Pier 1 Imports Reports In-Line First Quarter, Raises FY Guidance

Home goods retailer Pier 1 Imports PIR reported first quarter results that were in line with expectations. The company also raised guidance for full year earnings closer to Wall Street forecasts and shares rose pre-market.

First Quarter Highlights

For the fiscal first quarter ended June 1, Pier 1 reported earnings per share of $0.19 vs. $0.19 expected. However, earnings per share grew nearly 19 percent from the first quarter of 2013 when the company earned $0.16 per share.

Revenue also was mostly in line with forecasts while showing strong sequential growth. Revenue was reported at $394.85 million vs. $395.02 million forecast, a slight miss of 0.04 percent. However, revenue showed a strong 9.39 percent growth from the first quarter a year ago.

“Our results for the period, our 15th consecutive quarter of significant sales and profit growth, reflect a solid quarter of execution,” stated Alex W. Smith, President and Chief Executive Officer. “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. We also leveraged expenses, enabling us to deliver operating margins of 8.4% and earnings per share growth of 19%.”

Mr. Smith continued, “We're pleased with the ongoing progress we are making towards building out our multi-channel functionality and executing our '1 Pier 1' vision. The rollout of our new point-of-sale system is on track for completion later this summer; we will then begin the integration of our stores and e-Commerce businesses, laying the foundation to provide a seamless and significantly enhanced shopping experience for our customers.”

Guidance Raise

Pier 1 also raised its fiscal 2014 guidance for earnings per share. The company now expects to earn between $1.27-1.32 per share vs. the prior guidance of $1.26-1.31 per share. Wall Street expects earnings per share to be $1.32 in the year.

The company also noted that it expects comparable same-store sales growth "in the mid single-digit range" and EBITDA growth "in the range of 15% to 18%." The company also expects to open 30 new stores and to close or relocate 14 stores for a net increase of 16 stores by the end of FY 2014.

Credit Facility

Pier 1reported that it has also amended, renewed and extended its secured, asset-based revolving credit facility. The facility was extended from April 2016 to June 2018 and increased from $300 million to $350 million. The amended facility includes a $100 million accordion feature, which would enable Pier 1 to increase the line to as much as $450 million under certain circumstances.

The facility is secured by Pier 1 Imports' merchandise inventory and credit card receivables. The Company expects to continue funding its working capital requirements with cash flow from operations but may use the facility for general corporate purposes.

Shares Rise

Pier 1 shares rose modestly in the pre-market, gaining 2.33 percent to $24.55 on thin volume. Shares are only slightly below the 52-week high of $25.28.