viewPier 1 Imports Inc

Pier 1 Q4 profit soars, increases three-year growth goals


Pier 1 Imports (NYSE:PIR) said Thursday it had more than doubled its fourth quarter profit with more shoppers visiting its stores and a one-time tax benefit that boosted its net earnings.

For the quarter ended February 25, 2012, the company posted a net income of $115.2 million, or $1.04 per share, up sharply from $57.1 million, or 48 cents per share, a year earlier.

Taking out the one-time tax benefit of about $33.8 million, earnings per share were 48 cents for the fourth quarter, matching the expectations of analysts polled by FactSet.

Pier 1 said revenues for the fourth quarter were $476.8 million, an 11.8 percent increase from $426.6 million in the year-ago quarter, beating analysts’ estimates of $469.9 million.

Same-store sales grew 10.3 percent during the fourth quarter compared to last year’s comparable store sales increase of 8.9 percent for the same.

"The enhancements we’ve made across the store portfolio – along with improvements to merchandising, in-store presentation and service – are resonating with customers and driving increased traffic and sales," Pier 1's president and CEO Alex Smith said.

"Indeed, we achieved a total sales increase of 9.8 percent in fiscal 2012 and a comp store sales increase of 9.5 percent on top of last year’s comp store gain of 10.9 percent. At the same time, we delivered strong profitability and returned value to our shareholders through our share repurchase program.”

Merchandise margins for the quarter were 59.5 percent of sales compared to 58.4 percent of sales in the same period last year. The company said merchandise margins continue to be positively impacted by strong input margins, the right balance between regular and promotional pricing, and well-managed inventory levels.

Smith said the company is preparing for the next phase of its growth as it gets ready to launch its e-Commerce site, “Pier 1 To-You”.

The retailer expects online sales will contribute at least 10 percent of total revenue by fiscal 2016.

"We are pleased with the traction we have gained thus far with our ‘Pier 1 To-Go’ initiative – customer response has been exceptional as evidenced by the increase in site traffic and sales contribution," Smith added.

"The business continues to be a strong cash flow generator, providing us with the resources and flexibility to invest in our stores, e-Commerce platform, and systems and technology development to ensure that we’re meeting the needs of the Pier 1 Imports customer as we transition into an industry-leading multi-channel retailer."

The company said it expects to record sales of $225 per retail square foot, up from $200 per retail square foot, by fiscal 2015. It also raised its operating margin goal for the three-year period to at least 12 percent, up from 10 percent.

Pier 1 anticipates fiscal 2013 earnings of $1.06 to $1.12 per share. The company said it foresees revenue at stores open at least a year rising by the mid-single digits.

Analysts predict earnings of $1.12 per share.

Pier 1 said it plans to fully remodel about six to eight stores in fiscal 2013 and refurbish about 100 existing stores. It anticipates opening about 20 new stores during the fiscal year compared with 15 new stores in fiscal 2012.

The company added that it is still on pace to open approximately 80 to 100 new stores and close about 30 to 50 existing locations by fiscal 2016's end.

Quick facts: Pier 1 Imports Inc

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