Pier 1 Imports Inc. (PIR), an importer and specialty retailer of imported decorative home furnishings and gifts, Thursday reported a 14 percent increase in profit for the first quarter, benefiting from higher sales. The company lifted its profit forecast for the year.
Alex Smith, CEO, said, "Our results for the period, our 15th consecutive quarter of significant sales and profit growth, reflect a solid quarter of execution. The continued improvement of our gross profit speaks to the success of our merchandising strategies, both in-store and online, and reflects strong full-price selling during the period.''
Net income rose to $20.35 million or $0.19 per share from $17.83 million or $0.16 per share in the year-ago quarter. On average, 13 analysts polled by Thomson Reuters expected the company to report earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.
Total sales for the quarter increased 9.3 percent to $394.85 million from last year's $361.12 million. Analysts had a consensus revenue estimate of $395.02 million for the quarter.
Comparable store sales increased 5.9 percent compared to last year's gain of 7.2 percent, and were primarily attributable to increases in store traffic and higher average ticket.
Gross margin was 42.4 percent, compared to 41.6 percent last year, benefiting from the leveraging of store occupancy costs.
Inventory increased almost 15 percent to $383.3 million, in line with management's expectations.
For fiscal 2014, the company now expects earnings to be in the range of $1.27 to $1.32 per share, compared to prior guidance of $1.26 to $1.31 per share. The company still expects comparable store sales growth to be in the mid single-digit range.
Analysts expect the company to report earnings of $1.32 per share for the year. The guidance for fiscal 2014 is on a comparable 52-week basis.
Further, Pier said it has amended, renewed and extended its secured, asset-based revolving credit facility.
The facility was amended to extend the maturity date from April 2016 to June 2018 and increase its size from $300 million to $350 million. The facility is secured by Pier's merchandise inventory and credit card receivables.
The amended facility includes a $100 million accordion feature, which Pier chose to utilize, would enable it to increase the line to as much as $450 million under some circumstances.
The company plans to continue funding its working capital requirements with cash flow from operations, but may use the facility for general corporate purposes.
PI closed on Wednesday at $23.99.
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