<PAGE>

                                                                    EXHIBIT 10.3

                        AMENDMENT TO EMPLOYMENT AGREEMENT

            THIS AMENDMENT is made as of March 31, 2004 by and between
KIRKLAND'S, INC., a Tennessee corporation (the "Company") and REYNOLDS C.
FAULKNER (the "Executive").

            WHEREAS, the Company and Executive are parties to an Employment
Agreement dated as of June 1, 2002 (the "Employment Agreement"); and

            WHEREAS, Section 7.4 of the Employment Agreement provides that the
Company and Executive may amend the Employment Agreement by mutual agreement in
writing; and

            WHEREAS, the Company and Executive wish to make certain changes to
the Employment Agreement.

            NOW, THEREFORE, in consideration of these premises and the mutual
promises contained herein, and intending to be legally bound hereby, effective
January 1, 2003, the Employment Agreement is hereby amended as follows:

            Section 3.2 is deleted in its entirety and replaced with the
following:

      3.2   Annual Bonus. With respect to each fiscal year of the Company ending
      during the Term, Executive will be eligible to receive an Annual Bonus.
      The amount of such Annual Bonus, if any, payable with respect to a
      particular year will be determined by the Compensation Committee of the
      Board (the "Compensation Committee"), in its sole discretion. The
      Compensation Committee may establish specific corporate or individual
      performance goals, the achievement of which may trigger the payment of a
      specific bonus amount, may award an Annual Bonus based simply on its
      assessment of Executive's and/or the Company's performance during the
      applicable year, or may award an Annual Bonus based on a combination of
      subjective and objective factors. If deemed necessary or desirable by the
      Compensation Committee, the payment of any Annual Bonus based upon the
      achievement of performance criteria may be conditioned on the approval of
      the Company's shareholders in accordance with Section 162(m) of the
      Internal Revenue Code (the "Code") and related regulations. In any case,
      any Annual Bonus awarded by the Compensation Committee will be paid as
      soon as practicable following the end of the applicable year.

            The Employment Agreement, as amended by the foregoing changes, is
ratified and confirmed in all respects.

<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed by its duly authorized officer and Executive has executed this
Amendment, in each case as of the date first written above.

                                             KIRKLAND'S, INC.

                                              /s/ Robert E. Alderson
                                             ----------------------------------
                                             Robert E. Alderson
                                             President and Chief Executive
                                               Officer

                                              /s/ Reynolds C. Faulkner
                                             ----------------------------------
                                             Reynolds C. Faulkner