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Pier 1 Imports reports $29.4 million fourth-quarter loss

Also reduces debt in transaction with subsidiary

Larry Thomas -- Furniture Today, March 23, 2009

FORT WORTH, Texas — Pier 1 Imports reported a net loss of $29.4 million in the quarter ended Feb. 28 as sales fell 10.9%.

According to preliminary financial results released by the company, same-store sales fell 9.7% in the quarter, during which the company closed 16 stores.

Pier 1 ended its fiscal year with 1,092 stores and said it plans to close no more than 80 locations during the current fiscal year.

The retailer recently hired a consulting firm to help negotiate rental reductions from many of its landlords, and said it already has reached tentative agreements to terminate the leases of 14 stores.

Pier 1 said it will incur about $4 million in one-time charges related to the lease terminations. About half that amount will be taken during the first quarter.

Preliminary fourth-quarter results show that sales were $389.2 million, compared with $436.7 million in the quarter ended March 1, 2008.

The most recent quarter's net loss, which equals 33 cents per share, compares with net income of $13.7 million or 16 cents per share in the fourth quarter of the previous fiscal year.

The retailer also announced that a foreign subsidiary has purchased $79 million of the company's convertible senior notes for $27 million. The transaction allows the company to reduce its outstanding debt by $79 million on a consolidated basis.

Pier 1 stock rose sharply in trading early Monday on the New York Stock Exchange. Shortly before 1:30 p.m., it was up about 175% at 44 cents per share. In recent weeks, the stock had traded as low as 10 cents per share.

Industry analyst Budd Bugatch of Raymond James Financial wrote in a note to clients Monday that despite the news of the loss, the removal of the $79 million in debt from the balance sheet was a positive development, according to an Associated Press report.

"The company continues to improve its liquidity position and has a balance sheet that we believe will carry it through the downturn," he wrote.

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