Pier 1 Imports Inc. released its preliminary fourth quarter and year-end sales results on March 1 which revealed a better than expected 12 percent increase in sales to a total of $477 million for the fourth quarter.
During the fiscal year ended Feb. 25, 2012, total sales increased 9.8% to $1.534 billion from $1.396 billion last fiscal year.
The previous quarter’s income also had a big performance with a 50 percent increase to $33 million or 8.6 percent of sales compared to last year’s $22 million.
The past year has been a huge turnaround for the specialty retailer, which almost went bankrupt after precipitous sales declines over the period 2003 through 2009. The stock is currently trading at $17.20, up from a low of $.20 in March 2009.
Pier 1 Imports Inc. is (don’t say defined as; this is what it is) a specialty retailer of imported decorative home furnishings.
It has experienced [recent sales increases in the past quarter](don’t need to say both recent and in the past quarter; it’s redundant. Choose one or the other.) due in part to the fact that customers are visiting the store more frequently and also spending more while there.
“Pier 1’s fourth quarter was driven by strong same-store sales, up 10.3 percent compared to 8.9 percent in the year ago quarter. The company has seen same-store sales increase 25.7 percent over the last three years,” said Diane Affeldt, a financial analyst at the Warren Foundation.
Margins are also on the upswing, with merchandise margins climbing to 60.5 percent from 58.9 percent last year.
A major contribution to the increase in sales has been the implementation of Pier 1 To-Go, the online store launched in June 2011. The site allows customers to reserve what they want online and then purchase it in a store.
“Pier 1 To-Go is positively impacting top line sales and our new e-commerce enabled site will launch next summer,” chief executive officer Alex W. Smith said in the third quarter earnings call.
During the call, Charles H. Turner, Pier 1’s chief financial officer, said the online site “contributed approximately 1 percent to the comparative store sales increase during the quarter.
On a trailing 12-month basis at the end of the quarter, sales per retail square foot were $178, getting closer to our 3-year goal of $200 per retail square foot and up from $163 per retail square foot at the end of the third quarter last year.”
Pier 1 Imports Inc. has successfully been able to identify slow-selling, high-priced products like couches and wardrobes, and replace them with less-expensive smaller decorative items such as side tables that sell better, especially in the current economy.
“Management continues to strategically manage its inventory purchases and monitor its inventory levels to keep them in line with consumer demand,” Turner said.
Customers are also fond of this new type of inventory.
“I think it’s a good idea to have this stuff in stores because smaller items create more of a chance for impulse buys. Buying a brand new couch or wardrobe isn’t something that happens every day,” customer Jacob Broom said.
The growth is expected to continue as new inventory hits the shelves for the spring and Easter holiday. According to Smith, the momentum is expected to carry into the first quarter.
While many retailers are closing, Pier 1 Imports Inc. is expanding. It opened 11 stores in the third quarter and closed only one. Smith said ultimately he would like to have 1,100 stores up from the current 1,054.
