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What: Shares of home decor retailer Kirkland's (NASDAQ:KIRK) plummeted 30% on Thursday after its quarterly results and outlook missed Wall Street expectations.

So what: Kirkland's shares have been sluggish over the past several months on concerns over mounting losses, and today's Q3 results -- loss of $0.02 per share on revenue of $129.2 million -- coupled with downbeat guidance suggest that things aren't turning anytime soon. In fact, same-store sales grew just 1.8% in Q3 (versus an increase of 6.3% in the prior-year quarter) while gross margins slipped 180 basis points over the year-ago period, reinforcing worries about the company's competitive position and cost structure going forward.

Now what: Management now sees Q4 EPS of $0.88-$0.95 on revenue of $197 million-$200 million, versus the consensus of $1.11 and $200.13 million, respectively. "Our revised guidance assumes traffic challenges persist," said President and CEO Mike Madden. "Yet the bulk of the holiday selling season is ahead of us and we believe we have a strong and engaging holiday assortment as evidenced by our continued strength in conversion. We're also encouraged by the performance of our 2015 class of stores and will enter Thanksgiving with 11% more stores open versus last year." More important, with Kirkland's continuing to boast a rock-solid balance sheet to go along with its severely beaten stock price, the downside might be limited enough to bet on that bullishness.

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.