Exhibit 99.1
Pier 1 Imports, Inc. Reports 2008 Fiscal
Third Quarter Financial Results
Achieved Positive EBITDA for the Quarter
FORT WORTH, Texas--(BUSINESS WIRE)--Dec. 20, 2007--Pier 1 Imports,
Inc. (NYSE:PIR) today announced a net loss from continuing operations
of $10.0 million or $0.11 per share for the third quarter ended
December 1, 2007 versus a net loss of $72.7 million or $0.83 per share
for the year ago period. Also, the Company generated a positive EBITDA
(earnings before interest, taxes, depreciation and amortization) of
$2.9 million including $6.5 million in charges primarily related to
the exit of Pier 1 Kids.
Alex W. Smith, the Company's President and Chief Executive
Officer, said, "Our strategy of profitable sales at sustainable
margins, combined with a greater emphasis on lower ticket impulse
items, is beginning to pay off. We are pleased with our third quarter
margin results, which would have been higher had it not been for the
clearance of our Pier 1 Kids merchandise. I am obviously very
delighted that we achieved a positive EBITDA for the first time in
seven quarters."
Total sales for the third fiscal quarter declined 7.1% to $374.2
million from $402.7 million in the year-ago quarter, primarily as a
result of the closure of 98 stores. Comparable store sales, which
exclude Pier 1 Kids, clearance stores and e-commerce, declined 1.7%
for the quarter. Merchandise margins in the third quarter were 53.0%
of sales, up from 49.7% in the year ago quarter. As previously
indicated, the clearance activity related to closing down our Pier 1
Kids concept reduced the reported merchandise margin during this
fiscal quarter. Management estimates the impact on margins resulting
from the clearance of the Pier 1 Kids merchandise was 130 basis
points. Gross profit margins for the third quarter were 33.6% of
sales, up from 30.9% in the year ago period, and although the store
count was significantly reduced from the year ago period, gross profit
dollars improved $1.3 million.
Selling, general and administrative expenses for the third quarter
were $59.7 million less than the year ago period, and were 33.1% of
sales compared to 45.6% of sales last year. The primary contributors
to the decrease in on-going costs were savings of approximately $21.2
million in marketing expense, $10.8 million in payroll, and $5.4
million in other general administrative costs when compared to the
same period last year. Additionally, during the third quarter,
selling, general and administrative expenses included $6.5 million in
special charges compared to $28.8 million reported in the same period
last year, a decrease of $22.3 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 third quarter declined $37.4 million from the year
ago period and for the year declined $91.0 million when compared to
the first nine months of fiscal 2007.
Reconciled Selling, General and Administrative Expenses
3rd 3rd
Qtr Qtr 3rd Qtr YTD YTD YTD
($millions) FY08 FY07 (Savings) FY08 FY07 (Savings)
------ ------ ---------- ------ ------ ----------
SG&A Expense, less: $123.7 $183.4 ($59.7) $373.3 $484.2 ($110.9)
Lease Termination
Charges 6.1 0.9 5.2 11.0 2.9 8.1
Impairment Charges - 24.8 (24.8) 4.2 29.8 (25.6)
Litigation
Settlements - - - - 4.6 (4.6)
Credit Card Contract
Termination - 2.4 (2.4) - 2.4 (2.4)
Severance /
Outplacement 0.4 0.7 (0.3) 5.7 1.1 4.6
------ ------ ---------- ------ ------ ----------
Adjusted SG&A
Expense $117.2 $154.6 ($37.4) $352.4 $443.4 ($91.0)
====== ====== ========== ====== ====== ==========
As previously reported, management expects to realize additional
savings throughout the balance of this year, and now estimates the
savings to be at least $110 million for this fiscal year. On an
annualized basis, the on-going savings are now estimated to be $160
million.
Return to Profitability and Beyond
Alex W. Smith, the Company's President and Chief Executive
Officer, said, "During the third quarter, we have begun to see
improvements in conversion rates, units per transaction, and total
transaction value. This is only the beginning; we still have a lot of
work to do. However, the fact that we achieved these results with less
than perfect execution gives me great optimism about our ability to
return to profitability and beyond. I look forward to discussing this
in more detail later this morning on our scheduled conference call."
