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Pier 1 sales, profits continue to climb in 2Q

Fort Worth, Texas - An 8.3% sales gains and a sharply improved gross margin led to soaring profits for retailer Pier 1 Imports in the fiscal second quarter ended Aug. 25.

Sales of $367.6 million were up from $339.6 million a year earlier, the result of increased store traffic and a higher average ticket, the Fort Worth-based company reported.

Profits of $26.2 million or 24 cents per share were up 57.7% from the same period a year earlier, although part of the gain stemmed from a one-time tax benefit. Excluding that benefit and adjusting for a normal tax rate, earnings would be $20.7 million or 19 cents per share - still up about 24% in dollars and 36% on a per share basis.

Alex Smith, president and ceo, said this was the company's 12th consecutive quarter of same-store sales gains and profit growth. Same-store sales were up 6.7% from a year ago, on top of a 10.8% gain a year earlier. Compared with three years ago, same-store sales have grown 28.7%, the company said.

"Our sound strategies and focus on flawless execution ideally position the company to achieve continued growth and long-term success. Now, with the recent launch of the new e-commerce enabled Pier1.com, we have two powerful growth vehicles - our enhanced portfolio of 1,058 Pier 1 Imports stores and our new online business," Smith said.

Gross profit was 41.2% of sales for the quarter, up 1.6 percentage points from a year earlier.

For the first half of the fiscal year, sales of $728.7 million were up 8.1% from the same period last year, with a 7% gain in same-store sales.

Net income of $44.1 million or 40 cents per share was up 43.3%. Adjusted to exclude the tax benefit, earnings would have been $30.7 million or 26 cents per share, a gain of about 26%.

The company also raised its profit forecast, saying it now expects earnings per share of $1.15 to $1.21 for the year, or adjusted earnings of $1.10 to $1.16 per share on a 52-week basis. That is up from the prior guidance of $1.08 to $1.14 on an adjusted basis.

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