Pier 1's profit wave slows a bit
Staff Staff -- Furniture Today, December 22, 2003
Nicked by thinning margins and rising costs, third-quarter profits at Pier 1 Imports Inc. edged up a slender 3.5 percent, to $32.2 million from $31.1 million last year.
Fueled by continued rapid expansion, sales advanced by 10 percent, to $482.4 million from $438.5 million last year. Same-store sales inched up by 1.6 percent.
Soft as comps and earnings were, they mark a substantial improvement over a weak second quarter, when earnings tumbled by 13 percent, and same-store sales declined by 4.2 percent, as the retailer started to feel the pinch that has squeezed most other retailers, following a long run-up in sales and profits.
Holding earnings in check during the third quarter, average gross margin, while strong, narrowed by 60 basis points, or six-tenths of a percentage point, to 43.1 percent from 43.7 percent a year ago. Measured as a percentage of rising sales, costs rose slightly higher, by 10 basis points, or one-tenth of a percentage point, to 29.8 percent from 29.7 percent a year ago.
Providing some relief, borrowing costs were reduced by 42.1 percent, to $322,000 from $566,000 last year, generating a cash savings of $244,000.
In a low interest-rate environment, the company earned less on cash that it had invested, with interest income declining by 26.3 percent, to $462,000 from $627,000 last year.
Tightly controlling its stockpiles, Pier 1 said inventories rose at a slower pace than sales, rising by 5.7 percent, to $404.2 million from $382.2 million last year, well behind the 10.0 percent increase in sales.
Pier 1 Imports Inc.
|Qtr. 11/29 (x000)||2003||2002||% chg|
|Oper. income (EBIT)||64,101||61,604||4.1|
|Per share (diluted)||0.35||0.33||6.1|
|Average gross margin||43.1%||43.7%||—|
|Nine months||2003||2002||% chg|
|Oper. income (EBIT)||147,907||153,581||-3.7|
|Per share (diluted)||0.76||0.79||-3.8|
|Average gross margin||41.5%||42.2%||—|
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