Pier 1 Comps Tank 12 Percent

Numbers Drop Across The Board For Specialty Retailer

Forth Worth, Texas — Pier 1 stated that slow customer response to its three-month-old advertising campaign left store traffic sparse during its first fiscal quarter of 2006, resulting in a comp-store decline of 12 percent.

The company also reported a net loss of $12.5 million, and total sales declined 6.1 percent to $406 million from $432 million last year.

In fact, it was generally a swing from black to red across the board at the specialty retailer of home furnishings. Operating income at Pier 1 dropped from $11.7 million to a loss of $12.5 million; income per diluted share fell from 13 cents to a loss of 14 cents, and average gross margin contracted 510 basis points or 5.1 percentage points from 39.8 to 34.7 percent.

Selling, general and administrative expenses, a number that ideally goes down for a business, rose at the retailer last quarter, widening 380 basis points, or 3.8 percentage points from 32.4 to 36.2 percent.

During the company's conference call last week, Marvin Girouard, chairman and CEO, stated that second quarter earnings would come in between a 3 cent gain and a 7 cent loss per share.

“We are seeing some incremental improvement in sales and traffic, and we continue to closely monitor inventories. We project second quarter comparable-store sales to decline in the mid to high single-digit range, and given the continuing promotionally driven sales, gross profit is estimated to be in a range of 34 to 32 percent. Our financial guidance for second quarter sales is dependent upon the continuation of improvement in customer traffic; and gross profit projections are dependent upon the mix of promotional- and regular-priced merchandise sold,” he said.

Pier 1 plans to hold its annual shareholders meeting at 11 a.m. on June 30 in Fort Worth.

Pier 1 Imports Inc.

Qtr. 5/28 (x000) 2005 2004 % change
Sales $405,709 $432,027 (6.1)
Oper. Income (EBIT) (20,669) 18,541
Net Income (12,462) 11,737
Per share (diluted) (.14) .13
Average gross margin 34.7% 39.8%
SG&A expenses 36.2% 32.4%

Home & Textiles Today Staff | News & Commentary

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