Pier 1 earnings tide begins to ebb
June 23, 2003,
Cooling off abruptly after a long string of earnings gains in the range of 30 percent or more as it completed a strong turnaround, Pier 1 Imports reported that first-quarter profits, while still strong, fell by 14.1 percent, to $19.1 million from $22.2 million a year ago, hampered by lower margins and higher costs.
Putting profits under pressure was a threatening combination of weaker margins, rising costs and a persistently weak retail environment. Average gross margin thinned by 90 basis points, or nine-tenths of a percentage point, to 41.8 percent from 42.7 percent a year ago. With rising sales offsetting margin erosion, gross margin dollars improved by 2.6 percent, to $168.2 million from $164.0 million.
At the same time costs ratcheted higher by 40 basis points, or four-tenths of a percentage point, 31.2 percent from 30.8 percent the prior year. Measured in absolute dollars costs rose by 6.3 percent, or $7.4 million, to $125.8 million from $118.3 million.
Putting the bottom line under even more pressure, inventories climbed higher when expected sales failed to materialize. Stockpiles rose by 11.6 percent, to $338.5 million from $303.4 million.
Marvin Girouard, chairman and ceo, said results "reflected a more cautious consumer due to continuing weakness in the economy, international and political instability, as well as adverse weather conditions delaying the beginning of the important spring selling season. Despite these factors and tough sales comparisons to last year during the quarter, we are pleased to report that Pier 1's sales strengthened each month with higher traffic and average ticket transactions building since the fiscal year began March 2."
Pier 1 Imports Inc.
|Qtr. 5/31 (x000)||2003||2002||% change|
|Oper, income (EBIT)||30,258||34,929||-13.4|
|Per share (diluted)||0.21||0.23||-8.7|
|Average gross margin||41.8%||42.7%||—|
Related Content By Author
Live From New York: Fashion Comes Across the Pond
Home & Textiles Today eDaily
Most Viewed Articles
See the September 2017 issue of Home & Textiles Today. In this issue, we look at the Attack of the Killer Third Tier: Monster off-pricers are climbing to the top of the food chain, plus New Products: 40 pages of new products debuting at the New York Home Fashions Market; Home Stores: TJX unveils first U.S. HomeSense store; Clicks to Bricks: Boll & Branch moves from digital to physical retailing; and much more...