|

Management Team

Robert E. Alderson
President and Chief Executive Officer

W. Michael (Mike) Madden

Senior Vice President and
Chief Financial Officer

Adam C. Holland
Vice President of Finance

Y
 Safe Harbor Statement

Except for historical information contained herein, the statements in this

presentation are forward-looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements involve known and unknown risks and uncertainties,
which may cause Kirkland's actual results in future periods to differ
materially from forecasted results. Those risks and uncertainties 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.

4
 Kirkland¶s: A New Kind of Growth

Unique merchandising strategy

³We were value before value was hot´

Strong customer demographics

Higher loyalty & frequent visits

Store base transition and rationalization

Initiated well ahead of the curve

Financially well-positioned

No debt, strong cash flow, excellent cash position

Opportunity for disciplined, profitable growth

s
 Priority #1

Capitalize on improved merchandising

performance and execution

Increase margin

Leverage vendor relationships for exclusive product

Enhance the gift offering with unique items and
special buys

Provide innovative promos

GOAL: Increase profitability!


 Merchandising Principles

Emphasis on key items rather than themed category presentations

Product reflects current styles, but not a trend leader

Strong value proposition ± 44 years of demonstrating value to

customers

Collaborative product development

Constant flow of fresh and unique merchandise

Ever changing mix creates a fun, engaging customer experience ±

encouraging frequent return visits

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 Ever-Changing & Diverse Merchandise Mix

Approx. 3,500 to iscal 2009 et Sales Mix

4,000 SKUs per
store
Y

s

Items vs. broad   

assortments   Ã
4|
 Ã

Traditionally-  ×

styled product

 ×

  


Significant selling  
   
   |s

space devoted to
gifts and seasonal
merchandise

×
 Product Offering


 Store Experience

Easy to shop:

Convenient: off-mall locations + strong co-tenants

Inviting: creative visual merchandising = ³treasure hunt´

Fun: fresh, new product + hot, frequent promotions

Renewed effort to provide superior customer service


 Priority #2

Reach out to new customers

E-mail database growth ± currently 2.5+ million
customers

Re-launch E-Commerce capability
Reserve online for in-store pick up went live in Q2, 2009
Online direct to customer planned for late 2010

Social networking and community sites
MyKirklands.com; Facebook

GOAL: Increase profitability!

|
 Our Customer

Who Is The Typical Kirkland¶s Customer?

Female

25 ± 55 years old

Responds well to value message

³Middle America´

||
 Priority #3

Resume net growth of store base and improve the

quality of the existing store base

Fill in proven markets

Replacements of low-risk, strong cash flow-producing stores in
current markets

Reduce occupancy costs with off-mall stores

Favorable lease extensions

Close underperformers regardless of venue

GOAL: Increase profitability!

|Y
 Real Estate Strategy ± Venue Mix

Focus on off-mall began in 2003

Better store-level economics

Larger than mall stores

Current off-mall footprint ranges from 7,000 sf to 10,000 sf

Store base is now 77% off-mall

Real estate opportunities:

Market dominant strip centers

Outparcel locations within a dominant open air complex

Regional outlets

|4
 Real Estate Strategy ± Venue Mix

Kirkland's Store Mix

(Store Count) Off-Mall
Mall

79 137
181
241 214
210 208 213 217
168
121
91
66 64

2004 2005 2006 2007 2008 2009 Q1 2010

End of Fiscal Year / Period

|s
 Real Estate Strategy

New store growth

1. Replacements of successful mall stores with new
off-mall locations

2. Focus on proven geographical markets

3. Lower occupancy costs

4. Attractive return on initial investment

5. Dominant strip centers with high traffic and value

co-tenancy

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 Representative Recent Store Construction

|Ã
 New Store Economics

Kirkland¶s store model features strong cash flow and ROI

Cash investment:
Net Fixed Assets $125,000
Net Inventory 100,000
Total $225,000

Estimated year 1 performance:

Sales $1,500,000
Store Contribution $270,000
% of Sales 18%
Year 1 ROI 120%

Class of 2009 (18 stores) run rates suggest year 1 results will exceed this
model

|×
 Opportunity for Profitable Growth


 


 
 

 
 


 
 

  




O

  
 
  

|
 Priority #4

Infrastructure to support future growth

Existing logistics infrastructure will service new
store growth for foreseeable future

Rollout of new point of sale software and
hardware planned for 2010

2010 selection of enterprise and financial system

$5 to $7 million in systems investment in 2010

GOAL: Increase profitability!

|
 Priority #5

Maintain financial prudence

Operating expense control

Capital spending must meet high hurdle

Continue to build additional cash flow through
improved operating results

No debt

GOAL: Further strengthen balance sheet

and return on capital

Y
 Financial Objectives

Capitalize on financial position by deploying cash

productively

New store growth

High-return technology investments

Improve financial results:

Sales

Merchandise margin

Continue to leverage supply chain

Lower fixed costs -- occupancy

Tight management of SG&A

Y|
 Financially Well-Positioned

Took actions in advance of economic downturn

$76MM in cash to begin 2010

Ample credit line availability, with no borrowings

currently outstanding or expected

Flexible credit facility in place through October 2011

with no financial covenants

Anticipate strong positive cash flow in 2010

YY
 Financial Update

Turnaround year in 2008

Improved financial performance and solidified balance sheet

Strong financial performance in 2009

Profitable in every quarter

Earned $1.42 per share (adjusted for tax rate), best annual
performance as a public company

Positive trends continue into 2010

Achieved highest first quarter earnings since inception

Earned $0.32 per share for Q1 2010

Y4
 Key Performance Metrics ±2009

52-Week Period Ended

Jan 30, Jan 31, Feb 2,
2010 2009 2008
Comparable Store Sales +8.4% +3.6% (13.3%)
Gross Profit Margin 41.5% 34.2% 28.7%
Operating Margin 11.6% 2.5% (6.5%)
Diluted Earnings Per Share $1.71 $0.47 $(1.33)
Adjusted Diluted Earnings $1.42 $0.30 N/A
Per Share
Cash ï


$76,412 $36,445 $5,820
Inventory ï


$39,355 $38,686 $41,246
Inventory Turnover (ttm) 4.50 4.37 4.20
GMROI (ttm) 5.73 4.70 3.99

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 Strong Inventory Productivity

   
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 APPENDIX A: Q1 2010 Income Statement

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 APPENDIX C: Q1 2010 Cash Flow

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