Pier 1 2Q sales up 4.1%; net income drops 16.5%
By Clint Engel -- Furniture Today, September 21, 2003
Fort Worth, Texas — Pier 1 Imports said sales rose 4.1% in its second quarter, but profits dropped 16.5% and same-store sales slid 4.2% as an uncertain economy and global unrest prompted the specialty retailer to keep inventories low.
The 1,109-store chain posted net income of $18.4 million for the quarter ended Aug. 30, down from $22.1 million in the same period last year. Total sales rose to $427.8 million from $410.9 million a year ago.
For the first six months, net income was off 15.3% to $37.5 million from $44.3 million, and sales rose 4.4% to $830.5 million, while same-store sales decreased 3.8%.
"We were obviously disappointed with second-quarter sales," said Pier 1 Chairman and Chief Executive Officer Marvin Girouard, adding that even though stores recorded a higher average ticket, it wasn't enough to offset traffic and transaction declines.
Unlike last year, when the company was celebrating its 40th birthday with "the wind at our back," it started this year with the threat of war in Iraq, the outbreak of SARS, high unemployment and low consumer confidence, he said.
Pier 1 therefore kept inventories lean and put a greater focus on replenishing existing items with good sell-through rather than try a lot of new, unproven goods, Girouard said, thus sacrificing sales but limiting the risk of markdowns and cost overruns.
The worst may be over.
"As we now accelerate the flow of new merchandise, transactions and conversions are improving each week," Girouard said in a conference call with the investment community.
The retailer is increasing the frequency of its newspaper inserts and is filming TV commercials for the holiday period featuring Kirstie Alley. "We believe the new commercials will cut through the clutter, reinforce our brand and inspire customers to shop Pier 1," he said.
Next year, Pier 1 will add a fourth seasonal line of goods, to appear in stores in early summer, as it aims to correct a lack of fresh product. Girouard said Pier 1 shops competitors, and some "had a better back-to-school proposition than we had" this summer.
Still, there were some bright spots. Pier 1's balance sheet improved, with cash balances at the end of the second quarter up $36 million to $186 million. Through the first half, the company repurchased 2.2 million shares of stock for $41.6 million and had $112.4 million remaining in its share-repurchasing program.
Pier 1 also was pleased with its Cargokids division, which added a net seven stores and posted a 1.6% same-store sales increase for the first half. Cargokids' average ticket was down, but that was expected because of an increase in its accessories and cash-and-carry business.
Accessory sales accounted for bout 25% of total sales for the youth home furnishings division at the end of the quarter. The goal is to boost that to 30% by the end of the year and to 40% by the end of next year, Girouard said.
Pier 1 opened 34 stores in the second quarter and closed 13 in North America. This quarter, it plans to open 57 Pier 1 stores, including 11 relocations, and 13 Cargokids.
"Despite our frustration with recent negative same-store sales, we continue to be positive and are executing our business plan for strategic, profitable growth," Girouard said.
The company projected third-quarter same-store sales in the range of flat to down 4%, and fourth-quarter same-store sales in the positive low single-digit range.
| Pier 1 Imports | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 8/30 | 2003 | 2002 | Change |
| (a) Based on average shares outstanding of 91.6 million in the 2003 quarter, 95.5 million in the 2002 quarter, 91.9 million in the 2003 six months and 96 million in the 2002 six months. | |||
| Sales | $427,831,000 | $410,902,000 | 4.1% |
| Operating income | 41,387,000 | 46,317,000 | (10.6%) |
| Net income | 18,436,000 | 22,073,000 | (16.5%) |
| Earnings per share (a) | 0.20 | 0.23 | (13.0%) |
| 6 months ended 8/30 | 2003 | 2002 | Change |
| Sales | $830,543,000 | $795,331,000 | 4.4% |
| Operating income | 83,806,000 | 91,977,000 | (8.9%) |
| Net income | 37,498,000 | 44,254,000 | (15.3%) |
| Earnings per share (a) | 0.41 | 0.46 | (10.9% |
-
Pier 1 loss cut; sales off 7%
Sep 23, 2007 -
Pier 1 3Q sales rise 10%
Dec 21, 2003 -
Pier 1 slumps in 2Q
Oct 2, 2005 -
Pier 1 4Q sales up 6.6%, profits dip 10.6%
Apr 4, 2004 -
Pier 1 2Q sales up 5.7%, profits drop 43.3%
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