Pier 1 sees 1Q profits jump 70%

By Don Hogsett -- Home Textiles Today, 6/24/2002 12:00:00 AM

FORT WORTH, TX —

With same-store sales racing ahead at a near double-digit pace, first-quarter profits at Pier 1 Imports Inc. virtually doubled, shooting up by 79.7 percent, to $22.2 million from $12.3 million last year.

Bucking a two-year-old trend of sluggish retail sales across the nation., Pier 1 managed to drive its same-store sales ahead at a heady 9.5 percent pace. Getting a lift as well from the steady rollout of new units, overall sales at the specialty retailer jumped up by 18.1 percent, to $384.4 million from $325.4 million a year ago.

In a big lift to the bottom line, average gross margin widened by 120 basis points, or 1.2 percentage points, to 42.7 percent from 41.5 percent the preceding year. Gross margin dollars rose by 21.6 percent, to $164.0 million from $134.9 million.

In another boost to profits, the specialty retailer kept cutting away at costs, reducing expenses by 130 basis points, or 1.3 percentage points, to 30.8 percent of sales from 32.1 percent.

Lifted by the trifecta of stronger sales and margins and lower costs, operating profits raced ahead by more than three-fourths, climbing by 77.1 percent, to $34.9 million from $19.7 million.

Further propping the bottom line, Pier 1 whittled down its interest costs by 8.2 percent, to $558,000 from $608,000 a year ago. At the same time, it banked $837,000 as interest and investment income, up 77.7 percent from $471,000 in the same period last year.

Inventories were well controlled, rising by 10.2 percent, compared with the 18 percent increase in sales.

"Margins improved over last year during the first quarter and should continue this trend in the second quarter," said Marvin Girouard, chairman and ceo. "We are managing inventories well with new fall merchandise scheduled to arrive in our stores at the beginning of July. Expenses were well controlled, which led to achieving operating income as a percentage of sales of 9.1 percent in the quarter."

Girouard added, "We continue to experience higher customer traffic indicating strong reaction to our current advertising campaign creating recognized brand preference for Pier 1 imports. We believe our positive results over the last three quarters are due to a recognized and trusted brand name, a strong marketing initiative, remerchandised stores, superior customer service and a continued value orientation creating a fun shopping experience."

Pier 1 Imports Inc.