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Pier 1 Struggles to Reverse Fortunes

FORT WORTH, TX-As management trims costs and adds more impulse-oriented décor, its net loss and comp-store declines narrow a bit in second quarter.

By Marita Thomas | Updated on September 20, 2007

FORT WORTH, TX-As Pier 1 Imports Inc. continues its struggle to raise revenue and increase profitability, its losses for the second quarter narrow a bit to $43.9 million versus a $73.1-million drop in the same quarter a year ago. Comp-store sales fell 3.6% in second quarter, compared with a 5.4% decline in this year’s opening quarter.

Total second-quarter sales were $344.6 million. That represents a 7%-decline from $370.7 million in the same quarter of 2006. Store occupancy expenses for the quarter ended this Sept. 1 were down $2.5 million from second-quarter 2006. Other expenses dropped more dramatically and were $35.6 million less than the year-ago quarter. Chief among the contributors were savings of about $14 million in marketing costs and $13.9 million in payroll.

Trimming costs is key to the turnaround effort, and, during a conference call, management said it estimates savings of “at least $100 million for the year.” It expects on-going annual savings of $150 million as it improves efficiency and simplifies all aspects of its organizational structure.

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