Pier 1 reports 1.7% same-store sales decline

Smaller tickets offset better traffic

Clint Engel -- Furniture Today, September 3, 2008

FORT WORTH, Texas - Pier 1 Imports said its same-store sales in its fiscal second quarter were down 1.7% from the same period a year ago, as better traffic and closing ratios were offset by a lower average ticket.

The Top 100 company also said its merchandise margins for the quarter ended Aug. 30 were about 49.3%, which is below its guidance of 51.3% or better. Pier 1 said it expects to post a loss in the quarter of $15 million to $17 million before interest, taxes, depreciation and amortization.

"In spite of the challenges of the current retail environment, our turnaround plan remains on track," said Alex Smith, president and CEO of the Fort Worth-based retailer.

"During the quarter, comparable store sales benefited from traffic being slightly positive and an increase in conversion rate offset by a decrease in average ticket," said Smith.

He said merchandise margins were below expectations because Pier 1 needed to make deeper markdowns to clear out garden accessories and outdoor furniture, especially in areas where business is more difficult.

"Our stores are now in good shape and fall merchandise is flowing in nicely," he said. "We feel good about the levels and complexion of our inventory. As we look ahead to the more important third and fourth quarters, we will continue to focus on generating profitable sales, and returning our company to profitability and beyond."

Pier 1 pre-announced the results in anticipation of its participation today in the Goldman Sachs Global Retailing Conference in New York.