Pier 1 Imports profits plummet

FORT WORTH, Texas Pier 1 Imports today announced a net loss from continuing operations of $56.4 million or 64 cents per share, for the first quarter ended June 2. Total sales declined 5.2% for the first fiscal quarter to $356.4 million from $376.1 million in the year-ago quarter, and comparable-store sales declined 5.4%.

During the first quarter, merchandise margins declined to 45.5% as a direct result of the company's aggressive liquidation of modern craftsman merchandise. Excluding the estimated impact of the aggressive markdown strategy, merchandise margins for the quarter would have approximated 52.2% compared to 53.8% last year. Store occupancy costs remained flat compared to the year-ago quarter. Selling, general and administrative expenses declined $15.5 million from the year-ago period, and were 37.1% of sales compared to 39.2% of sales last year. The primary drivers of the decrease in costs were savings of approximately $9 million in marketing expense, $6 million in store payroll, and $4 million in other general administrative costs when compared to the same period last year. These cost savings were partially offset by one-time and unusual charges of $3.5 million related to severance and outplacement costs incurred with the company's previously announced reduction in force. Excluding the impact on merchandise margins and the one-time charge discussed above, management believes the pre-tax loss for the first quarter would have been more in line with the pre-tax loss for the year ago period.