Pier 1 Imports, Inc. (PIR: Quote), a specialty retailer of decorative home furnishings and gifts, on Thursday lifted its earnings forecast for fiscal 2013, after it reported a strong growth in first-quarter earnings on higher comparable store sales. Quarterly earnings per share matched Wall Street estimates, while top line beat analysts' view.
President and Chief Executive Officer Alex Smith said, "Given the underlying strength of our operating strategy and solid financial condition, we are confident that we can continue to drive strong results and deliver value to our shareholders over the long-term."
For the first quarter, net income climbed 26.5 percent to $17.83 million from prior year's $14.10 million. Earnings per share increased 33 percent to $0.16 from $0.12 a year ago, and were in line with the average estimate of 11 analysts polled by Thomson Reuters. Such estimates typically exclude special items.
Total net sales grew 8 percent to $361.12 million, driven by increases in store traffic and higher average ticket, while Wall Street analysts' consensus estimate was $360.07 million.
Comparable store sales from stores open for at least a year increased 7.2 percent, on top of last year's 10.2 percent gain. The company noted that the three-year cumulative comparable store sales increase was 31.7 percent.
In the quarter, gross margin improved 150 basis points to 41.6 percent and operating margin grew 170 basis points to 7.6 percent.
Merchandise margins for the quarter were 60.2 percent compared to 59.8 percent last year, reflecting strong input margins, an optimal balance between regular and promotional pricing, and well-managed inventory levels, the company noted.
As of May 26, 2012, Pier 1 remained in strong financial condition with $217.9 million of cash and cash equivalents.
Smith said, "We're pleased with the strong sales and earnings performance we achieved this quarter, as well as the continued expansion of our operating margin. The results demonstrate the effectiveness of our merchandising strategies and in-store execution, as well as strong full-price selling."
Looking ahead, for the 53-week fiscal 2013, Pier 1 now projects earnings per share in the range of $1.08 to $1.14, a growth of 15 percent to 21 percent, compared to prior guidance of $1.06 to $1.12. Analysts expect earnings of $1.13 per share for the year.
The company continues to expect comparable store sales growth in the mid single-digit range. The company noted that the 53rd week is expected to contribute approximately $25 million to total sales and $0.01 to $0.02 to earnings per share.
Further, Pier 1 said it executed a three-year renewal and extension of the employment agreement with Smith, who is with the company over five years, on Wednesday.
Pier 1 shares closed Wednesday's trading at $15.58, down $0.43 or 2.69 percent. In the extended trading, shares grew $0.09 or 0.58 percent to $15.67.
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by RTT Staff Writer
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