size: 12pt">Five hundred thousand dollars for improvement in our distribution center to
better support workflow and additional space for ecommerce fulfillment and
lastly the remaining $500,000 dollars spent during the quarter, related to
various routine maintenance capital expenditures. The final item I&#146;ll cover
before turning the call over to (Robert), is to provide our guidance for the
fourth quarter in the full fiscal year.



<P align="left" style="margin-left:10%; font-size: 12pt">For the fourth quarter ending February&nbsp;2, 2013, we expect to open 17 stores and
close two stores. As a result, for the full year of fiscal 2012, we will have 42
new stores and 28 closings. This overall store activity equates to unit growth
of approximately 4-1/2% and square footage growth of approximately 10%. We
expect total sales for the 14-week fourth quarter to be in the range of 160 to
163&nbsp;million, reflecting a comparable store sales decrease of 2% to 5% on a
13-week to 13-week comparative basis.



<P align="left" style="margin-left:10%; font-size: 12pt">Compared with sales of 149.1&nbsp;million and a comparable store sales increase of
1.4% in the prior year quarter. This would result in total sales for the full
year to range between 445-1/2&nbsp;million to 448-1/2&nbsp;million and apply comparable
store sales decline of 3 to 4% on a 52-week to 52-week comparative basis. We
expect gross profit margin to be down in the range of 200 basis points versus
the prior year quarter, reflecting a decrease in merchandising margin due in
part to higher inbound freight costs as well as an expected promotional sales
environment, combined with smaller increases in outbound freight, occupancy and
central distribution costs as a percentage of sales.



<P align="left" style="margin-left:10%; font-size: 12pt">Operating expenses for the fourth quarter should be above the prior year quarter
by 9 to 12%, the majority of this increase reflects the extra week in the retail
calendar this year, as well as an increase in the number of stores in operation
and an increase in new store activity during the quarter as compared to last
year. Based on these assumptions, we expect our full year operating margin to be
250 to 290 basis points below fiscal 2011. We expect to report earnings of 71 to
76 cents per share in the fourth quarter, which would result in earnings of 67
to 72 cents per share for the full fiscal year.



<P align="left" style="margin-left:10%; font-size: 12pt">The earnings impact of the extra week in this year&#146;s retail calendar is not
material. The full year tax rate is expected to range between 38 and 38-1/2%.
From a cash flow standpoint, for the full year we expect capital expenditures
totaling 30 to 32&nbsp;million before (landlord)&nbsp;construction allowances for new
stores. And based on our fourth quarter forecast, cash and equivalents are
expected to be between 61 and 64&nbsp;million at the end of the year.



<P align="left" style="margin-left:10%; font-size: 12pt">Thank you and I&#146;ll now turn the call over to (Robert).


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    <TD>(Robert): Thanks (Mike). Third quarter results were in line with or previously issued
(unintelligible). During the quarter traffic was down on a comparable basis almost 4% along
with conversion, which adversely affected transactions at a sufficient level to overcome
modest gains in average ticket and items per transaction. Comparable sales are an approximate
120 basis point deficit and product margin drove the earnings result, inbound freight increase
but wasn&#146;t as significant as expected. Our third quarter results were supported by a strong
across the board performance in art, seasonal, candles and fragrance, lamps, mirrors, floral
and rugs.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">We&#146;ve been looking for improvement in decorative accessories and I think we&#146;re
seeing the beginnings of better business in this important category. Somewhat
new emphasis impulse, ladies accessories continue to show promise. These
positive results were offset by decline in furniture productivity and our
continue to struggle with wall d&#233;cor. Both are a work in progress with
significant attention. (Owing Harvest) delivered a nice comparable sales support
for the very modest increase in the buy for the season.



<P align="left" style="margin-left:10%; font-size: 12pt">(Harvest) performed better than Halloween and we will adjust a mix and content
and amount of spend in subsequent seasons to account for the abnormal amount of
vacant temporary retail space, both primary and secondary that is being leased
for and devoted to selling Halloween products. During the quarter on schedule,
we quietly and successfully implemented our new (oracle)&nbsp;retail management
system. After an intense two-year installation process and a three-year total
project timeline.



