JACKSON, TN-Kirkland’s is shifting its focus away from mall-based units and will have a majority of its stores in off-mall locations by the end of the year, executives said at its second quarter conference call.

Now with 188 mall stores and 154 off-mall units, the home furnishings chain will open 20 off-mall units and will close three by the end of the year, making the larger, more profitable format the larger part of its store count. During the last quarter, the company closed opened nine units and closed five.

“We are repositioning our focus from malls to off malls, and will be expanding in core markets,” said Robert Alderson, CEO. Sales in off-mall locations have held up better than in mall stores, he noted.

In all, Kirkland’s will open 50 to 55 new stores this year, down from the 60 units projected earlier this year, because of delays in shopping center construction. The other openings will take place in 2007, Alderson said.

The shift is part of a turnaround effort that is just getting under way, and should show results in 2007. Other initiatives include refocusing merchandising on three distinct styles–formal, updated and soft–and working on inventory controls to ensure a deep selection in core items.

Net sales for the second quarter ended July 29, 2006, were $91 million, up 4.8% from the second quarter of 2005. Comparable store sales for quarter decreased 9% versus the previous year. The chain posted a net loss of $5.6 million for the quarter compared with a net loss of $5.7 million for the prior-year period.

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