Conference Call Information
The Company will host a conference call to discuss the 2008 third
quarter results at 10:00 a.m. Central Time today. A web cast is
available on the Company's website at www.pier1.com linking through to
the "Investor Relations" page and the "Events" page, or you can dial
into the conference at 1-800-498-7872 or if international dial
1-706-643-0435 and the conference ID number is 28244511. The
teleconference will be held in a "listen-only" mode for all
participants other than the Company's current sell-side analysts and
buy-side investors.
The replay will be available at about 12:00 p.m. (Central) for 24
hours and replay access can be dialed at 1-800-642-1687 or if
international dial 1-706-645-9291 and reference the conference ID
number 28244511.
Financial Disclosure Advisory
This release references non-GAAP selling, general and
administrative expense information that excludes 1) lease termination
charges, 2) impairment charges, 3) charges for litigation settlements,
4) credit card contract termination charges, and 5) severance and
outplacement costs, as reconciled above. This release also includes
references to EBITDA, which is a non-GAAP measure that represents
earnings before interest, taxes, depreciation and amortization
expense, and is reconciled to net income below.
($millions) 3rd Qtr FY08
-------------
Net Income (Loss), plus ($10.0)
Tax Expense .4
Net Interest Expense 2.1
Depreciation and Amortization Expense 10.4
-------------
EBITDA $2.9
=============
The Company believes that the non-GAAP financial measures included
in this press release allow management and investors to understand and
compare the Company's operating results in a more consistent manner
for the third quarter and first nine months of fiscal 2008. These
non-GAAP measures should be considered supplemental and not a
substitute for the Company's financial results that were 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.
- ----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
Dec. 1, Nov. 25, Dec. 1, Nov. 25,
2007 2006 2007 2006
--------- --------- ----------- -----------
Net sales $374,181 $402,714 $1,075,122 $1,149,504
Operating costs and
expenses:
Cost of sales (including
buying and store
occupancy costs) 248,286 278,131 774,525 792,172
Selling, general and
administrative expenses 123,698 183,442 373,279 484,170
Depreciation and
amortization 10,347 12,110 31,349 39,338
--------- --------- ----------- -----------
382,331 473,683 1,179,153 1,315,680
--------- --------- ----------- -----------
Operating loss (8,150) (70,969) (104,031) (166,176)
Nonoperating (income) and
expenses:
Interest and investment
income (1,624) (947) (6,994) (6,655)
Interest expense 3,759 4,218 11,716 11,113
Other income (674) (1,477) (1,327) (1,477)
--------- --------- ----------- -----------
1,461 1,794 3,395 2,981
--------- --------- ----------- -----------
Loss from continuing
operations before income
taxes (9,611) (72,763) (107,426) (169,157)
Income tax expense
(benefit) 351 (45) 2,323 (615)
--------- --------- ----------- -----------
Loss from
continuing
operations (9,962) (72,718) (109,749) (168,542)
Discontinued operations:
Loss from discontinued
operations before
income taxes - - - (638)
Income tax benefit - - - (231)
--------- --------- ----------- -----------
Loss from
discontinued
operations - - - (407)
Net loss ($9,962) ($72,718) ($109,749) ($168,949)
========= ========= =========== ===========
Loss per share from
continuing operations:
Basic and diluted ($0.11) ($0.83) ($1.25) ($1.93)
========= ========= =========== ===========
Loss per share from
discontinued operations:
Basic and diluted - - - ($0.01)
========= ========= =========== ===========
Loss per share:
Basic and diluted ($0.11) ($0.83) ($1.25) ($1.94)
========= ========= =========== ===========
Average shares outstanding
during period:
Basic and diluted 88,178 87,503 87,991 87,302
========= ========= =========== ===========
Pier 1 Imports, Inc.
