Pier 1 loss balloons to $72.2M as sales dip
By Furniture Today Staff -- Furniture Today, December 17, 2006
Fort Worth, Texas — Specialty retailer Pier 1 Imports said last week it lost $72.7 million or 83 cents per share in its third quarter ended Nov. 25. Sales of $402.7 million were down 11.8% from the comparable period a year earlier, and same-store sales were down 12.9%.
The loss was 10 times the company's loss a year ago and much greater than the 33 cents per share analysts were forecasting on average, according to Reuters Estimates.
Pier 1 took a charge of $24.8 million or 28 cents per share in the latest quarter for "store level asset impairment." It also took charges of about $700,000 for adoption of a new accounting rule and $1.2 million for the sale of its credit card business.
Excluding charges in both quarters, it said the net loss in this year's third quarter came to $46.1 million or 53 cents per share, compared with $5.2 million or 6 cents per share a year ago.
Pier 1 said that for the first nine months of the fiscal year, it had a net loss of $168.9 million or $1.94 per share, compared to a loss per share of $29.8 million or 34 cents per share a year earlier. Sales of $1.15 billion were down 9.5%, and same-store sales declined 11.6%.
Merchandise margins declined to 49.7% from 52.5% in the year-ago quarter due to increased promotional and markdown activity, which the company said reflected a focus to maintain appropriate inventory levels.
"Trends so far in December are better than the trends seen in October and November," said Chairman and CEO Marvin Girouard. "Despite weak sales in the home furnishing categories, early sales of our holiday merchandise have been encouraging."
During a conference call with securities analysts, Girouard said the company's new spring product assortment — featuring more goods with traditional styling — will be in stores in mid- to late January.
"The styling won't be as extreme as some of our recent introductions," he said. "It will be updated traditional styling with a broad appeal."
Girouard said home furnishings, which now represents about 40% of the retailer's sales, probably will decline to 30% to 35% of the total once the new merchandise mix takes hold. He told analysts that decorative accessories and housewares products such as dinnerware will account for a larger percentage of future sales.
The company ended its third fiscal quarter with 1,181 Pier 1 stores in the United States and Canada. It also operates 40 Pier 1 Kids stores.
| Pier 1 Imports | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 11/25 | 2006 | 2005 | Change |
| (a) Includes a $45,000 income tax benefit. (b) Includes a $1.5 million net loss from discontinued operations. (c) Based on average shares outstanding of 87.5 million in the 2006 quarter, 86.7 million in the 2005 quarter, 87.3 million in the 2006 nine months and 86.5 million in the 2005 nine months. (d) Includes income tax benefits of $615,000 in the 2006 nine months and $11.8 million in the 2005 nine months and net losses from discontinued operations of $407,000 in the 2006 nine months and $9.3 million in the 2005 nine months. |
|||
| Sales | $402,714,000 | $456,690,000 | (11.8%) |
| Operating income | (58,859,000) | 11,886,000 | — |
| Net income | (a)(72,718,000) | (b)(7,181,000) | — |
| Earnings per share (c) | (0.83) | (0.08) | — |
| 9 months ended 11/25 | 2006 | 2005 | Change |
| Sales | $1,149,504,000 | $1,270,679,000 | (9.5%) |
| Operating income | (126,838,000) | 9,320,000 | — |
| Net income (d) | (168,949,000) | (29,828,000) | — |
| Earnings per share (c) | (1.94) | (0.34) | — |
