The turnaround effort continues at home decor retailer Kirkland's (NASDAQ:KIRK).

That's not the most inspiring thing to say. If I'd said "the turnaround continues," I'd feel much better. Including the word "effort" changes everything.

When same-store sales decrease 6.1% after declining 5% in the previous year's quarter, investors aren't happy. When the company owes its $0.07 of EPS growth entirely to the net effects of unredeemed guest cards and discount certificates, investors wonder whether the turnaround is really happening.

When the CEO says that "we still have significant work and opportunity ahead of us," investors wonder whether the opportunity is large enough to reward the amount of work required. After all, the company has been in turnaround mode since about 2004.

When the CEO says that the company hired key people to "bring us closer to assembling the team to lead our turnaround," investors probably get a little nervous. Shouldn't the turnaround team have been in place a while ago? The stock price has been falling, and investors can't wait forever to reap the benefits of a turnaround.

Or can they?

The top five investors in Kirkland's hold just less than 71% of the shares, and some have held those shares since the company's IPO in 2003. If they have a patient streak -- a very wide one -- maybe they can wait for the rewards.

Is the turnaround finally starting to turn?
It's tough to really know. But despite the difficulties outlined above, the release did contain some positives.

After adjusting for the gift-card and discount-certificate "breakage" -- customers' failure to redeem those items -- gross margins rose from 34.9% to 37.7%. That's very encouraging. If the company can lean less on discounts in the future by offering the right merchandise, this number should continue to rise.

Kirkland's is also getting out of the mall. Management will open 40 new off-mall stores and close 40 stores, mostly mall-based locations, in 2007. It's expensive in there, and probably not attracting the ideal customers -- same-store sales for mall-based stores declined 8.4% during the quarter.

The environment has been brutal for home decor retailers, and management expects more of the same going forward. Its competitors, Pier 1 (NYSE:PIR), Restoration Hardware (NASDAQ:RSTO), Cost Plus (NASDAQ:CPWM), Bed Bath & Beyond (NASDAQ:BBBY), and Williams-Sonoma (NYSE:WSM), have faced the same headwinds, but not all have seen their stock price fall. And it's hard to get inspired by earnings guidance of ($0.10) to $0.10. That's a wide range, with plenty of room for uncertainty. At this point, I'd rather wrap myself in a blanket, lie on my couch pillows, and watch if to see if the turnaround is really unfolding.

For more on the home-decor saga, check out:

Two Motley Fool newsletters recommended Bed Bath & Beyond: Stock Advisor and Inside Value. Both are available free for 30 days by clicking on those pretty blue links.

Retail editor David Meier loves a good turnaround situation. He does not own shares in any of the companies mentioned. He is currently ranked 582 out of 24488 investors in The Motley Fool's CAPS rating service. You can view his TMF profile here. The Fool takes its disclosure policy very seriously.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.