Pier 1's net income surges 79.7% in 1st qtr.
By Clint Engel -- Furniture Today, June 24, 2002
FORT WORTH, Texas — Pier 1 Imports posted a 79.7% increase in first-quarter net income, citing improved margins, well-managed inventories and an advertising campaign that continues to drive traffic.
Net income for the home furnishings specialty retailer rose to $22.2 million in its first quarter ended June 1, up from $12.3 million for the same period last year.
Sales for the quarter jumped 18.1% to $384.4 million, while same-store sales grew 9.5%.
"Margins improved over last year during the first quarter and should continue this trend in the second quarter," said Marvin Girouard, chairman and chief executive officer of the 989-store worldwide chain, including 925 North American Pier 1 stores and 18 Cargo youth furniture stores, recently renamed Cargokids.
Girouard said the quarter was stronger than expected throughout the three months, and consistent across all regions.
"We continue to experience higher customer traffic, indicating strong reaction to our current advertising campaign," he said. Girouard said the retailer's national TV ad campaign featuring actress Kirstie Alley has been a big hit with consumers.
Pier 1 is projecting same-store sales for June in the 5%-7% range and second-quarter earnings per share of 19 to 21 cents.
The company plans to open 115 to 120 new stores this year and close or relocate 25 to 30 stores, Girouard said. The retailer has been opening a handful of larger-format units targeting affluent big markets, he added. They are off to a strong start in South Hampton, N.Y., Dallas and St. Louis. The company also has opened a larger-format unit in Denver and is looking at the Houston and Las Vegas markets, he said.
The larger stores are generating sales per square foot above regular stores, he said, noting that the recently opened South Hampton store has done particularly well. It was projected to generate sales under $4 million and now "we think it might do $5.8 million to $6 million this year," he said.
The latest developments at Pier 1's Cargo chain include the name change to Cargokids and shifts in the merchandise mix and sourcing.
Same-store sales for Cargokids were up 32% in the first quarter, with furniture representing the majority of sales. Girouard said Cargokids will add more accessories and textiles this year, aiming to bring furniture sales down to 50% to 60% of the mix next year from about 75% today.
The shift of furniture sourcing away from domestic and Mexican vendors and to primarily Brazilian manufacturers is nearly complete. "These shifts … will result in better quality and much higher merchandise margins for Cargokids," Girouard said.
Pier 1 plans to open eight to 10 Cargokids stores this year.
| Pier 1 Imports Earnings per share are fully diluted. | |||
|---|---|---|---|
| Quarter ended 6/1 | 2002 | 2001 | Change |
| (a) Based on average shares outstanding of 96.6 million in the 2002 quarter and 97.3 million in the 2001 quarter. | |||
| Sales | $384,429,000 | $325,387,000 | 18.1% |
| Operating income | 45,660,000 | 30,417,000 | 50.1% |
| Net income | 22,181,000 | 12,345,000 | 79.7% |
| Earnings per share (a) | 0.23 | 0.13 | 76.9% |
