Kirkland's, Inc. (Nasdaq: KIRK) ("Kirkland's Home" or the "Company"), a specialty retailer of home décor and furnishings, announced financial results for the 14-week and 53-week periods ended February 3, 2024.

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Fourth Quarter 2023 Summary

-- Net sales were $165.9 million, with comparable sales on a 13-week comparison increasing 1.7%.

-- Gross profit margin of 32.0%.

-- Operating income of $10.7 million, a $13.9 million improvement quarter-over-quarter.

-- Operating cash flow of $28.2 million.

-- Adjusted EBITDA of $14.2 million.

-- Closed 9 stores during the period.

-- Ended the year with a cash balance of $3.8 million and $34.0 million in outstanding debt.

Fiscal Year 2023 Summary

-- Net sales were $468.7 million, with comparable sales on a 52-week comparison decreasing 4.8%.

-- Gross profit margin of 27.1%.

-- Operating loss of $24.4 million, an $18.3 million improvement year-over-year.

-- Adjusted EBITDA of $(8.4) million.

-- Closed 16 stores and relocated one store to end the year with 330 stores.

Management Commentary

"Fiscal 2023 was a year of significant change across our entire organization that culminated in a positive holiday sales season and healthy momentum to build off of going into 2024," said Amy Sullivan, CEO of Kirkland's Home. "The fourth quarter marked our first full quarter of capitalizing on the strategic repositioning initiatives we've implemented, which generated positive comparable sales results, strong gross margins, and healthy operating cash flow. Although we remain in the early stages of our strategic repositioning, we are pleased with the results we were able to generate to close out the year.

"As we move into fiscal 2024, we will continue prioritizing targeted engagement with our customer base and have been pleased with the in-store traffic levels we've sustained to start the year. Consumers remain highly price sensitive, and while we continue to see dampened demand for larger ticket items, the demand for seasonally relevant décor and accessories remains high, which is more than offsetting the lower average ticket trends we're experiencing thus far. E-commerce traffic has been challenging in comparison to stores to start the year, and we are adjusting our promotional and marketing plans as well as making technical enhancements to support profitable sales growth online. We remain vigilant in managing our expenses, both operating and capital, as top line and margin improvements continue to take hold.

"Overall, we are pleased with the direction Kirkland's Home is headed, and we believe there are opportunities for us to capitalize on and return to profitable growth. With additional capital to improve our liquidity position, a strategy that is generating positive momentum, and a nimble team in place focused on operational excellence, we believe we are well positioned heading into fiscal 2024 and beyond. We remain committed to achieving our long-term strategic goals and unlocking the true potential of Kirkland's Home."

Fourth Quarter 2023 Financial Results

Net sales in the fourth quarter of 2023 (14 weeks) were $165.9 million, compared to $162.5 million in the prior year quarter (13 weeks). The net sales increase was primarily driven by $6.6 million of net sales for the 53rd week of fiscal 2023 and growth in same-store sales, partially offset by the impact of store closures. On a 13-week comparison, comparable same-store sales increased 1.7%, including a 8.3% decline in e-commerce sales. The increase was primarily driven by an increase in store traffic and conversion, partially offset by a decrease in average ticket.

Gross profit in the fourth quarter of 2023 was $53.0 million, or 32.0% of net sales, compared to $40.3 million, or 24.8% of net sales in the prior year quarter. The improvement as a percentage of net sales was primarily a result of improved merchandise margin, favorable outbound freight costs and favorable distribution center costs.

Operating income in the fourth quarter of 2023 was $10.7 million compared to operating loss of $3.2 million in the prior year quarter. The increase was primarily a result of the aforementioned increase in gross profit and lower operating costs.

EBITDA in the fourth quarter of 2023 was $13.9 million compared to $2.0 million in the prior year quarter. Adjusted EBITDA in the fourth quarter of 2023 was $14.2 million compared to $2.6 million in the prior year quarter.

Net income in the fourth quarter of 2023 was $10.1 million, or earnings of $0.78 per diluted share, compared to a loss of $3.8 million, or a loss of $0.30 per diluted share in the prior year quarter.

