Back to PIR
Pier 1 Imports, Inc. Reports Fiscal 2012 Third Quarter Financial Results

Pier 1 Imports, Inc. (NYSE:PIR) today reported financial results for the third quarter ended November 26, 2011.

Third Quarter Highlights

  • Comparable store sales increase of 7.0% versus last year’s increase of 10.2%; three-year cumulative comparable store sales increase of 30.9%
  • Merchandise margins of 60.5% of sales versus 58.9% last year
  • Gross profit of 43.2% of sales compared to 40.7% last year
  • Operating income increased 50.2% and is 8.6% of sales compared to 6.2% of sales last year
  • Earnings per share of $0.21 (fully taxed) versus $0.18 per share last year (minimally taxed)

Execution of Three-Year Growth Plan

Alex W. Smith, President and Chief Executive Officer, commented, “We are very pleased with the results of our third quarter. Our strong product assortments, the right balance of regular and promotional pricing and a great store experience are driving robust sales and merchandise margin growth. December sales so far are strong and we expect this trend to continue for the final ten days leading up to Christmas. Our growth plan is on track as we execute our business model with increasing finesse. Operating margins and sales per retail square foot continue to grow. Pier 1 To-Go, which allows customers to order online and pick-up and pay in-store, is positively impacting top line sales and our new e-commerce enabled site will launch next summer. We look forward to discussing our third quarter results in more detail and providing updates to the balance of the year and our three-year growth plan initiatives later this morning on our conference call.”

Third Quarter Results

For the third quarter ended November 26, 2011, the Company reported net income of $23.0 million, or $0.21 per share, which included an income tax provision of $12.4 million. Net income for the third quarter last year was $21.0 million, or $0.18 per share, which included an income tax provision of $0.5 million due to the Company’s federal net operating loss tax carry-forward position. Income before income taxes was $35.4 million for the third quarter compared to income before income taxes of $21.5 million for the same period last year. Total sales for the third quarter were $382.7 million, an 8.2% increase from $353.8 million in the year-ago quarter. Comparable store sales increased 7.0% during the third quarter compared to last year’s comparable store sales increase of 10.2% for the same period. The sales increase for the quarter was primarily the result of increases in store traffic and average ticket.

Merchandise margins for the quarter were 60.5% of sales compared to 58.9% of sales in the same period last year. The 160 basis point improvement in merchandise margins continues to be positively impacted by strong input margins, the right balance between regular and promotional pricing and well-managed inventory levels. Store occupancy costs were $66.2 million for the quarter, or 17.3% of sales, compared to $64.4 million, or 18.2% of sales, last year. Gross profit for the quarter improved to $165.5 million, or 43.2% of sales, from $144.1 million, or 40.7% of sales in the third quarter of last year.

Third quarter selling, general and administrative expenses totaled $127.5 million, or 33.3% of sales, compared to $117.5 million, or 33.2% of sales, in the year-ago quarter. For the quarter, SG&A expenses consisted of $26.4 million in marketing, $84.2 million in payroll, and $16.9 million in other G&A costs.

The following table details the breakdown of fixed and variable costs included in selling, general, and administrative expenses for the third quarter as compared to the same period last year.

  Three months ended    
November 26, 2011       November 27, 2010
Expense     % Sales Expense     % Sales Increase
($ in millions)
Store payroll $ 58.5 15.3 % $ 56.9 16.1 % $ 1.6
Marketing 26.4 6.9 % 23.6 6.7 % 2.8
Store supplies, services and other   6.6 1.7 %   6.0 1.7 %   0.6
Variable costs 91.5 23.9 % 86.5 24.5 % 5.0
 
Administrative payroll 25.7 6.7 % 21.5 6.1 % 4.2
Other relatively fixed expenses   10.3 2.7 %   9.5 2.6 %   0.8
Relatively fixed costs 36.0 9.4 % 31.0 8.7 % 5.0
     
$ 127.5 33.3 % $ 117.5 33.2 % $ 10.0
 

Operating income for the third quarter increased 50.2% to $32.9 million, or 8.6% of sales, compared to last year’s operating income of $21.9 million, or 6.2% of sales, reported for the same period. The overall improvement in operating income is primarily attributable to increases in sales and merchandise margins.

