Exhibit 99.1
Pier 1 Imports, Inc. Reports Fourth Quarter and FY 2006 Financial Results
FORT WORTH, Texas--(BUSINESS WIRE)--April 6, 2006--Pier 1 Imports, Inc.
(NYSE:PIR) today reported results for the fourth quarter and fiscal year ended
February 25, 2006. The results of The Pier Retail Group Limited ("The Pier"),
the Company's subsidiary based in the United Kingdom, have been classified as
discontinued operations for all periods presented in the Company's consolidated
financial statements; this subsidiary was sold on March 20, 2006.
Fourth Quarter Results
Fourth quarter sales from continuing operations were $506,022,000, up 0.7%
from last year's sales from continuing operations of $502,278,000, and
comparable store sales declined 2.9%. For the fourth quarter, merchandise
margins decreased 400 basis points from the year-ago period and gross profit,
after de-leveraging of store occupancy costs, declined 510 basis points versus
last year. The Company reported a net loss of $9,976,000 or $0.11 per share for
the fourth quarter, which included an after-tax loss from discontinued
operations from The Pier of $2,991,000 or $0.03 per share. The loss from
discontinued operations included a non-cash pre-tax impairment charge of
$7,441,000 to state the Company's investment in The Pier at its estimated fair
value. The fourth quarter net loss from continuing operations of $6,985,000 or
$0.08 per share included charges recorded in selling, general and administrative
expenses for the following transitional costs and other significant adjustments
during the quarter:
-- After a comprehensive reevaluation of the real estate portfolio of
Pier 1 and Pier 1 Kids in fiscal 2006, the Company has accelerated
closings of certain stores with weaker sales. The decision was made to
close 38 stores in fiscal 2006 and 35 store closings are planned for
fiscal 2007. The Company had originally scheduled to close 27 and 20
stores in fiscal 2006 and 2007, respectively. This rationalization of
the Company's store portfolio resulted in non-cash pre-tax impairment
charges and fixed asset and intangible asset write-offs in the fourth
quarter totaling $5.8 million, as well as early lease terminations of
$1.4 million before tax. Currently, the Company plans to open
approximately 40 new Pier 1 stores and no new Pier 1 Kids stores
during fiscal 2007. Additionally, the Company has doubled the number
of Pier 1 outlet stores as of the end of fiscal 2006, and now operates
34 outlet stores in order to effectively transition merchandise,
improve margins and maintain clean visual presentations in stores
throughout the year.
-- The Company also restructured certain corporate office and field
administration functions during the fourth quarter that resulted in
incremental costs for severance, outplacement and retirement expenses
totaling approximately $2.6 million before tax.
Full Year Fiscal 2006 Results
Total fiscal 2006 sales from continuing operations were $1,776,701,000, a
decrease of 2.7% from last year's sales from continuing operations of
$1,825,343,000, and comparable store sales declined 7.1%. The Company reported a
fiscal 2006 net loss of $39,804,000 or $0.46 per share, which included an
after-tax loss from discontinued operations from The Pier of $12,333,000 or
$0.14 per share. For the year, the Company reported a net loss from continuing
operations of $27,471,000 or $0.32 per share.
Marvin J. Girouard, the Company's Chairman and Chief Executive Officer,
said, "The Company continues to move forward with its turnaround strategy, and
during the fourth quarter we made significant progress toward plans to improve
sales and profitability for fiscal year 2007 that began on February 26, 2006. We
believe that our business will improve through the successful implementation of
strategies in the areas of merchandising, marketing and store portfolio
rationalization, as well as corporate and field restructuring programs. These
changes are anticipated to improve sales, while reducing administrative
expenses. In addition, the Company's divestiture of the U.K. stores last month
is further evidence that we are intensely focused on the core business.
"In early March, we dramatically transformed stores to feature the 'Pier 1
meets modern' look and new colors for the season. Customers are responding
positively to the more relevant and modern designs, the uniqueness of the new
styles as well as their higher quality and value pricing. In mid-March, we began
our targeted marketing program consisting of new national television ads and a
spring catalog mailing to 10 million customers. It is too early to make any
assertions on longer term success; however, we are encouraged by initial
feedback on the new merchandise and easy-to-shop store presentations. We believe
that by the end of the first quarter and into the beginning of the second
quarter, we will begin to see notable improvement in customer traffic."
Consolidated Statements of Cash Flows Reclassification
The Company has determined that a reclassification within its consolidated
statements of cash flows is required to properly reflect the exchanges of
proprietary credit card receivables for retained interests in securitized
receivables as non-monetary transactions in the operating activities section of
the cash flow statements. The reclassification of the consolidated statements of
cash flows will require restatement for the years ended February 26, 2005 and
February 28, 2004. Please refer to the Company's Form 8-K submission today with
the Securities and Exchange Commission for a more complete discussion of the
reclassification. The Company expects to file its Form 10-K for the year ended
February 25, 2006 during April 2006.