At February 3, 2024, the Company had a cash balance of $3.8 million, with $34.0 million of outstanding debt under its $90.0 million senior secured revolving credit facility and no borrowings under its $12.0 million "first-in, last-out" delayed-draw, asset-based term loan. As of March 21, 2024, the Company had $40.0 million of outstanding debt under its senior secured revolving credit facility and $5.0 million in borrowings under its "first-in, last-out" delayed-draw, asset-based term loan.

Fiscal Year 2023 Financial Results

Net sales in 2023 (53 weeks) were $468.7 million, compared to $498.8 million in the prior year (52 weeks). The net sales decrease was primarily driven by a decrease in same-store sales and the impact of store closures, partially offset by net sales of $6.6 million for the 53rd week of fiscal 2023. On a 52-week comparison, comparable same-store sales decreased 4.8%, which included a 9.8% decrease in e-commerce sales. The decrease was primarily driven by a decline in traffic and a decrease in average ticket, partially offset by increased conversion.

Gross profit in 2023 was $127.0 million or 27.1% of net sales, compared to $119.8 million, or 24.0% of net sales, in 2022. The improvement as a percentage of net sales was primarily a result of improved merchandise margin, partially offset by the deleverage of fixed cost components on the lower sales base.

Operating loss in 2023 was $24.4 million compared to operating loss of $42.8 million in 2022, due to the increase in gross profit dollars and lower operating costs, including reduced advertising and corporate compensation and benefits expense.

EBITDA in 2023 was a loss of $10.6 million compared to a loss of $24.2 million in 2022. Adjusted EBITDA in 2023 was a loss of $8.4 million compared to a loss of $21.3 million in 2022.

Net loss in 2023 was $27.8 million, or a loss of $2.16 per diluted share, compared to net loss of $44.7 million, or $3.52 diluted loss per share, in 2022.

Investor Conference Call and Web Simulcast

Kirkland's Home management will host a conference call to discuss its financial results for the fourth quarter and full year ended February 3, 2024, followed by a question-and-answer period with President and CEO, Amy Sullivan, and EVP and CFO, Mike Madden.

Date: Thursday, March 21, 2024 Time: 9:00 a.m. Eastern Time Toll-free dial-in number: (855) 560-2577 International dial-in number: (412) 542-4163 Conference ID: 10186597

Please call the conference telephone number 10-15 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at (949) 574-3860.

The conference call will be broadcast live and available for replay hereand via the investor relations section of the Company's website at www.kirklands.com. The online replay will follow shortly after the call and continue for one year.

A telephonic replay of the conference call will be available after the conference call through March 28, 2024.

Toll-free replay number: (877) 344-7529 International replay number: (412) 317-0088 Replay ID: 1935201

About Kirkland's, Inc.

Kirkland's, Inc. is a specialty retailer of home décor and furnishings in the United States, currently operating 330 stores in 35 states as well as an e-commerce website, www.kirklands.com, under the Kirkland's Home brand. The Company provides its customers an engaging shopping experience characterized by a curated, affordable selection of home décor and furnishings along with inspirational design ideas. This combination of quality and stylish merchandise, value pricing and a stimulating in-store and online environment provides the Company's customers with a unique brand experience. More information can be found atwww.kirklands.com.

Forward-Looking Statements

Except for historical information contained herein, certain statements in this release, constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the Company's quarterly financial and accounting procedures. Forward-looking statements deal with potential future circumstances and developments and are, accordingly, forward-looking in nature. You are cautioned that such forward-looking statements, which may be identified by words such as "anticipate," "believe," "expect," "estimate," "intend," "plan," "seek," "may," "could," "strategy," and similar expressions, involve known and unknown risks and uncertainties, many of which are outside of the Company's control, which may cause the Company's actual results to differ materially from forecasted results. Those risks and uncertainties include, among other things, risks associated with the Company's liquidity including cash flows from operations and the amount of borrowings under the secured revolving credit facility, the Company's actual and anticipated progress towards its short-term and long-term objectives including its brand strategy, the risk that natural disasters, pandemic outbreaks (such as COVID-19), global political events, war and terrorism could impact on the Company's revenues, inventory and supply chain, the continuing consumer impact of inflation and countermeasures, including raising interest rates, the effectiveness of the Company's marketing campaigns, risks related to changes in U.S. policy related to imported merchandise, particularly with regard to the impact of tariffs on goods imported from China and strategies undertaken to mitigate such impact, the Company's ability to retain its senior management team, continued volatility in the price of the Company's common stock, the competitive environment in the home décor industry in general and in the Company's specific market areas, inflation, fluctuations in cost and availability of inventory, increased transportation costs and potential interruptions in supply chain, distribution systems and delivery network, including our e-commerce systems and channels, the ability to control employment and other operating costs, availability of suitable retail locations and other growth opportunities, disruptions in information technology systems including the potential for security breaches of the Company's information or its customers' information, seasonal fluctuations in consumer spending, and economic conditions in general. Those and other risks are more fully described in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K filed on April 4, 2023 and subsequent reports. Forward-looking statements included in this release are made as of the date of this release. Any changes in assumptions or factors on which such statements are based could produce materially different results. Except as required by law, the Company 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.