<P align="left" style="margin-left:10%; font-size: 12pt">That was a great accomplishment for our company and I&#146;d like to thank our entire
staff for their tireless work on this implementation. Installation of the second
phase, the planning allocation module, is in process and we&#146;ll provide updates
on our progress on subsequent calls. We&#146;re now in position with our technology
additions and replacements to turn even more attention and resources to
opportunities like driving our ecommerce platform and capability, installing
(CRM)&nbsp;and other applications that will help us leverage our foundational
investments and drive sales.



<P align="left" style="margin-left:10%; font-size: 12pt">It&#146;s much to early to describe the multiple benefits that are possible from the
(oracle)&nbsp;driven information but we&#146;ve coupled the technology upgrade with a
strong effort of instilling best practices in our merchandise buying process,
along with additions to our merchandising talent to take advantage of (oracle&#146;s)
benefits to generate more data driven decision making in buying, planning and
allocation.



<P align="left" style="margin-left:10%; font-size: 12pt">(Mike) gave you information on our store openings for the quarter. We replaced
numerous stores in the past several years and we&#146;ll continue to target
opportunities. The quarter produced a number of stores in new markets, which
should be a consistent and evident trend over the next few years. Although we
strive to avoid late-in-the-year openings, we will again open 17 stores in the
fourth quarter but only one store will open after Christmas this year.



<P align="left" style="margin-left:10%; font-size: 12pt">Our new California stores continue to have strong openings and perform well. We
will carefully continue our expansion in the (Central Valley) and Sacramento
areas and begin to look north along the West Coast. New store in strip center
locations in New Jersey during the fourth quarter will be carefully watched for
customer reaction in this new market for Kirkland&#146;s. As we approach 2013, we
will continue to be cautious and conservative on store expansion for a couple of
reasons.



<P align="left" style="margin-left:10%; font-size: 12pt">First, we&#146;re very involved with efforts to improve the productivity of our box
and implementing change in technology and process. Second, we remain very
concerned about a fragile economy that faces some distinct challenges in the
coming months, as it faces the pending fiscal cliff at year-end and prepares to
absorb multiple shocks with healthcare and other regulatory changes. Despite
these challenges, we still expect year-over-year net store growth in fiscal 2013
and at this moment expect square footage growth to approximate that of fiscal
2012.



<P align="left" style="margin-left:10%; font-size: 12pt">Concurrent with store expansion, our management team&#146;s very involved in an
accelerated process aimed at developing a multi-phased major branding and
selling effort as we move ever closer to repositioning our store base from
regional and closed malls into major strip centers. We recognize we are
essentially moving into a new neighborhood that requires us to effectively gain
the attention of old as well as new customers, many of whom have long-term
loyalty to our new retail neighbors.



<P align="left" style="margin-left:10%; font-size: 12pt">And to effectively invite interest and entice such customers to make the overt
choice to stop their vehicle and come into our store. While email and social
network efforts are well developed at Kirkland&#146;s, our customer inboxes and
social network sites are crowded with retail opportunities both promotional and
lifestyle oriented. We recognize the need to intercept with more customers in
more ways to garner their interest and motivate store and online visits.



<P align="left" style="margin-left:10%; font-size: 12pt">Developing our ecommerce capability is one way to help the effort, by providing
an expanded offering in the context of the seamless customer retail experience.
Developing and productively deploying a more effective description of who we are
and what we do very well is of paramount importance. We&#146;re developing methods to
sing louder and more beautifully to gain customer attention and develop a major
national brand that means something to the customer who hasn&#146;t learned about us
during our 40 plus years in regional malls.