Year-to-Date Results

For the year-to-date period ended November 26, 2011, the Company reported net income of $53.7 million, or $0.47 per share, which included an income tax provision of $28.9 million. Net income for the same period last year was $43.1 million, or $0.37 per share, which included an income tax provision of $0.9 million due to the Company’s federal net operating loss tax carry-forward position. Income before income taxes was $82.7 million for the first nine months compared to income before income taxes of $43.9 million for the same period last year. Total sales for the first nine months increased 9.0% to $1.057 billion from $969.9 million in the year-ago period. Comparable store sales for the first nine months increased 9.2% compared to last year’s comparable store sales increase of 11.8% in the year-ago period.

Merchandise margins for the first nine months were 59.9% of sales compared to 58.6% of sales in the same period last year. Store occupancy costs were $199.3 million, or 18.9% of sales, compared to $195.9 million, or 20.2% of sales, last year. As a percentage of sales, gross profit for the first nine months was 41.1% compared to 38.4% last year.

Year-to-date selling, general and administrative expenses were $342.4 million, or 32.4% of sales, compared to $312.9 million, or 32.3% of sales, in the year-ago period. SG&A expenses consisted of $56.4 million in marketing, $236.2 million in payroll, and $49.8 million in other G&A costs.

The following table details the breakdown of fixed and variable costs included in selling, general, and administrative expenses for the first nine months of the year as compared to the same period last year.

  Nine months ended    
November 26, 2011       November 27, 2010 Increase
Expense     % Sales Expense     % Sales (Decrease)
($ in millions)
Store payroll $ 170.2 16.1 % $ 159.9 16.5 % $ 10.3
Marketing 56.4 5.3 % 47.3 4.9 % 9.1
Store supplies, services and other   17.9 1.7 %   18.4 1.9 %   (0.5 )
Variable costs 244.5 23.1 % 225.6 23.3 % 18.9
 
Administrative payroll 66.0 6.3 % 58.7 6.1 % 7.3
Other relatively fixed expenses   31.9 3.0 %   28.6 2.9 %   3.3  
Relatively fixed costs 97.9 9.3 % 87.3 9.0 % 10.6
     
$ 342.4 32.4 % $ 312.9 32.3 % $ 29.5  
 

Operating income for the first nine months of the year increased 68.7% to $76.5 million, or 7.2% of sales, compared to last year’s operating income of $45.3 million, or 4.7% of sales, for the same period. The overall improvement in operating income is primarily attributable to increases in sales and merchandise margins.

Balance Sheet, Share Repurchase Program and Income Taxes

At the end of the third quarter, inventory was in line with management’s expectations and totaled $367.9 million, up 8.7% over last year’s third quarter-end balance of $338.4 million. The increase in inventory was primarily due to slightly larger purchases of seasonal merchandise to support higher sales and early receipt of spring merchandise in order to transition and set the stores earlier for spring. By the end of the fiscal year, inventory is expected to be slightly above last year-end’s levels. Management continues to strategically manage its inventory purchases and monitor its inventory levels to keep them in line with consumer demand.

Cash and cash equivalents at the end of the third quarter were $179.3 million, a decrease from last year’s balance of $209.8 million for the same period. Capital expenditures for the first nine months totaled $40.4 million and consisted primarily of investments in new stores, existing store improvements, and infrastructure and technology development as described in the three-year growth plan.

During the third quarter, the Company did not repurchase shares under the newly authorized $100 million share repurchase program and $100.0 million currently remains available for repurchase. As of December 15, 2011, approximately 109.7 million shares of the Company’s common stock were outstanding.

Given the improved performance and expectations for the remainder of the fiscal year, the Company believes it is probable that during the fourth quarter it will be able to conclude that the realization of all deferred tax assets is more likely than not. Accordingly, it is likely that the Company will reverse its valuation allowance and record a non-cash tax benefit of approximately $60 million, or an estimated $0.54 per share, during the fourth quarter of the current fiscal year.