Contact: Kirkland's Home Gateway Group, Inc. Mike Madden Cody Slach and Cody Cree (615) 872-4800 KIRK@gateway-grp.com (949) 574-3860

KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OFOPERATIONS (In thousands, except per share data) 14-Week Period 13-Week Period Ended Ended February 3, January 28, 2024 2023 Net sales $ 165,946 $ 162,477 Cost of sales 112,919 122,192 Gross profit 53,027 40,285 Operating expenses: Compensation and benefits 23,055 22,038 Other operating expenses 17,931 18,634 Depreciation (exclusive of depreciation included in cost of sales) 1,051 1,185 Asset impairment 325 1,624 Total operating expenses 42,362 43,481 Operating income (loss) 10,665 (3,196) Other expense, net 749 409 Income (loss) before income taxes 9,916 (3,605) Income tax (benefit) expense (201) 188 Net income (loss) $ 10,117 $ (3,793) Earnings (loss) per share: Basic $ 0.78 $ (0.30) Diluted $ 0.78 $ (0.30) Weighted average shares outstanding: Basic 12,924 12,754 Diluted 13,025 12,754

KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OFOPERATIONS (In thousands, except per share data) 53-Week Period 52-Week Period Ended Ended February 3, January 28, 2024 2023 Net sales $ 468,690 $ 498,825 Cost of sales 341,700 379,036 Gross profit 126,990 119,789 Operating expenses: Compensation and benefits 82,152 85,231 Other operating expenses 62,863 69,183 Depreciation (exclusive of depreciation included in cost of sales) 4,522 6,055 Asset impairment 1,867 2,071 Total operating expenses 151,404 162,540 Operating loss (24,414) (42,751) Other expense, net 2,818 1,400 Loss before income taxes (27,232) (44,151) Income tax expense 519 543 Net loss $ (27,751) $ (44,694) Loss per share: Basic $ (2.16) $ (3.52) Diluted $ (2.16) $ (3.52) Weighted average shares outstanding: Basic 12,871 12,703 Diluted 12,871 12,703

KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) February 3, January 28, 2024 2023 ASSETS Current assets: Cash and cash equivalents $ 3,805 $ 5,171 Inventories, net 74,090 84,071 Prepaid expenses and other current assets 7,614 5,089 Total current assets 85,509 94,331 Property and equipment, net 29,705 38,676 Operating lease right-of-use assets 126,725 134,525 Other assets 8,634 6,714 Total assets $ 250,573 $ 274,246 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 46,010 $ 43,739 Accrued expenses 23,163 26,069 Operating lease liabilities 40,018 41,499 Total current liabilities 109,191 111,307 Operating lease liabilities 99,772 114,613 Revolving line of credit 34,000 15,000 Other liabilities 4,486 3,553 Total liabilities 247,449 244,473 Net shareholders' equity 3,124 29,773 Total liabilities and shareholders' equity $ 250,573 $ 274,246