<P align="left" style="margin-left:10%; font-size: 12pt">We expect to begin to test the effectiveness of different media opportunities as
well as our early first quarter of next year. That being said, all of our
intentions and efforts are geared toward maximizing the holiday season in the
fourth quarter. Early November traffic and conversion trends have been about the
same as the prior quarter. We&#146;ve shown some improvement since national election
week is behind us. As we said in our press release earlier today, it&#146;s early in
the quarter and there&#146;s limited visibility.



<P align="left" style="margin-left:10%; font-size: 12pt">So we remain cautious and conservative as to the results. We are well prepared
for the holiday with what we believe is a strong, well priced assortment
featuring a substantial amount of new products, attractive, bought-for-the-event
promotions and a floor set that features great values on holiday and gift items
and in practical settings. We have the merchandise messaging and margin to drive
the results. Holiday spending is likely to again be cautious, bill-driven and
more than likely late in the season.



<P align="left" style="margin-left:10%; font-size: 12pt">We also have a strong plan to capture post Christmas business as well. On a
personal note, we announced today that I would take a short absence after
Thanksgiving to accomplish a non-emergency medical procedure and that (Mike
Madden) would assume the interim President/Chief Executive Officer role. No time
is ever perfect in retail but over the next several weeks our primary focus will
be on execution. (Mike) is very capable, highly experienced and very respected.
I&#146;m totally confident he will lead the company very well in my absence.



<P align="left" style="margin-left:10%; font-size: 12pt">Operator we&#146;re prepared to accept questions.

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</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you. Ladies and gentlemen if you&#146;d like to register a<BR>
question, please press the 1 followed by the 4 on your<BR>
telephone. You&#146;ll hear a three-tone prompt to acknowledge your<BR>
request. If your question has been answered and you&#146;d like to<BR>
withdraw your registration, please press the 1 followed by the<BR>
3. And if you are using speakerphone, we ask that you please<BR>
lift your handset before entering your request.</DIV></TD>
</TR>
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    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">One moment please, your first question.</DIV></TD>
</TR>
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    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And our first question comes from the line of (Brad Thomas)<BR>
with (Key Bank Capital Markets). Your line is open, please<BR>
proceed with your question.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Brad Thomas):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thanks, good morning (Robert), good morning (Mike).</DIV></TD>
</TR>
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    <TD align="left" valign="top">Man:
</TD>
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    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Morning.</DIV></TD>
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    <TD>(Brad Thomas): I wanted to first just ask about the store base and the store expansion plans, you
know, (Robert) I think your quote from the prepared remarks was that you want to be more
conservative with your openings going forward. How are you thinking about the opening plans at
this point as you look out to 2013?</TD>
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    <TD>(Robert): I think we believe that we&#146;ll still end up with about the same amount of square footage,
the units may change some. I think we&#146;re &#151; we want to be &#151; we won&#146;t have as many closings so
our net should be a little larger than it&#146;s been the last two to three years. What we want to
be very careful about is that we devote full attention to our box and all the process and
technology changes that we&#146;re trying to accomplish. And we&#146;re moving into some new markets and
we&#146;re also involved in a major (branding)&nbsp;effort and we want to make sure that all that comes
together in the right way.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">So, I think we&#146;ll be very conservative and prudent about the deals and not be
particularly worried about hitting a number and we&#146;ll take it as it comes. And
one of the things that I didn&#146;t mention that we&#146;re very concerned about is the
consistent drift of deals into the late year caused by a variety of reasons and
we&#146;re going to be a little bit more careful about opening late and we&#146;ll black
out some periods and let those deals roll over to the next year if we need to.


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    <TD>(Brad Thomas): And as you all look the impact of new openings on your existing store base, have
you seen a level of cannibalization that may be taking away from the existing store base?</TD>
</TR>

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    <TD>(Mike): (Brad) there&#146;s some, especially when you go into markets and you&#146;re filling them out like
Houston, Dallas, Atlanta, so you can&#146;t avoid some of that but the way we look at it is we want
to end up with more profits coming out of that market and that&#146;s the long-term position we
want to show. But as (Robert) said, we&#146;ve added a lot of new markets in this last class and
we&#146;ll continue to have more of the class represent new markets where there&#146;s little
cannibalization.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">I don&#146;t think the overall affect of cannibalization has been that great, except
for in some select markets whereas I said we&#146;re filling out and there&#146;s a
natural transfer in some of those locations.


