Pier 1 Profitable in Third Quarter, Optimistic About Fourth Quarter

By Cecile B. Corral -- Home Textiles Today, 1/4/2010 12:00:00 AM

Fort Worth, Texas —

Pier 1 Imports Inc. embarked on its "return to profitability in the third quarter — a period the special home retailer said was one of many gains.

"Well, what a difference a year makes," said Alex Smith, president and ceo during the company's conference call with analysts in December. "Comparable stores sales increases, strong merchandise margins and net profit, and a strong balance sheet all added up to a gratifying and successful quarter."

While 1,059-unit Pier 1 had anticipated its third quarter comp stores sales to show improvements over last year's same period, a better-than-expected 13.7% gain "demonstrates to us that both new and loyal customers are responding well to our merchandise and in-store experience."

Average transaction improved, and comp increases were consistent across product categories, Smith said.

For the third quarter, ended November 28, Pier 1 reported total sales increased to $327 million from $301 million in the year-ago quarter.

Net income came in for the quarter at $39 million, or $0.37 per share, versus a net loss of $37 million, or $0.41 per share, for the same period last year. Excluding charges, net income would have been $2 million compared to a The company noted its merchandise margins improved as a direct result of strong initial mark-ups and significantly reduced clearance activity.

Year-to-date results included a sales decline to $895 million from $931 million in the year-ago period, a comparable store sales decline of 0.6%, and net income of $52 million, or $0.55 per share, versus a net loss of $100 million, or $1.12 per share, for the same period last year.

Looking ahead, Pier 1 plans to close fewer stores during the fourth quarter than previously reported — 40 as opposed to the original projection of 50 closings.

Year to date, the company has closed 33 locations and expects to close seven more stores in January and February.