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Pier 1 posts $34.5 million profit in quarter

Retailer reports 6.5% same-store sales gain

Larry Thomas -- Furniture Today, April 8, 2010

FORT WORTH, Texas — Aided by improved merchandise margins and a 6.5% comparable-store sales increase, retailer Pier 1 Imports reported a profit of $34.5 million for the quarter ended Feb. 27.

The quarterly profit, which equals 30 cents per share, reversed a net loss $29.4 million or 33 cents per share in the quarter ended Feb. 28, 2009.

Sales in the most recent quarter edged up 1.7% to $396 million, even though Pier 1 started the quarter with 49 fewer stores than it had a year earlier.

"We are extremely pleased that in the fourth quarter, we improved our net income by $64 million and delivered an operating margin of 9% of sales," said Alex Smith, president and CEO. "With a slightly more active economy, we are starting to see top line improvements, which we knew would come eventually."

The merchandise margin for the quarter was 55.8% of sales, up from 44.3% of sales in the same quarter last year. Gross margin was 38.9%, up from 26.2% in last year's fourth quarter.

For the fiscal year ended Feb. 27, net income totaled $86.8 million or 86 cents per share. That compares with a net loss of $129.3 million or $1.45 per share the previous fiscal year.

Sales for the year totaled $1.29 billion, down 2.3% from the previous year.

Pier 1 ended the fiscal year with 1,054 locations in North America, 38 fewer than it had at the beginning of the year. Smith said 10 to 15 additional stores will be closed this year and three to five stores will be opened.

Smith said the company has negotiated rent reductions for about 350 stores, which saved Pier 1 about $16 million during the fiscal year.

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