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Pier 1 drives 3Q profits up 24.2%

Driven by consumers' continued focus on home goods and a double-digit increase in sales, third-quarter profits at Pier 1 Imports surged by 24.2 percent, to $31.1 million from $25.0 million.

Driven by stronger same-store sales and continued rapid expansion, sales at the specialty home furnishings retailer climbed by 13.2 percent, to $438.5 million from $387.4 million the preceding year. Same-store sales grew by 4.6 percent.

Driving the bottom-line improvement, in addition to the stronger sales, Pier 1 boosted its average gross margin by 100 basis points, or 1.0 percentage points, to 43.7 percent from 42.7 percent a year ago. Mostly on the stronger sales volume, gross margin dollars increased by 15.9 percent, to $191.8 million from $165.4 million in 2001. Operating costs were unchanged at 29.7 percent of sales.

Helped by the stronger sales and margins, operating profits grew by 24.3 percent, to $49.3 million from $39.7 million. The retailer's operating margin — operating profits measured as a percentage of sales — climbed to an impressive 11.2 percent from 10.2 percent in the same period a year ago.

Marvin Girouard, chairman and ceo, commented, "Traffic and conversion rates grew during the quarter and continue to build each week. Early holiday sales results make us optimistic about December sales, as well as our season ending 'One Big Sale & Clearance' event that goes from Dec. 26 through the end of January. Our projection of December comp-store sales gain is in the 2 percent to 4 percent range."

Girouard added, "We continue to improve our strong balance sheet by managing working capital and increasing free cash flow generation, while accelerating openings of Pier 1 and Cargokids stores."

Sharing the gains with shareholders, Girouard noted, Pier 1 increased its quarterly cash dividend by 20.0 percent, to $0.06 a share from $0.05. At the close of the third quarter, the retailer had repurchased $40.2 million of its common stock, with $109.8 million remaining in the share buyback program.

Pier 1 Imports Inc.

Qtr. 11/30 (x000) 2002 2001 % change
Sales $438,501 $387,360 13.2
Oper. income (EBIT) 49,299 39,670 24.3
Net income 31,100 25,046 24.2
Per share (diluted) 0.33 0.26 26.9
Average gross margin 43.7% 42.7%
SG&A expenses 29.7% 29.7%
Nine months
Sales 1,233,832 1,069,995 15.3
Oper. income (EBIT) 119,216 81,405 46.4
Net income 75,354 51,193 47.2
Per share (diluted) 0.79 0.53 49.1
Average gross margin 42.2% 40.9%
SG&A expenses 29.8% 30.3%


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