The Company will host a conference call to discuss the fourth quarter and
fiscal year 2006 results, as well as March sales, at 10:00 a.m. Central Time
today. A web cast is available on our website at www.pier1.com linking through
to the "Investor Relations" page and the "Events" page, or you can dial into the
conference at 1-800-498-7872 or if international dial 1-706-643-0435 and the
conference ID number is 4637140. The teleconference will be held in a
"listen-only" mode for all participants other than the Company's current
sell-side analysts and buy-side investors.
The replay will be available at about 12:00 p.m. (Central) for 24 hours and
replay access can be dialed at 800-642-1687 or if international dial
706-645-9291 and reference the conference ID number 4637140.
Any forward-looking projections or statements made in this press release
should be considered in conjunction with the cautionary statements contained in
the Company's most recently filed quarterly report on Form 10-Q. Management's
expectations and assumptions regarding planned store openings, financing of
Company obligations from operations, results from its new marketing,
merchandising and store operations strategies, and other future results are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from the anticipated results or other expectations
expressed in the forward-looking statements. Risks and uncertainties that may
affect Company operations and performance include, among others, the effects of
terrorist attacks or other acts of war, conflicts or war involving the United
States or its allies or trading partners, labor strikes, weather conditions or
natural disasters that may affect sales, volatility of fuel and utility costs,
the general strength of the economy and levels of consumer spending, consumer
confidence, the availability of new sites for expansion along with sufficient
labor to facilitate growth, the strength of new home construction and sales of
existing homes, the availability and proper functioning of technology and
communications systems supporting the Company's key business processes, the
ability of the Company to import merchandise from foreign countries without
significantly restrictive tariffs, duties or quotas and the ability of the
Company to source, ship and deliver items from foreign countries to its U.S.
distribution centers at reasonable prices and rates and in a timely fashion. The
Company assumes no obligation to update or revise its forward-looking statements
even if experience or future changes make it clear that any projected results
expressed or implied will not be realized.
Pier 1 Imports, Inc. is North America's largest specialty retailer of
imported decorative home furnishings and gifts with Pier 1 Imports(R) stores in
49 states, Puerto Rico, Canada, and Mexico and Pier 1 Kids(R) stores in the
United States.
Pier 1 Imports, Inc.
--------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
February 25, February 26, February 25, February 26,
2006 2005 2006 2005
----------- ---------- ------------ -----------
Net sales $506,022 $502,278 $1,776,701 $1,825,343
Operating costs and
expenses:
Cost of sales
(including buying
and store
occupancy costs
and excluding
costs shown
separately
below) 344,235 316,008 1,175,011 1,121,697
Selling, general
and
administrative
expenses 157,690 142,142 588,273 549,635
Depreciation and
amortization 14,085 15,476 56,229 55,762
----------- ---------- ----------- ----------
516,010 473,626 1,819,513 1,727,094
----------- ---------- ----------- ----------
Operating income
(loss) (9,988) 28,652 (42,812) 98,249
Nonoperating (income)
and expenses:
Interest and
investment income (1,284) (1,473) (3,510) (2,635)
Interest expense 947 937 2,610 1,735
----------- ---------- ----------- ----------
(337) (536) (900) (900)
----------- ---------- ----------- ----------
Income (loss)
from continuing
operations before
income taxes (9,651) 29,188 (41,912) 99,149
Provision (benefit)
for income taxes (2,666) 11,848 (14,441) 36,384
----------- ---------- ----------- ----------
Income (loss) from
continuing
operations (6,985) 17,340 (27,471) 62,765
Discontinued
operations:
Income (loss) from
discontinued
operations (8,241) 1,459 (17,583) (2,308)
Income tax benefit (5,250) - (5,250) -
---------- ---------- ----------- ----------
Loss on
discontinued
operations (2,991) 1,459 (12,333) (2,308)
Net income (loss) $(9,976) $18,799 $(39,804) $60,457
========== ========== =========== ==========
Earnings (loss) per
share from
continuing operations:
Basic ($0.08) $0.20 ($0.32) $0.72
========== ========== =========== ==========
Diluted ($0.08) $0.20 ($0.32) $0.71
========== ========== =========== ==========
Earnings (loss) per
share from
discontinued
operations:
Basic ($0.03) $0.02 ($0.14) ($0.03)
========== ========== =========== ==========
Diluted ($0.03) $0.01 ($0.14) ($0.03)
========== ========== =========== ==========
Earnings (loss) per
share:
Basic ($0.11) $0.22 ($0.46) $0.69
========== ========== =========== ==========
Diluted ($0.11) $0.21 ($0.46) $0.68
========== ========== =========== ==========
Average shares
outstanding during
period:
Basic 86,883 86,454 86,629 87,037
========== ========== =========== ==========
Diluted 86,883 87,965 86,629 88,838
========== ========== =========== ==========
Pier 1 Imports, Inc.
