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Pier 1 beats pack with strong 4Q

Bucking a soft economy and turning in another strong performance Pier 1 Imports Inc. put up a fourth-quarter profit of $54.0 million, up 10.2 percent from last year's $49.0 million.

Sales at the specialty home furnishings chain improved by 8.9 percent, rising to $521.0 million from $478.6 million the prior year. Same-store sales grew by 0.9 percent.

While its numbers are still more than respectable — and beating most of its retailing peers — they mark a dramatic slowdown from a blazing pace set earlier in 2002, before the long summer slide that affected most American retailers. During the second quarter, for example, profits jumped up 59.9 percent, sales advanced by 15.0 percent, and same-store sales improved by 5.8 percent.

Holding up the bottom line, average gross margin improved moderately, helping to offset somewhat higher costs. It widened by 40 basis points, to 44.7 percent, up from 44.3 percent last year. But acting as a drag, operating costs rose higher by 20 basis points, to 26.0 percent of sales from 25.8 percent the previous year.

With a remarkably clean balance sheet and low debt levels, Pier 1 actually made more on the money it put in the bank than the interest it paid on its debt. Interest income totaled $884,000, while interest expense amounted to $558,000.

Pier 1 Imports Inc.

Qtr. 3/1 (x000) 2003 2002 % change
a-Earnings in the fourth quarter include $884,000 in investment income, compared with $999,000 during the same period a year ago.
b-12-month results include $3,0 million in investment income vs. $2.5 million the preceding year.
Sales $521,035 $478,561 8.9
Oper. income (EBIT) 85,438 77,408 10.4
Net income 54,032a 49,016a 10.2
Per share (diluted) 0.57 0.51 11.8
Average gross margin 44.7% 44.3%
SG&A expenses 26.0% 25.8%
12 months
Sales $1,754,867 $1,548,556 13.3
Oper. income (EBIT) 204,654 158,813 28.9
Net income 129,386b 100,209b 29.1
Per share (diluted) 1.36 1.04
Average gross margin 42.9% 42.0%
SG&A expenses 28.6% 28.9%

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