Pier 1 Imports reports first quarter profit

Pier 1 Imports Inc. found itself in the black in the first quarter ended May 30, reporting earnings of $29.3 million, or 32 cents per share, compared to a loss of $32.8 million, or 37 cents per share, in the prior-year period.

The Fort Worth, Texas-based home furnishings retailer was helped by a large gain related to a reduction of debt. A foreign subsidiary bought some outstanding convertible senior notes during the quarter for $27 million, which lowered outstanding debt by $79 million and led to a $48 million gain, the company said.

However, net sales for the period dropped 9.3% to $281.1 million from $310 million, while same-store sales slipped 7.5 % in the quarter. The retailer was able to increase merchandise margins for the quarter to 54% of sales compared to 51% of sales in the prior-year quarter due to a reduced supply chain cost and decreased clearance activity.

Pier 1 ended the quarter with 1,073 North American stores, down from 1,092 the prior quarter. The company said it plans to end the leases on 22 stores and close five more that it has not reached deals on to either lower their rents or end their leases. The retailer said it currently anticipates closing about 50 locations this fiscal year.