"Our team is obviously very disappointed with the first-quarter results," president and COO Catherine David remarked, bemoaning that leadership "took our eye off the ball" and failed to deliver on presentation, price and product. Kirkland's posted a net loss of $7.5 million, or 38 cents per share, more than double the $3 million loss (18 cents per share) registered a year earlier.

Store traffic was so weak that management advised analysts of the torpid start during a mid-March conference call. "I think we were pretty much on target with the severity of the trend described," said David on Friday. CEO Robert Alderson was equally blunt, offering that, "we have some big challenges ahead" that he anticipates will not be overtaken by mid-year.

According to Alderson, rising energy costs, the housing slump and increasing, voracious competition are all dogging the Nasdaq-listed company, which was founded in 1966 in downtown Jackson by Chairman Emeritus Carl Kirkland. Declining disposable income is alarming for a chain whose customers "don't need anything we sell to sustain life; just to make it better," noted Alderson. In that environment, "tragic trends may not reverse in the near term," he acceded