KIRKLAND'S, INC. UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) 53-Week Period 52-Week Period Ended Ended February 3, January 28, 2024 2023 Cash flows from operating activities: Net loss $ (27,751) $ (44,694) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property and equipment 11,980 16,522 Amortization of debt issuance costs 124 91 Asset impairment 1,867 2,071 Loss on disposal of property and equipment 9 185 Stock-based compensation expense 1,186 1,961 Changes in assets and liabilities: Inventories, net 9,981 29,958 Prepaid expenses and other current assets (2,525) 5,448 Accounts payable 2,186 (18,192) Accrued expenses (3,146) (4,742) Operating lease assets and liabilities (8,585) (6,269) Other assets and liabilities 198 (490) Net cash used in operating activities (14,476) (18,151) Cash flows from investing activities: Proceeds from sale of property and equipment 148 59 Capital expenditures (4,779) (8,120) Net cash used in investing activities (4,631) (8,061) Cash flows from financing activities: Borrowings on revolving line of credit 64,000 60,000 Repayments on revolving line of credit (45,000) (45,000) Debt issuance costs (1,175) — Cash used in net share settlement of stock options and restricted stock (84) (2,383) Proceeds received from employee stock option exercises — 16 Repurchase and retirement of common stock — (6,253) Net cash provided by financing activities 17,741 6,380 Cash and cash equivalents: Net decrease (1,366) (19,832) Beginning of the year 5,171 25,003 End of the year $ 3,805 $ 5,171 Supplemental schedule of non-cash activities: Non-cash accruals for purchases of property and equipment $ 504 $ 699 Non-cash accruals for debt issuance costs 1,180 —

Non-GAAP Financial Measures

To supplement our unaudited consolidated condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the related earnings conference call contain certain non-GAAP financial measures, including EBITDA, adjusted EBITDA and adjusted operating income (loss). These measures are not in accordance with, and are not intended as alternatives to, GAAP financial measures. The Company uses these non-GAAP financial measures internally in analyzing our financial results and believes that they provide useful information to analysts and investors, as a supplement to GAAP financial measures, in evaluating the Company's operational performance.

The Company defines EBITDA as net income or loss before interest and the provision for income tax, which is equivalent to operating income (loss), adjusted for depreciation and asset impairment, adjusted EBITDA as EBITDA with non-GAAP adjustments and adjusted operating income (loss) as adjusted EBITDA including depreciation.

Non-GAAP financial measures are intended to provide additional information only and do not have any standard meanings prescribed by GAAP. Use of these terms may differ from similar measures reported by other companies. Each non-GAAP financial measure has its limitations as an analytical tool, and you should not consider them in isolation or as a substitute for analysis of the Company's results as reported under GAAP. The Company's non-GAAP adjustments remove stock based compensation expense, due to the non-cash nature of this expense, and remove severance and lease termination costs, as those expenses can fluctuate based on the needs of the business and do not represent a normal, recurring operating expense.

The following table shows a reconciliation of operating income (loss) to EBITDA, adjusted EBITDA and adjusted operating income (loss) for the 14-week and 53-week period ended February 3, 2024 and the 13-week and 52-week period ended January 28, 2023:

KIRKLAND'S, INC. UNAUDITED NON-GAAP MEASURE RECONCILIATION (In thousands, except per share data) 14-Week 13-Week 53-Week 52-Week Period Ended Period Ended Period Ended Period Ended February 3, January 28, February 3, January 28, 2024 2023 2024 2023 Operating income (loss) $ 10,665 $ (3,196) $ (24,414) $ (42,751) Depreciation 2,862 3,597 11,980 16,522 Asset impairment(1) 325 1,624 1,867 2,071 EBITDA 13,852 2,025 (10,567) (24,158) Non-GAAP adjustments: Total adjustments in cost of sales(2) — — — 46 Stock-based compensation expense(3) 295 501 1,186 1,961 Severance charges(4) 38 63 995 839 Total adjustments in operating expenses 333 564 2,181 2,800 Total non-GAAP adjustments 333 564 2,181 2,846 Adjusted EBITDA 14,185 2,589 (8,386) (21,312) Depreciation 2,862 3,597 11,980 16,522 Adjusted operating income (loss) $ 11,323 $ (1,008) $ (20,366) $ (37,834)

(1) Asset impairment charges are related to property and equipment, software costs, cloud computing implementation costs and other assets. Asset impairment was previously shown as a non-GAAP adjustment. The current presentation includes asset impairment as a reconciling item between operating income (loss) and EBITDA. Prior periods have been reclassified to conform to the current period presentation. (2) Costs associated with asset disposals, closed store and lease termination costs. (3) Stock-based compensation expense includes amounts amortized to expense related to equity incentive plans. (4) Severance charges include expenses related to severance agreements and permanent store closure compensation costs.

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