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    <TD>(Robert): And then just to follow up on this (Mike), you know, when we think of the company, over
the last five years there was a huge boost to profitability as you&#146;ve shifted stores from mall
locations to off mall locations. You know, as you look at the store portfolio today, are there
any outlying buckets like that that maybe stand out with further room for optimization?</TD>
</TR>

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    <TD>(Mike): You know, I &#151; there&#146;s still some room, we&#146;ve still got about 40 mall stores in the base and
some of those are still on their original rent deal. So as we relocate those over the next few
years, yes there&#146;s some opportunity but stepping back from that group, we have accomplished a
great deal over the last few years. We&#146;ve got our occupancy ratio as a percentage of sales
below 10%. Whereas when we were in the malls entirely, that was in the 13/14% range. And so
we&#146;ve done a great deal so far, there&#146;s still a little bit left there.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">But I think it&#146;s more about going forward to productivity, those units and not
as much about the advantage we get by moving from one location to another.


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    <TD>(Robert): You know, (Brad) I also mentioned there&#146;s sort of a bucket of 20 or so early off mall
stores that we&#146;ll put in lifestyle centers and I think those represent an opportunity to
relocate into a more productive box. The market suggests that that&#146;s possible and to, you
know, gain some of those sort of mall store advantages that you were talking about.</TD>
</TR>

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    <TD>(Brad Thomas): All right, great. Thanks so much and best of luck this holiday season and best
wishes to you (Robert) as you take your leave.</TD>
</TR>

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    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thanks. I appreciate it so much (Brad).</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And our next question comes from the lines of (Nealy Tamengo) with<BR>
(Piper Jeffrey), your line is open, please proceed with your<BR>
question.</DIV></TD>
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    <TD>(Nealy Tamengo): Great, good morning you guys. I&#146;d love to dig in a little bit more on the ecom
side of your business, I know it&#146;s very, very small but it&#146;s obviously growing fairly rapidly
so I didn&#146;t know if you had any metrics around some of the site visits or who you&#146;re actually
seeing come into your ecom site (Mike) and if that&#146;s giving you guys some encouragement as you
go into some new markets? And I have a couple follow ups.</TD>
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    <TD>(Mike): Sure. I&#146;ll cover a few things there. Our site visits are up quite a bit, it&#146;s in the range
of 50% and it has a lot to do with the fact that about this time last year, we launched a
major marketing blitz of sorts online. We &#151; up until that point, we didn&#146;t do any real (page)
search, advertising or even a lot of search engine optimization, that is now in place and
starting to gain some traction so that&#146;s a big reason for the increase in the visits. We&#146;ve
also been able to increase our (skew)&nbsp;count, it&#146;s 25% higher than it was this time last year.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">We&#146;ve got more to offer online and we&#146;re starting to learn a lot more about what
promotions work best online, that&#146;s been a big part of the last 12&nbsp;months is
measuring the different promotions that we run and how successful they are and
then learning from that and applying it going forward. That&#146;s been a big
improvement and it&#146;s a way we can kind of drive sales when we want to drive
sales. There&#146;s some back-end things that we&#146;re working on, expanding the
navigation on the site, there&#146;s a lot of opportunity there to allow our
customers to navigate easier.



<P align="left" style="margin-left:10%; font-size: 12pt">Especially when you look at our art category with so many different themes and
varieties to choose from and we launched our mobile site in August &#151; or back in
August which opened up the site, you know, in a more workable way to smartphone
users and they can buy online. So we still got a lot to do, we&#146;re not where we
want to be, we&#146;ve got a huge project list that we&#146;re having to prioritize and
choose from going into next year but it&#146;s all good &#151; it&#146;s great stuff and we&#146;re
excited about the business.


