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Pier 1 Meets Expectations As It Builds Potential

Thursday April 11th, 2013 - 1:47PM


For the 53-week fiscal year ended March 2, Pier 1 Imports, Inc. posted net income of $129.4 million, or $1.20 per diluted share, versus $168.9 million, or $1.48 per diluted share, in the 52-week fiscal 2011. Fiscal 2013 comparable store sales, calculated on a 52-week basis, increased 7.5% over the year earlier.

Total  sales were $1.7 billion versus $1.53 billion in the prior fiscal year. Operating income advanced 29% to $199 million in fiscal 2013, or 11.7% of sales, versus $154.8 million, or 10.1% of sales, in the year before.

Pier 1 estimates that the 53rd week contributed $29 million to net sales and approximately 3 cents to earnings per share. In fiscal 2012, the company reported net income that included a one-time tax benefit . So non-GAAP adjusted earnings per share, before the one-time tax benefits of $61.5 million, were 94 cents for fiscal 2012.

In the fourth quarter Pier 1 generated net income of $61.7 million, or 58 cents per diluted share, versus $115.2 million, or $1.04 per diluted share, in the year-earlier period. Comps, calculated on a 13-week basis, increased 7.9% over the year earlier.

Total sales for the 14-week fourth quarter of fiscal 2013 improved 15.7% to $551.6 million. Operating income advanced 28% to $100.4 million, in the fiscal 2013 fourth quarter, or 18.2% of sales, versus $78.3 million, or 16.4% of sales, in the year prior.

In the fiscal 2013 final frame, non-GAAP adjusted net income, using a 35.6% annual effective tax rate, was $64.2 million, or 60 cents per share, in line with a Thomson Reuters consensus analyst estimate. In the fourth quarter of fiscal 2012, Pier 1 earnings per share, before the $61.5 million tax benefit, were 48 cents, the retailer related.

The strength of the fourth quarter 2013 comp gain was primarily attributable to increases in store traffic and higher average ticket, the company maintained.

In a conference call, Pier 1 president and CEO Alex Smith said upgrades to Pier 1 online capacities and stores had helped the company drive results. In the past fiscal year, Pier 1 introduced e-commerce capacity to its website and continues to enhance internal and outward-facing systems to help it operate more effectively, he said.  Site traffic continues to increase in the high double digits, Smith observed, with the company currently enjoying more than one million visits per week. He asserted that average ticket online is almost twice as large as that in store.

Pier 1 has begun to roll out a new POS system that will help the company integrate store and Internet shopping, Smith pointed out.  At the same time, the retailer has been remodeling and refurbishing stores, with more than 250 units getting dressed up, including, Smith noted, the top 200 sales generators. He added that sales per square foot gained over the past year to $198 from $184.

A Wedbush Morgan analyst, who has an outperform rating on Pier 1 stock, observed in a research note that Pier 1’s e-commerce operation, “has the potential to drive incremental business with not only merchandise from stores but also incrementally online-only merchandise.  With a focus on encouraging customers to buy online and pick up in stores, they have the potential to drive incremental store traffic as well.”