--------------------
CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
(unaudited)
February 25, February 26,
2006 2005
------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents, including
temporary investments of $238,463
and $178,289, respectively $246,115 $185,722
Beneficial interest in securitized
receivables 50,000 35,690
Other accounts receivable, net 13,916 11,089
Inventories 368,978 365,767
Income tax receivable 18,011 -
Assets held for sale 32,359 39,815
Prepaid expenses and other current
assets 45,544 40,864
------------- ---------------
Total current assets 774,923 678,947
Properties, net 298,922 320,138
Other noncurrent assets 96,016 76,664
------------- ---------------
$1,169,861 $1,075,749
============= ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $105,916 $108,132
Gift cards and other deferred
revenue 63,835 60,844
Accrued income taxes payable 4,763 11,716
Liabilities related to assets held
for sale 16,841 15,163
Other accrued liabilities 97,493 95,723
------------- ---------------
Total current liabilities 288,848 291,578
Long-term debt 184,000 19,000
Other noncurrent liabilities 107,031 100,802
Shareholders' equity:
Common stock, $1.00 par, 500,000,000
shares authorized, 100,779,000
issued 100,779 100,779
Paid-in capital 132,075 141,850
Retained earnings 582,221 656,692
Cumulative other comprehensive
(loss) income (583) (1,426)
Less -- 13,761,000 and 14,459,000
common shares in treasury, at cost,
respectively (222,254) (233,526)
Less unearned compensation (2,256) -
------------- ---------------
589,982 664,369
------------- ---------------
$1,169,861 $1,075,749
============= ===============
Pier 1 Imports, Inc.
--------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
February 25, February 26, February 28,
2006 2005 2004
------------ ------------- -------------
(as restated) (as restated)
Cash flow from operating
activities:
Net income (loss) $(39,804) $60,457 $118,001
Adjustments to reconcile to
net cash provided by
(used in) operating
activities:
Depreciation and
amortization 78,781 75,624 64,606
Loss (gain) on
disposal of fixed
assets 1,542 315 (316)
Loss on impairment of
fixed assets 6,263 741 459
Write-down of assets
held for sale 7,441 - -
Deferred compensation 11,402 7,710 6,573
Lease termination
expense 4,048 2,243 3,258
Deferred income taxes (14,496) 2,035 184
Sale of receivables in
exchange for
beneficial
interest in securitized
receivables (74,550) (91,071) (83,931)
Tax benefit from
options exercised by
employees 760 3,668 4,897
Other (396) (222) 4,894
Changes in cash from:
Inventories 882 (6,860) (40,520)
Other accounts
receivable, prepaid
expenses and other
current assets (22,778) (11,302) (16,927)
Income tax receivable (18,011) - -
Accounts payable and
accrued expenses 7,369 21,572 34,410
Income taxes payable (6,966) (14,116) 184
Other noncurrent assets (2,558) 336 (2,027)
------------ ------------- -------------
Net cash provided
by (used in)
operating
activities (61,071) 51,130 93,745
------------ ------------- -------------
Cash flow from investing
activities:
Capital expenditures (50,979) (99,239) (121,190)
Proceeds from disposition
of properties 1,401 3,852 34,450
Contributions to restricted
cash (3,500) (10,807) (8,752)
Collections of principal on
beneficial interests
in securitized receivables 60,240 99,712 78,788
------------ ------------- -------------
Net cash provided
by (used in)
investing
activities 7,162 (6,482) (16,704)
------------ ------------- -------------
Cash flow from financing
activities:
Cash dividends (34,667) (34,762) (26,780)
Purchases of treasury stock (4,047) (58,210) (76,009)
Proceeds from stock options
exercised, stock purchase
plan and other, net 7,641 12,473 15,709
Issuance of long-term debt 165,000 - -
Notes payable borrowings 86,500 - -
Repayment of notes payable (86,500) - (6,390)
Debt issuance costs (6,739) (169) (584)
Purchase of call option (9,145) - -
------------ ------------- -------------
Net cash provided
by (used in)
financing
activities 118,043 (80,668) (94,054)
------------ ------------- -------------
Change in cash and cash
equivalents 64,134 (36,020) (17,013)
Cash and cash equivalents at
beginning of period
(including cash held for sale
of $3,359, $6,148 and $6,506,
respectively) 189,081 225,101 242,114
------------ ------------- -------------
Cash and cash equivalents at
end of period (including cash
held for sale of $7,100,
$3,359 and $6,148,
respectively) $253,215 $189,081 $225,101
============ ============= =============
CONTACT: Pier 1 Imports, Inc., Fort Worth
Cary Turner, 817-252-8400