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    <TD>(Nealy Tamengo): Okay, that&#146;s really encouraging. And then just a follow up, I know it&#146;s very near
term, can you just remind us how you guys are positioned for black Friday and kind of what you
historically do, are you doing anything differently for kind of the black Friday weekend this
weekend? That would be helpful. Thanks.</TD>
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    <TD>(Robert): Well we constantly change the type of promotions that we offer and the timing and
sequence of coupons and our email and, you know, I think we&#146;re &#151; have learned that there&#146;s
sort of a flow to the weekend and some of the major boxes that open at midnight on the prior
day or now I think Target&#146;s going to be open all day on Thursday, those guys are going to get
their visits. And we tend to get them a little later in the morning through about 6 pm.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">And so we&#146;ve learned, you know, sort of timing, you know, what hours are the
high sales activities, be able to time our activities and scheduling and all
those other things that contribute to sales to those &#151; to the time. So we&#146;ve
also learned that, you know, you&#146;ve got to offer a deal that really looks good
in comparison to what&#146;s going on in the world because there&#146;re a lot of very
extravagant percentage off opportunities being offered and sometimes those are
real prices and sometimes they&#146;re not. And we try to make sure that the customer
understands the value involved in that.



<P align="left" style="margin-left:10%; font-size: 12pt">So it&#146;s a constant &#151; (Nealy) as you know, it&#146;s a constant learning process and
no season is ever the same and no black Friday weekend is ever the same but we
feel like we&#146;ve got a great array of merchandise for the weekend and we hope we
get our share.


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    <TD>(Nealy Tamengo): Okay, we do too. Just one little follow-up question for the calendar for, you
know, obviously it&#146;s so key in terms of (sheer)&nbsp;traffic and what it means to you guys from
your quarter&#146;s perspective. You know, the calendar at the face value seems to be quite
favorable with the extra day and the full week and what have you but it can also cause a
little bit of lull into our shopping period during the holiday.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">Just wondering how you guys might be attacking that, it sounds like you might
just going to be (halting)&nbsp;those promotions through your email function which is
something you have today versus even where you were the last time we saw this
calendar but just kind of curious how you&#146;re going to be (flowing)&nbsp;those promos
for a bit longer, kind of extended (traffic)?


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    <TD>(Robert): Well we&#146;ve seen the calendar shift as an opportunity and have tried to adjust our
messaging and offerings to the customer accordingly but you&#146;re right, it tends to be not as
important as you think it&#146;s going to be, at least that&#146;s been my experience over a number of
years. The customer does seem to take a pause so you have to give them an opportunity and one
of the things that we try to do is use the power of our new ecommerce platform to combine with
store promotions to help that period.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">I hope we get a lot of extra bounce from it and we&#146;ll see, we&#146;ve certainly tried
to prepare for it.


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    <TD>(Mike): And (Nealy) one thing to add to that is that the last weekend before Christmas is a full
shopping weekend this year which, you know, that will be a big focus because last year,
Christmas Eve fell on Saturday and you just didn&#146;t get the benefit of that.</TD>
</TR>

</TABLE>


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    <TD>(Nealy Tamengo): Absolutely, very back-end (related). Well best of luck to you guys and (Robert) as
much as we like (Mike), we want you back so come back soon. Okay? All right, thanks guys.</TD>
</TR>

</TABLE>

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    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you, I appreciate your kind note this morning. Thank you so much.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD colspan="3" valign="top" align="left">(Nealy Tamengo):You bet.</TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And our next question is one of (Anthony Lebozinski) with (Sedonia and Company), your line is open, please proceed<BR>
with your question.</DIV></TD>
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    <TD>(Anthony Lebozinski): Yes, good morning. Just wanted to follow up in regards to your comment about
elevating your brand awareness, I know earlier in the year you guys tried a mini catalog which
had some mixed results with so &#151; I was just wondering if you could give us more color on that
topic please?</TD>
</TR>

