News Release

KIRKLAND’S REPORTS FOURTH QUARTER AND ANNUAL RESULTS

NASHVILLE, Tenn. (March 10, 2011) — Kirkland’s, Inc. (NASDAQ: KIRK) today reported financial results for the 13-week and 52-week periods ended January 29, 2011.

Net sales for the 13-week period ended January 29, 2011, were $139.6 million compared with $142.8 million for the 13-week period ended January 30, 2010. Comparable store sales for the fourth quarter of fiscal 2010 decreased 7.9% compared with a 10.2% increase in the prior-year quarter. The Company opened 10 stores and closed 6 stores during the fourth quarter to end the period with 300 stores.

Net sales for the 52-week period ended January 29, 2011, were $415.3 million compared with $406.2 million for the 52-week period ended January 30, 2010. Comparable store sales for fiscal 2010 decreased 0.5% compared with an 8.4% increase in fiscal 2009. The Company opened 38 stores and closed 17 during fiscal 2010.

The Company reported net income of $14.4 million, or $0.70 per diluted share, for the fourth quarter of fiscal 2010 compared with net income of $22.1 million, or $1.08 per diluted share, for the fourth quarter of fiscal 2009. For fiscal 2010, the Company reported net income of $26.4 million, or $1.28 per share, compared with net income of $34.6 million, or $1.71 per diluted share, in the prior year.

Income tax expense for the fourth quarter of fiscal 2010 included a net benefit of $0.8 million related to an adjustment to the Company’s prior year income tax provision partially offset by an adjustment to the state tax rate applied to the Company’s deferred tax assets. Excluding the impact of these items, adjusted net income for the fourth quarter of fiscal 2010 was $13.6 million, or $0.66 per diluted share (adjusted). Income tax expense for the fourth quarter of fiscal 2009 included a benefit of approximately $3.3 million related to the reversal of the valuation allowance on the Company’s deferred tax assets established in prior periods. Excluding the impact of this item, adjusted net income for the fourth quarter of fiscal 2009 was $18.8 million, or $0.92 per diluted share (adjusted).

The Company believes that presenting adjusted net income and earnings per share for its 2009 and 2010 periods to reflect more normalized tax rates is instrumental in evaluating the Company’s performance. See “Reconciliation of Non-GAAP Financial Information” below.

Robert Alderson, Kirkland’s President and Chief Executive Officer, said, “Our fourth quarter results were in line with the sales we previously reported and certainly affected by the tough comparisons we faced this year. We managed the promotional environment well during the quarter, had a strong performance from our Christmas merchandise, and finished the year with inventory levels on plan. Our store base

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2501 McGavock Pike, Suite 1000 ¦ Nashville, Tennessee 37214 ¦ (615) 872-4800

KIRK Reports Fourth Quarter Results
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March 10, 2011

growth resulted in an increase in total square footage of 14%, and we are encouraged about the early results from our 2010 store class.

“As we enter fiscal 2011, comparable store sales trends continue to be challenging given that comparable store sales were up 19% at this time last year. Based on quarter-to-date sales and merchandise margin trends, we are cautiously optimistic about our prospects for the first quarter. We are also encouraged by early signs of improvement in our all-important framed art category.”

Fiscal 2011 Performance Goals

First Quarter Fiscal 2011 Outlook

The Company issued guidance for the first quarter ending April 30, 2011, of net income of $0.10 to $0.14 per diluted share, compared with $0.32 per diluted share a year ago. Net sales are expected to be $94 million to $96 million, with a comparable store sales decrease in the high-single-digit range, compared with net sales of $93.5 million and a comparable store sales increase of 12.6% in the prior-year period. The Company expects to open approximately 3 stores during the quarter, and close 6 to 8 stores during the quarter.

Investor Conference Call and Web Simulcast

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replay of the conference call will be available through Thursday, March 17, 2011, by dialing (402) 977-9140 and entering the confirmation number, 21510653.

A live broadcast of Kirkland’s quarterly conference call will be available online at the Company’s website www.kirklands.com under Investor Relations or http://www.videonewswire.com/event.asp?id=76716 on March 10, 2011, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue for one year.

Reconciliation of Non-GAAP Information
This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). The non-GAAP measures are “adjusted net income” and “adjusted diluted earnings per share” and are equal to net income, and diluted earnings per share excluding adjustments to the Company’s valuation allowance for deferred tax assets, adjustments related to the prior year tax provision, adjustments to the state tax rate applied to the Company’s deferred tax assets, and certain income tax credits related to prior periods. Management uses these measures to focus on normalized operations, and believes that it is useful to investors because it enables them to perform more meaningful comparisons of past, present and future operating results. The Company believes that using this information, along with the corresponding GAAP measures, provides for a more complete analysis of the results of operations by quarter. Net income and earnings per share are the most directly comparable GAAP measures. Below is a reconciliation of the non-GAAP measures to their most comparable GAAP measures:

Kirkland’s, Inc. was founded in 1966 and is a specialty retailer of home décor in the United States. Although originally focused in the Southeast, the Company has grown beyond that region and currently operates 296 stores in 30 states.  The Company’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.  The Company’s stores also offer an extensive assortment of gifts, as well as seasonal merchandise.  More information can be found at .

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’s actual results to differ materially from forecasted results. Those risks and uncertainties include, among other things, the competitive environment in the home décor industry in general and in Kirkland’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’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K filed on April 15, 2010. Kirkland’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.

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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)

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KIRK Reports Fourth Quarter Results
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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)

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KIRK Reports Fourth Quarter Results
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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS
(dollars in thousands)

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KIRK Reports Fourth Quarter Results
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KIRKLAND’S, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(dollars in thousands)

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