Pier 1 same-store sales fall 11.7%

Traffic down 8% in September

Clint Engel -- Furniture Today, October 9, 2008

FORT WORTH, Texas - Pier 1 Imports said today that its September same-store sales were down 11.7% from the same month last year, placing the blame primarily on an 8% decline in traffic.

The Fort Worth-based retailer also said that the results for the five-week period ended Oct. 4 suggested that it may not be able to meet earnings expectations for the second half of its fiscal year.

The Top 100 company's stock price fell 63 cents, or 23.1%, in trading Wednesday to $2.10 per share.

"Given the unprecedented events in the financial markets over the past few weeks, we wanted to provide additional information concerning our performance," said President and CEO Alex Smith.

"As we previously indicated, our ability to improve profitability for the rest of the fiscal year would be contingent on driving traffic levels that were at least neutral to last year," he said. However, he said growing consumer concerns and bad weather took their toll last month.

"If we continue to experience traffic levels like those seen in recent weeks, we will not meet the current consensus for earnings expectations" for the second half, he said.

Smith added that despite the traffic decline, Pier 1's "underlying business remained strong." The retailer saw strong conversion rates during the month and was able to keep merchandise margins in line with expectations.

He said the company is confident its efforts to cuts costs and improve efficiencies, combined with its strong balance sheet, "have us well-positioned to address the challenges presented during this period of consumer uncertainty and well into the future."

Last month, when Pier 1 reported a second-quarter net loss of $30.2 million - an improvement over the $43.4 million loss the year before - Smith said Pier 1's turnaround hinged on merchandise margins and operating profits.

In announcing the September same-store sales, Smith said the company "will continue to focus on balancing profitable sales, merchandise margins dollars and inventory levels, and will adjust our tactics as necessary to meet the changing sales trends through the rest of the fiscal year."