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    <TD>(Robert): Well we are &#151; we&#146;re trying to understand how to best present the company and what it
really stands for to the retail universe and recognizing that if we start to make ourselves
known in the retail communities that we&#146;re in, (visa vi) the major retail boxes that we share
shopping centers with, we have to have a voice that is outstanding and the way that we present
our company and talk about it has to be very focused and effective.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">So we&#146;re working with some people who do this for retail companies and we&#146;re
deep into the process, we&#146;ll start next year to test some of the things that
we&#146;ve worked on and we&#146;ll do some media tests and I think the opportunity for us
is to make many more customers aware of Kirkland&#146;s so that we become an
attractive alternative when they make a trip to the shopping center. They may
not know us from our mall years but we like to position our real estate with
those tenants and so now it&#146;s our responsibility to make our message equally as
good or if not better.



<P align="left" style="margin-left:10%; font-size: 12pt">So we&#146;re not expecting to change the world with that (Anthony) in the first
year, it&#146;s a building process. You don&#146;t build a brand over night and we had an
opportunity to do that for more than 40&nbsp;years and regionally (close)&nbsp;malls but
really wasn&#146;t necessary. We had 1000 plus people come by our storefront everyday
and walk in our doors simply because we were there and our money was used by the
mall developer to advertise shopping centers. So that&#146;s not something that we
have a great deal of history with or are very accomplished with at this point.
But we intend to get better at it very quickly.


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    <TD>(Anthony Lebozinski): Okay, thank you for that and I know you&#146;re done with the initial
implementation of the (oracle)&nbsp;system, can you give us a timeframe or some color at least on
the next IT system initiatives?</TD>
</TR>

</TABLE>


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    <TD>(Mike): Sure. The &#151; I think we mentioned in the comments, there&#146;s a phase II to the (oracle)
implementation, we implemented the foundational system in October, which was a big deal and
there&#146;s a lot of new functionality within that, but phase II is taking our planning and
allocation process and using the (oracle)&nbsp;system for that which we currently have our own
systems designed for that, the (oracle)&nbsp;system&#146;s much more robust and we&#146;ll add a lot of
capability there. On the, you know, I mentioned ecom earlier during (Nealy&#146;s) question,
there&#146;s a lot going on there.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">You know, third party delivery of products is on the schedule in ecom and more
ability for the customer to find the product they&#146;re looking for and getting it
however they&#146;d like and we want shipping to store, we do a lot of that now but
we want the customer to have a choice in how they buy online. And there&#146;s a lot
of technology that goes into making that happen.
<BR>
And then (Robert) mentioned (CRM), customer relationship management software at
the store level allowing us to collect more information about our customers and
apply it, you know, to our buying decisions and our promotional, you know,
strategy going forward with that richer, deeper information at the customer
level. And those are the priorities for 2013.


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    <TD>(Anthony Lebozinski): Okay, that&#146;s very helpful and as far as store openings for the rest of the
year, are these primarily in existing markets or I think you mentioned the store in New Jersey
but the other new markets that you&#146;re entering?</TD>
</TR>

</TABLE>


<P>
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<TR valign="top" style="font-size: 12pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Mike): There&#146;s several in New Jersey, as (Robert) mentioned California, working our way up the
valley, filling out in Sacramento, we&#146;ve got some immature markets in Colorado, New Mexico and
out west so and then just continuing to work into the Mid-Atlantic, we mentioned New Jersey
but we&#146;re really under stored in Virginia, Maryland, Pennsylvania &#151; those markets are
priorities.</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Anthony Lebozinski): Okay, well thank you and good luck to you guys, especially you (Robert).</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you (Anthony) we appreciate it so much.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">As a reminder, ladies and gentlemen, to register for a<BR>
question or a comment you may press the 1 followed by the 4 on<BR>
your telephone.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And our next question comes on the line of (Joan Storms) with<BR>
(Web Busch), your line is open, please proceed with your<BR>
question.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Joan Storms):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Hi, good morning.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Morning.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Joan Storms): Just a follow up on the sort of, you know, what the steps being taken from the
merchandising perspective to sort of get closer to that, you know, positive (comp)&nbsp;as we go
forward and I know part of that had to do with, you know, getting the (oracle)&nbsp;merchandising
plan and allocation portion of that launch so I was wondering if you might address, you know,
and also like how the decorative accessories, if you&#146;re seeing some improvement there, what
that&#146;s looking like for the holiday?</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Robert): Well I think a (Joan) most of that is directed around process, I mean (oracle)&nbsp;is just
been turned on and we&#146;re &#151; we know how to run it, we know how to get the information from it
and use it in our daily activities but in terms of being able to really change the world with
that, that&#146;s &#151; next two years we&#146;ll get better and better as we go. In the meantime, I think
we said there are a couple of things that we&#146;ve been trying to do.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">One is that we&#146;ve been trying to develop and add a plan for adding talent to the
group and we&#146;re underway with that and when we have an opportunity to or the
need to make an announcement, that we will. The second part of that is about
installing best practices if you will, better process and looking at our
inventory mix and what we sell from a much more data driven view point,
Kirkland&#146;s for many years has really been focused on finding constant new
product offerings.



<P align="left" style="margin-left:10%; font-size: 12pt">And sometimes in a &#151; when an economic environment that is a little bit more
rich, that&#146;s a great thing to do. Sometimes when it&#146;s in a little bit more
restricted environment, it makes sense to use data extremely well, moderate the
amount of new that represents risk and continue to bring items in that represent
great selling opportunities that still have punch going forward. And that&#146;s
really about building a better core assortment and that&#146;s what we&#146;re involved in
right now.



<P align="left" style="margin-left:10%; font-size: 12pt">And I think when you see the world as core and then several other layers to
that, it can soon modify how you spend your money. And it tends to constantly
remind you to allocate risk in that inventory spend and the most advantageous
way and with the most amount of information that you possibly can as to history
and the probability of success. So I think the process part for us over the next
six months to a year is going to be the most important part of that and we&#146;ll
blend the new talent and the new information in as that become available to us.



<P align="left" style="margin-left:10%; font-size: 12pt">One of the big opportunities for us in combining process and information from
(oracle)&nbsp;and one that I think it will help categories where we tend to
occasionally find struggles is that when we are able to build store specific
inventory &#151; store specific inventory mix for each of our stores with better
information and present product with a greater propensity to be sold in that
store, I think we&#146;re going to profit immeasurably.



<P align="left" style="margin-left:10%; font-size: 12pt">I don&#146;t think that&#146;s a long way away and it&#146;s something that we&#146;re putting a lot
of focus, effort and energy into. On the deck side, I think it&#146;s a lot about the
core business, modifying or controlling our risk and really understanding the
level of spend that we need to make in that category relative to the whole. So I
think we&#146;re seeing progress there. I think we&#146;re actually seeing progress in a
wall decor, especially in large wall d&#233;cor pieces. So it&#146;s a constant effort to
make all 13 categories go in the right direction.



<P align="left" style="margin-left:10%; font-size: 12pt">And I think we&#146;re seeing improvement. I hope we&#146;ll be able to report that to you
shortly.


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Joan Storms): Okay, great that&#146;s very helpful, thank you and good luck during the holiday season
and good luck to you (Robert) as well.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you so much.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">And our next question I think is one of (Bill Dezellan) with (Titan<BR>
Capital Management). Please proceed with your question.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Bill Dezellan): Thank you. First of all, relative to the recent bump up that we have seen in
housing activity or at least a discussion about how to improve housing activity, have you seen
any signs that that&#146;s flowing through in a favorable way to Kirkland&#146;s?</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Robert): I don&#146;t think we have specifically seen it and I think the improvement that we see in the
press at this point is still relatively modest and represents improvement over historic lows
and certainly doesn&#146;t represent the kind of new housing development that tends to drive retail
sales. I think the first people that see it are the Home Depots and Lowe&#146;s of the world and
some of the builders who are positioned with capital to be able to take advantage of changes.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">When we look at realtor information, I think what we&#146;re seeing right now, (Bill)
more than new stuff is a change or an increase in the sales rate of older homes.
In other words, people flipping those homes. It&#146;s a little bit difficult right
now to tell how much of that is bank activity, your bank sellers and how much of
that represents an across the board change in the economy. So I think that will
become more transparent over the next several months. We certainly hope there&#146;s
an improvement and look forward to seeing that in our stores.



<P align="left" style="margin-left:10%; font-size: 12pt">The one thing that we always say is that we offer a great opportunity to
customers to improve their existing home at a great value in terms of price and
the impact that they can make relative to redecorating or improving their home
for a relatively small amount of money.


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Bill Dezellan): And then secondarily is you&#146;ve mentioned in the opening remarks that you have new
stores that you&#146;re opening, they&#146;re entering new markets. Does this &#151;and that that would be
an even more predominate theme going forward &#151; does that imply to us that we should have
lower expectations for productivity of the new stores at opening and a little slower ramp than
what we&#146;ve come to believe or and understanding to be your model? And if that&#146;s the case, then
how does that enter into your conservatism that you reference for openings next year or not?</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Mike): (Bill) intuitively you would think that and I follow your logic. What we&#146;ve seen in
comparing new markets with existing markets in our last couple of classes of new stores would
suggest that there&#146;s not much difference in the productivity. That on average, you know, the
new markets are doing just as well as the existing and we will continue to monitor that
obviously going forward, we&#146;ll have a better read of it as we see how New Jersey stores open
and these additional California stores open.</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>But so far we don&#146;t &#151; I haven&#146;t seen a reason to adjust that expectation for productivity out of
the new stores just because they&#146;re going to be a little bit weighted in new markets.</TD>
</TR>

</TABLE>

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Bill Dezellan):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Great, thank you both and best wishes with your recovery (Robert).</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):<BR>
Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you so much (Bill).<BR>
Our next question comes from the line of (David McGee) with (Suntrust Robertson Humphrey), your line is open,<BR>
please proceed with your question.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(David McGee):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Yes Hi, good morning guys.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Morning (David).</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(David McGee): I just want to ask a question about what you&#146;re seeing competitively going into the
holidays here, you know, I know it&#146;s difficult out there, I&#146;m curious if you think is it worse
year-to-year and, you know, is there something different about how folks are going to market
relative to how they went last year or was it earlier this year? I&#146;m just looking for more
color on the competition please.</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Robert): We did our floor set a week to ten days later this year than we did last year in an
effort to continue to drive our everyday core business a little bit longer and because we had
a considerable amount of Halloween harvest, a period of, I don&#146;t know six weeks or so where
that was on the floor. So, you know, we were trying to define or separate a little bit of the
seasons. I don&#146;t know that that helped us any but we have seen a lot of early, large percent
off promotions and what seems to be an opportunity or an effort to push black Friday back to
black August the 15 if they could I guess.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:10%; font-size: 12pt">I mean it&#146;s &#151; I don&#146;t know how far back it goes but there seems to be an effort
to try to get in front of other retailers with opportunities. That&#146;s kind of
what we&#146;ve seen. I don&#146;t think the season overall will be dramatically more
promotional than it has been for the last two or three because it&#146;s been very
promotional.

<DIV align="center">
<TABLE style="font-size: 12pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="17%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(David McGee):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Okay. Well thanks (Robert) and take care of yourself (here).</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">(Robert):
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thank you buddy, I appreciate it.</DIV></TD>
</TR>
<TR valign="bottom" style="font-size: 12pt">
    <TD align="left" valign="top">Operator:
</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">There appear to be no further questions on the phone lines,<BR>
(unintelligible)&nbsp;I&#146;ll turn the call back over to you.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>(Robert): Okay, thanks very much everybody. We look forward to talking with you on the next call.
Bye-bye. Have a great holiday.</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">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operator: Ladies and gentlemen that does conclude the conference call for today. We thank you for
your participation. Will you please disconnect your lines.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 12pt">END




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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
