Exhibit 99.1
Pier 1 Imports, Inc. Reports Second Quarter Financial Results
FORT WORTH, Texas--(BUSINESS WIRE)--Sept. 20, 2007--Pier 1
Imports, Inc. (NYSE:PIR) today announced a net loss from continuing
operations of $43.4 million or $0.49 per share for the second quarter
ended September 1, 2007 versus a net loss of $73.1 million or $0.84
per share for the year ago period. Total sales declined 7.0% for the
second fiscal quarter to $344.6 million from $370.7 million in the
year-ago quarter. Comparable store sales, which exclude Pier 1 Kids,
clearance stores and e-commerce, declined 3.6% for the quarter.
Merchandise Margin and Gross Profit
Merchandise margins in the second quarter were 47% of sales.
Historically, the second quarter has the lowest merchandise margins of
the year as a result of the semi-annual clearance event in June and
July. In addition, margins for the quarter were further reduced by an
estimated 200 basis points as a result of the aggressive liquidation
of Pier 1 Kids, e-commerce, clearance and the remaining modern
craftsman merchandise. During the month of August, when the Company
had no unusual promotional discounting activities, merchandise margins
were approximately 52% excluding Pier 1 Kids, e-commerce and clearance
stores and were comparable to last year. Store occupancy expense for
the second quarter decreased $2.5 million from the year ago period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the second
quarter were $35.6 million less than the year ago period, and were
34.1% of sales compared to 41.3% of sales last year. The primary
contributors to the decrease in on-going costs were savings of
approximately $14.0 million in marketing expense, $13.9 million in
payroll, and $4.8 million in other general administrative costs when
compared to the same period last year.
During the second quarter, selling, general and administrative
expenses also included $7.4 million in special charges compared to
$10.3 million reported in the same period last year, a decrease of
$2.9 million. The following table shows these charges in each of the
periods presented. Excluding the impact of these charges, adjusted
selling, general and administrative expenses for the second quarter
declined $32.7 million from the year ago period and for the year
declined $52.5 million when compared to the first six months of fiscal
2007.
Reconciled Selling, General and Administrative Expenses
($millions) 2nd Qtr 2nd Qtr YTD YTD YTD
FY08 FY07 FY08 FY07 (Savings)
------- ------- ------ ------ ----------
SG&A Expense, less: $117.5 $153.1 $249.6 $300.7 ($51.1)
Lease Termination Charges 3.6 1.5 4.8 2.0 2.8
Impairment Charges 2.0 3.1 4.2 5.1 (0.9)
Litigation Settlements - 4.6 - 4.6 (4.6)
Pier 1 Kids Relocation - 0.7 - 0.7 (0.7)
Severance / Outplacement Costs 1.8 0.4 5.3 0.5 4.8
------- ------- ------ ------ ----------
Adjusted SG&A Expense $110.1 $142.8 $235.3 $287.8 ($52.5)
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As the Company continues to improve efficiency and simplify all
aspects of the organizational structure, management expects to realize
additional savings throughout the balance of this year, and estimates
the savings to be at least $100 million for the year. On an annualized
basis, the on-going savings are estimated to be $150 million, as
previously announced.
Return to Profitability and Beyond
Alex W. Smith, the Company's President and Chief Executive
Officer, said, "I am delighted that our strenuous efforts to simplify
our business and drive out costs are already significantly improving
our bottom line. We know that if we continue to focus on execution of
our six business priorities, we will be able to reverse five years of
deteriorating trends and return to profitability and beyond.
"As we head into the very important holiday selling season, our
energies are concentrated on generating sales with sustainable,
normalized margins. I look forward to updating you in more detail on
our conference call later today."
Conference Call Information
The Company will host a conference call to discuss the 2008 second
quarter results at 10:00 a.m. Central Time today. A web cast is
available on the Company's 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 17087229. 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 1-800-642-1687 or if
international dial 1-706-645-9291 and reference the conference ID
number 17087229.
Financial Disclosure Advisory
This release references non-GAAP selling, general and
administrative expense information that excludes 1) lease termination
charges, 2) impairment charges, 3) charges for litigation settlements,
4) the relocation of Pier 1 Kids, and 5) severance and outplacement
costs.
The Company believes that the non-GAAP financial measures allow
management and investors to understand and compare the Company's
operating results in a more consistent manner for the second quarter
and first half of fiscal 2008. These non-GAAP measures should be
considered supplemental and not a substitute for the Company's
financial results that are recorded in accordance with generally
accepted accounting principles for the periods presented.
Management's expectations and assumptions regarding 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
included in this press release. Any forward-looking projections or
statements should be considered in conjunction with the cautionary
statements and risks contained in the Company's annual report filed on
Form 10-K. Refer to the Company's most recent SEC filings for any
updates concerning these and other risks and uncertainties that may
affect the Company's operations and performance. 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 the original global importer and is North
America's largest specialty retailer of imported decorative home
furnishings and gifts. Information about the Company is available on
www.pier1.com.
Pier 1 Imports, Inc.
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CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Six Months Ended
September August September August
1, 26, 1, 26,
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $344,566 $370,698 $700,941 $746,790
Operating costs and expenses:
Cost of sales (including
buying and store occupancy
costs) 257,042 265,201 526,239 514,041
Selling, general and
administrative expenses 117,457 153,145 249,581 300,728
Depreciation and
amortization 10,444 13,604 21,002 27,228
--------- --------- --------- ---------
384,943 431,950 796,822 841,997
--------- --------- --------- ---------
Operating loss (40,377) (61,252) (95,881) (95,207)
Nonoperating (income) and
expenses:
Interest and investment
income (2,438) (2,795) (5,370) (5,708)
Interest expense 4,000 3,444 7,957 6,895
Other income (405) - (653) -
--------- --------- --------- ---------
1,157 649 1,934 1,187
--------- --------- --------- ---------
Loss from continuing operations
before income taxes (41,534) (61,901) (97,815) (96,394)
Income tax expense (benefit) 1,875 11,158 1,972 (570)
--------- --------- --------- ---------
Loss from continuing
operations (43,409) (73,059) (99,787) (95,824)
Discontinued operations:
Loss from discontinued
operations - - - (638)
Income tax benefit - - - (231)
--------- --------- --------- ---------
Loss from discontinued
operations - - - (407)
Net loss ($43,409) ($73,059) ($99,787) ($96,231)
========= ========= ========= =========
Loss per share from continuing
operations:
Basic and diluted ($0.49) ($0.84) ($1.14) ($1.09)
========= ========= ========= =========
Loss per share from
discontinued operations:
Basic and diluted - - - ($0.01)
========= ========= ========= =========
Loss per share:
Basic and diluted ($0.49) ($0.84) ($1.14) ($1.10)
========= ========= ========= =========
Average shares outstanding
during period:
Basic and diluted 88,000 87,307 87,898 87,201
========= ========= ========= =========
Pier 1 Imports, Inc.
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CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
(unaudited)
September 1, March 3, August 26,
2007 2007 2006
------------- --------- -----------
ASSETS
Current assets:
Cash and cash equivalents,
including temporary investments
of $112,468, $160,721 and
$140,708, respectively $121,872 $167,178 $150,253
Beneficial interest in
securitized receivables - - 44,928
Other accounts receivable, net 20,533 21,437 16,246
Inventories 374,468 360,063 404,117
Income tax receivable 15,143 34,966 43,344
Prepaid expenses and other
current assets 47,318 50,324 78,115
------------- --------- -----------
Total current assets 579,334 633,968 737,003
Properties, net 212,623 239,548 282,938
Other noncurrent assets 46,524 42,954 41,165
------------- --------- -----------
$838,481 $916,470 $1,061,106
============= ========= ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $125,253 $95,609 $125,404
Gift cards and other deferred
revenue 64,318 66,130 63,482
Accrued income taxes payable 3,120 3,305 2,106
Other accrued liabilities 102,321 119,541 129,631
------------- --------- -----------
Total current liabilities 295,012 284,585 320,623
Long-term debt 184,000 184,000 184,000
Other noncurrent liabilities 97,321 86,768 75,950
Shareholders' equity:
Common stock, $1.00 par,
500,000,000 shares authorized,
100,779,000 issued 100,779 100,779 100,779
Paid-in capital 125,663 130,416 127,276
Retained earnings 232,318 337,178 468,515
Cumulative other comprehensive
income (loss) 3,012 2,408 (2,473)
Less -- 12,359,000, 12,981,000
and 13,223,000 common shares in
treasury, at cost, respectively (199,624) (209,664) (213,564)
262,148 361,117 480,533
------------- --------- -----------
$838,481 $916,470 $1,061,106
============= ========= ===========
Pier 1 Imports, Inc.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
September August
1, 26,
2007 2006
--------- ---------
Cash flow from operating activities:
Net loss $(99,787) $(96,231)
Adjustments to reconcile to net cash used in
operating activities:
Depreciation and amortization 27,172 32,519
(Gain) loss on disposal of fixed assets (1,404) 200
Loss on impairment of fixed assets and long-
lived assets 4,164 5,063
Stock-based compensation expense 3,182 3,270
Deferred compensation 1,891 4,727
Lease termination expense 4,820 2,005
Deferred income taxes - 24,613
Other 281 (2,154)
Changes in cash from:
Sale of receivables in exchange for beneficial
interest in securitized receivables - (14,900)
Inventories (14,405) (34,297)
Other accounts receivable, prepaid expenses
and other current assets (6,066) (15,701)
Income tax receivable 24,474 (25,237)
Accounts payable and accrued expenses 2,488 20,168
Accrued income taxes payable 434 (2,794)
Other noncurrent assets 305 469
Other noncurrent liabilities (586) (938)
--------- ---------
Net cash used in operating activities (53,037) (99,218)
--------- ---------
Cash flow from investing activities:
Capital expenditures (2,665) (18,711)
Proceeds from disposition of properties 3,505 58
Proceeds from sale of discontinued operations - 11,601
Proceeds from sale of restricted investments 6,373 217
Purchase of restricted investments (589) (2,000)
Collections of principal on beneficial interest in
securitized receivables - 19,972
--------- ---------
Net cash provided by investing
activities 6,624 11,137
--------- ---------
Cash flow from financing activities:
Cash dividends - (17,475)
Proceeds from stock options exercised, stock
purchase plan and other, net 2,105 2,877
Debt issuance costs (998) (283)
--------- ---------
Net cash provided by (used in) financing
activities 1,107 (14,881)
--------- ---------
Change in cash and cash equivalents (45,306) (102,962)
Cash and cash equivalents at beginning of period
(including cash held for sale of $0 and $7,100,
respectively) 167,178 253,215
Cash and cash equivalents at end of period $121,872 $150,253
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CONTACT: Pier 1 Imports, Inc., Fort Worth
Cary Turner, 817-252-8400