Third Quarter Conference Call and December Sales Release

The Company will host a conference call concerning fiscal 2012 third quarter financial results at 10:00 a.m. Central Time today. Investors will be able to connect to the call through the Company’s website at www.pier1.com. The conference call can be accessed by linking through to the “Investor Relations” page to the “Events” page, or you can listen to the conference call by calling 1-800-498-7872, or if international, 1-706-643-0435. The conference ID number is 25501934.

A replay will be available after 12:00 p.m. Central Time for a 24-hour period and the replay can be accessed by calling 1-855-859-2056, or if international, 1-404-537-3406 using the conference ID number 25501934.

The Company will announce fiscal 2012 December sales on January 5, 2012.

Financial Disclosure Advisory

Management’s expectations and assumptions regarding future results are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements included in this press release. Any forward-looking projections or statements should be considered in conjunction with the cautionary statements and risks contained in the Company’s Annual Report on Form 10-K. Refer to the Company’s most recent SEC filings for any updates concerning these and other risks and uncertainties that may affect the Company’s operations and performance. The Company assumes no obligation to update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied will not be realized.

Pier 1 Imports, Inc. is the original global importer of imported decorative home furnishings and gifts. Information about the Company is available on www.pier1.com.

Pier 1 Imports, Inc.

               
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
Three Months Ended
November 26, % of November 27, % of
2011 Sales 2010 Sales
 
Net sales $ 382,699 100.0 % $ 353,759 100.0 %
 
Cost of sales (including buying and store occupancy costs)   217,209   56.8 %   209,690   59.3 %
 
Gross Profit 165,490 43.2 % 144,069 40.7 %
 
Selling, general and administrative expenses 127,514 33.3 % 117,524 33.2 %
Depreciation and amortization   5,104   1.3 %   4,666   1.3 %
 
Operating income 32,872 8.6 % 21,879 6.2 %
 
Nonoperating (income) and expenses:
Interest and investment income and other (3,238 ) (1,045 )
Interest expense   739       1,424    
  (2,499 ) -0.6 %   379   0.1 %
 
Income before income taxes 35,371 9.2 % 21,500 6.1 %
Income tax provision   12,383   3.2 %   496   0.2 %
 
Net income $ 22,988   6.0 % $ 21,004   5.9 %
 
Earnings per share:
Basic $ 0.21   $ 0.18  
Diluted $ 0.21   $ 0.18  
 
Average shares outstanding during period:
Basic   108,713     116,479  
Diluted   110,306     117,680  
 

Pier 1 Imports, Inc.

               
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
Nine Months Ended
November 26, % of November 27, % of
2011 Sales 2010 Sales
 
Net sales $ 1,056,854 100.0 % $ 969,887 100.0 %
 
Cost of sales (including buying and store occupancy costs)   622,775   58.9 %   596,970   61.6 %
 
Gross Profit 434,079 41.1 % 372,917 38.4 %
 
Selling, general and administrative expenses 342,416 32.4 % 312,917 32.3 %
Depreciation and amortization   15,171   1.5 %   14,653   1.4 %
 
Operating income 76,492 7.2 % 45,347 4.7 %
 
Nonoperating (income) and expenses:
Interest and investment income and other (8,441 ) (3,113 )
Interest expense   2,279       4,516    
  (6,162 ) -0.6 %   1,403   0.2 %
 
Income before income taxes 82,654 7.8 % 43,944 4.5 %
Income tax provision   28,929   2.7 %   886   0.1 %
 
Net income $ 53,725   5.1 % $ 43,058   4.4 %
 
Earnings per share:
Basic $ 0.47   $ 0.37  
Diluted $ 0.47   $ 0.37  
 
Average shares outstanding during period:
Basic   113,767     116,363  
Diluted   115,490     117,202  
 

Pier 1 Imports, Inc.