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CONSOLIDATED BALANCE SHEETS
(in thousands except per share amounts)
(unaudited)
December March 3, November
1, 25,
2007 2007 2006
---------- ---------- -----------
ASSETS
Current assets:
Cash and cash equivalents,
including temporary investments
of $74,107, $160,721 and
$159,843, respectively $ 82,652 $ 167,178 $ 172,252
Other accounts receivable, net 28,224 21,437 30,018
Inventories 432,782 360,063 392,407
Income tax receivable 14,150 34,966 43,447
Prepaid expenses and other
current assets 47,093 50,324 77,913
---------- ---------- -----------
Total current assets 604,901 633,968 716,037
Properties, net 204,035 239,548 251,326
Other noncurrent assets 44,640 42,954 50,518
---------- ---------- -----------
$ 853,576 $ 916,470 $1,017,881
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 138,871 $ 95,609 $ 121,622
Gift cards and other deferred
revenue 63,051 66,130 64,685
Accrued income taxes payable 3,200 3,305 2,361
Other accrued liabilities 112,295 119,541 139,456
---------- ---------- -----------
Total current liabilities 317,417 284,585 328,124
Long-term debt 184,000 184,000 184,000
Other noncurrent liabilities 98,491 86,768 96,222
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 126,245 130,416 126,890
Retained earnings 222,356 337,178 395,797
Cumulative other comprehensive
income (loss) 2,343 2,408 (2,726)
Less -- 12,281,000, 12,981,000
and 13,076,000 common shares in
treasury, at cost, respectively (198,055) (209,664) (211,205)
253,668 361,117 409,535
---------- ---------- -----------
$ 853,576 $ 916,470 $1,017,881
========== ========== ===========
Pier 1 Imports, Inc.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
December November
1, 25,
2007 2006
---------- ----------
Cash flow from operating activities:
Net loss $(109,749) $(168,949)
Adjustments to reconcile to net cash used in
operating activities:
Depreciation and amortization 41,248 48,087
(Gain) loss on disposal of fixed assets (1,130) 231
Loss on impairment of fixed assets 4,164 29,839
Stock-based compensation expense 4,416 4,233
Deferred compensation 2,692 7,716
Lease termination expense 10,991 2,859
Deferred income taxes - 23,869
Other 344 (3,486)
Changes in cash from:
Sale of receivables in exchange for
beneficial interest in securitized
receivables - (15,914)
Purchase of proprietary credit card
receivables and other - (97,740)
Proceeds from the sale of proprietary credit
card operations - 142,788
Inventories (72,719) (22,587)
Other accounts receivable, prepaid expenses
and other current assets (16,919) (28,077)
Income taxes receivable 25,467 (25,555)
Accounts payable and accrued expenses 26,125 21,940
Accrued income taxes payable 582 (2,539)
Defined benefit plan payments (6,282) (217)
Other noncurrent assets 406 643
Other noncurrent liabilities (2,195) (1,582)
---------- ----------
Net cash used in operating activities (92,559) (84,441)
---------- ----------
Cash flow from investing activities:
Capital expenditures (5,557) (25,234)
Proceeds from disposition of properties 4,282 104
Proceeds from sale of discontinued operations - 11,601
Proceeds from sale of Pier 1 National Bank - 10,754
Proceeds from sale of restricted investments 6,373 217
Purchase of restricted investments (589) (2,000)
Collection of notes receivable 1,500 -
Collections of principal on beneficial interest
in securitized receivables - 21,907
---------- ----------
Net cash provided by investing
activities 6,009 17,349
---------- ----------
Cash flow from financing activities:
Cash dividends - (17,475)
Proceeds from stock options exercised, stock
purchase plan and other, net 3,022 3,887
Notes payable borrowings - 69,000
Repayments of notes payable - (69,000)
Debt issuance costs (998) (283)
---------- ----------
Net cash provided by (used in)
financing activities 2,024 (13,871)
---------- ----------
Change in cash and cash equivalents (84,526) (80,963)
Cash and cash equivalents at beginning of period
(including cash at discontinued operation of $0
and $7,100, respectively) 167,178 253,215
Cash and cash equivalents at end of period $ 82,652 $ 172,252
========== ==========
CONTACT: Pier 1 Imports, Inc.
Cary Turner, 817-252-8400