Pier 1 Imports Expects Third Quarter Sales Decline

Furniture World Magazine

Pier 1 Imports, Inc. has provided guidance for the third quarter ending November 29, 2008. Based on current trends and a cautious view of Thanksgiving business, third quarter comparable store sales will be approximately negative 16 - 18%. Merchandise margins are expected to be approximately 52.5%. EBITDA before special charges is currently forecasted to be negative $16 - 20 million. Alex Smith, President and Chief Executive Officer stated, “The significant slowdown in consumer spending continues to affect our business. The deterioration in customer traffic that we reported for September continued into October, resulting in traffic that was down 10% below last year. Customers who are visiting our stores continue to respond well and we see meaningful improvements in both conversion rate and units per transaction. These increases are offset by the fact customers primarily shopped for 'small treats,' such as Halloween and holiday decor, and smaller home furnishings and furniture purchases, resulting in a lower average ticket. “Our merchandise margin rate remains healthy. We have continued to be very judicious in our approach to inventory purchases as well as the use of markdowns, and feel very good about our inventory position heading into the fourth quarter. “As of the end of October, our year-to-date marketing spending was still below last year. From now until Christmas, our marketing activities will continue to increase and our spend will be above last year. Our stores look fresh and exciting, and we are well positioned to make the most of the holiday customer traffic. “In terms of liquidity, our balance sheet is still strong. Our inventories are well under control and we are very focused on watching inventory levels and managing our merchandise purchases for next year to keep them in line with consumer demand. We are constantly evaluating the working capital needs of our company in this challenging environment. Based on current trends, we anticipate no need to request cash advances under our credit facility for the foreseeable future. We will continue our rigorous review of all costs and processes to ensure that Pier 1 Imports is properly positioned to meet the challenges of the current consumer environment.” 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.