         
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
 
 
November 26, February 26, November 27,
2011 2011 2010
ASSETS
 
Current assets:
Cash and cash equivalents, including temporary investments
of $136,765, $261,274 and $164,066, respectively $ 179,296 $ 301,471 $ 209,781
Accounts receivable, net 26,561 14,814 24,313
Inventories 367,876 311,770 338,437
Income tax receivable 134 1,043 972
Prepaid expenses and other current assets   21,525     22,871     20,694  
Total current assets 595,392 651,969 594,197
 
Properties, net 87,029 64,773 59,171
Other noncurrent assets   30,405     26,835     31,008  
$ 712,826   $ 743,577   $ 684,376  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
Accounts payable $ 68,437 $ 57,421 $ 61,445
Current portion long-term debt - - 16,542
Gift cards and other deferred revenue 58,369 71,963 44,672
Accrued income taxes payable 11,731 232 2,313
Other accrued liabilities   115,342     106,739     116,931  
Total current liabilities 253,879 236,355 241,903
 
Long-term debt 9,500 9,500 9,500
Other noncurrent liabilities 70,666 84,870 79,425
 
Shareholders' equity:
Common stock, $0.001 par, 500,000,000 shares authorized,
125,232,000 issued 125 125 125
Paid-in capital 230,524 243,051 244,134
Retained earnings 347,538 293,813 236,746
Cumulative other comprehensive loss (2,174 ) (784 ) (262 )
Less -- 15,574,000, 7,748,000 and 7,967,000
common shares in treasury, at cost, respectively   (197,232 )   (123,353 )   (127,195 )
  378,781     412,852     353,548  
$ 712,826   $ 743,577   $ 684,376  
 

Pier 1 Imports, Inc.

     
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Nine Months Ended
November 26, November 27,
2011 2010
 
Cash flow from operating activities:
Net income $ 53,725 $ 43,058
Adjustments to reconcile to net cash (used in) provided by operating activities:
Depreciation and amortization 23,078 24,178
Loss (gain) on disposal of fixed assets 388 (1,687 )
Stock-based compensation expense 4,780 3,668
Deferred compensation 4,342 3,127
Lease termination expense 783 680
Amortization of credit card deferred revenue (15,625 ) -
Amortization of deferred gains (9,794 ) (5,683 )
Other (1,118 ) 2,662
Changes in cash from:
Inventories (56,106 ) (24,941 )
Accounts receivable, prepaid expenses and other assets (17,586 ) (10,460 )
Income tax receivable 909 (411 )
Accounts payable and accrued expenses 12,668 4,118
Accrued income taxes payable   11,499     (2,654 )
Net cash provided by operating activities   11,943     35,655  
 
Cash flow from investing activities:
Capital expenditures (40,359 ) (19,659 )
Proceeds from disposition of properties 1,341 10,619
Proceeds from sale of restricted investments 423 3,818
Purchase of restricted investments (1,240 ) (3,815 )
Collection of notes receivable   -     1,500  
Net cash used in investing activities   (39,835 )   (7,537 )
 
Cash flow from financing activities:
Purchases of treasury stock (100,000 ) -
Proceeds from stock options exercised, stock purchase plan and other, net 8,814 3,251
Repayment of long-term debt - (9,500 )
Debt issuance costs   (3,097 )   -  
Net cash used in financing activities   (94,283 )   (6,249 )
 
Change in cash and cash equivalents (122,175 ) 21,869
Cash and cash equivalents at beginning of period   301,471     187,912  
Cash and cash equivalents at end of period $ 179,296   $ 209,781  

(c) 2014 Business Wire, Inc., All rights reserved. All of the news releases and other content contained herein are protected by copyright and other applicable laws, treaties and conventions. Information contained in the releases is furnished by Business Wire's members, who warrant that they are solely responsible for the content, accuracy and originality of the information contained therein. Any copying or reproduction (other than for an individual user's personal reference), redistribution, reposting or other transmission or communication is expressly prohibited without prior written permission of Business Wire, Inc
Back to PIR
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki