Pier 1 Imports, Inc. Reports Fiscal 2015 First Quarter Results

  Pier 1 Imports, Inc. Reports Fiscal 2015 First Quarter Results                   Raises e-Commerce Sales Contribution Target;                 Adjusts Fiscal 2015 Earnings Per Share Guidance  Business Wire  FORT WORTH, Texas -- June 19, 2014  Pier 1 Imports, Inc. (NYSE:PIR) today reported financial results for the first quarter ended May 31, 2014.  “We achieved company comparable sales growth of 6.3% in the first quarter, reflecting strong traffic to the Pier 1 Imports brand,” stated Alex W. Smith, President and Chief Executive Officer. “We are pleased to see increasing strength in e-Commerce, which exceeded our plans and reached 9% of sales for the quarter. At the same time, our stores continue to serve as an important and productive gateway to Pier1.com, with approximately one-quarter of our online transactions originating at the store and one-third of orders placed at home being picked up in-store. Given the momentum we are experiencing, we now anticipate that sales through Pier1.com will exceed $200 million in fiscal 2015. Nevertheless, the retail environment remains highly promotional and is pressuring gross profit in the near-term. As a result, we are adjusting our full-year earnings forecast accordingly.”  “Our expanded spring and outdoor assortments resonated with customers and were buoyed by a strong marketing message. Our talented merchants continue to curate exceptional merchandise which, combined with our ‘1 Pier 1’ strategy, creates an engaging shopping experience. We believe this is an exciting time to be a retailer – we’re seeing a profound shift in the shopping behavior of our customers. Our timely transformation from a brick-and-mortar retailer to one with full omni-channel capabilities has us well positioned to seize upon this change and drive brand growth.”  First Quarter Fiscal 2015 Results  For the first quarter ended May 31, 2014, the Company reported net income of $15.1 million, or $0.16 per share, compared to last year’s first quarter net income of $20.3 million, or $0.19 per share. Total sales for the first quarter were $419.1 million, a 6.1% increase versus $394.9 million in the year-ago quarter. Company comparable sales increased 6.3% during the first quarter, attributable to increases in total brand traffic, conversion and higher average ticket.  Gross profit for the quarter was $167.7 million, approximately flat compared to gross profit of $167.6 million for the same period last year. As a percentage of sales, gross profit in the first quarter of fiscal 2015 was 40.0%, compared to 42.4% in the year-ago period.  First quarter selling, general and administrative expenses leveraged slightly to $131.5 million, or 31.4% of sales, compared to $125.5 million, or 31.8% of sales in the first quarter of last year.  First quarter EBITDA (earnings before interest, taxes, depreciation and amortization) was $36.4 million compared to $42.3 million in the first quarter of last year. Operating income for the first quarter was $25.8 million compared to $33.2 million in the first quarter of fiscal 2014.  Net interest expense for the first quarter was $1.7 million, compared to $0.4 million during the same period last year. The increase is primarily attributable to the Company’s new $200 million senior secured term loan, which closed in the first quarter.  Balance Sheet and Share Repurchase Program  As of May 31, 2014, the Company remained in strong financial condition with $220.6 million of cash and cash equivalents. The Company had $200 million outstanding under its senior secured term loan, and no cash borrowings under its $350 million asset-based revolving credit facility. Inventory totaled $417.6 million, an increase of 9.0% compared to $383.3 million in the year-ago period, which was in line with management’s expectations. Capital expenditures totaled $15.3 million for the quarter and were primarily used for new store openings, existing store improvements and infrastructure and technology development, including work on the Company’s new e-Commerce fulfillment center in Columbus, Ohio and enhancements to the Company’s e-Commerce platform.  The Company repurchased 5,701,812 shares of its common stock during the first quarter at an average cost of $18.84 per share and a total cost of approximately $107.4 million. Of this amount, 630,000 shares were purchased at an average cost of $17.92 per share and a total cost of $11.3 million under the new $200 million share repurchase authorization announced in April 2014. Subsequent to the end of the first quarter, the Company repurchased an additional 390,000 shares of its common stock at an average cost of $17.55 per share and a total cost of approximately $6.8 million. To date the Company has repurchased 1,020,000 shares of common stock under the April 2014 $200 million share repurchase program at a total cost of approximately $18.1 million and $181.9 million remains available for future repurchases under the program. As of June 18, 2014, approximately 93.5 million shares of the Company’s common stock were outstanding.  Fiscal 2015 Financial Guidance  The Company provided the following updated financial guidance for fiscal year 2015:    *Company comparable sales growth, which includes e-Commerce, in the     high-single digits;   *Selling, general and administrative expenses relatively flat as a     percentage of sales compared to fiscal 2014;   *EBITDA growth in the range of 9% to 14%, compared to previous guidance for     growth of 11% to 17%;   *Interest expense of approximately $11 million;   *Earnings per share in the range of $1.14 to $1.22, utilizing a fully     diluted share count of 95 million shares, representing year-over-year     growth of 13% to 21%. This compares to previous guidance of $1.16 to $1.24     utilizing a fully diluted share count of 96 million.  Updated Growth Targets  In response to the early success of its ‘1 Pier 1’ omni-channel strategy, the Company also announced that it now expects to achieve e-Commerce sales of at least $200 million in fiscal 2015, and e-Commerce sales of at least $400 million in fiscal 2016. This compares to previous expectations for e-Commerce sales to represent 10% of total sales by the end of fiscal 2016. The Company reiterated its previously stated goals for sales per retail square foot of $225 and operating margins of approximately 11% to 11.5% by the end of fiscal 2016.  First Quarter Results Conference Call and Annual Meeting of Shareholders Information  The Company will host a live conference call to discuss fiscal 2015 first quarter financial results at 10:00 a.m. Central Time today, June 19, 2014. Investors will be able to connect to the call through the Company’s website at www.pier1.com. The conference call can be accessed by linking through the “Investor Relations” page to the “Events” page, or you can listen to the conference call by dialing 1-800- 498-7872, or if international, 1-706-643-0435. The conference ID number is 51384062.  A replay will be available after 12:00 p.m. Central Time for a 24-hour period and the replay can be accessed by dialing 1-855-859-2056, or if international, 1-404-537-3406. The conference ID number is 51384062.  The Company will host its annual meeting of shareholders on Friday, June 20, 2014 at 10:00 a.m. Central Time. The meeting will be held on the Mezzanine Level, Conference Center Room C, Pier 1 Imports, Inc. Headquarters, 100 Pier 1 Place, Fort Worth, Texas 76102.  Financial Disclosure Advisory  The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). This press release references a non-GAAP financial measure, EBITDA.  EBITDA represents earnings before interest, taxes, depreciation and amortization. Management believes EBITDA is a meaningful indicator of the Company’s performance that provides useful information to investors regarding its financial condition and results of operations. Management uses EBITDA, together with financial measures prepared in accordance with GAAP, to assess the Company’s operating performance, to enhance its understanding of core operating performance and to compare the Company’s operating performance to other retailers. This non-GAAP financial measure should not be considered in isolation or used as an alternative to GAAP financial measures and does not purport to be an alternative to net income as a measure of operating performance. A reconciliation of net income to EBITDA is shown below for the periods indicated (in millions).                                  Three Months Ended                                                                                 May 31, 2014   June 1, 2013                                                  Net Income (GAAP)                $    15.1      $    20.3 Add Back: Income Tax Provision        9.0            12.5 Interest Expense, net                 1.9            0.6 Depreciation and Amortization        10.4          8.9 EBITDA (non-GAAP)                $    36.4      $    42.3                                                        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 projections or 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 on Form 10-K, and other filings. 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 projections or 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 of home décor and furniture. 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                                  May 31,       % of      June 1,       % of                                   2014       Sales      2013       Sales                                                                         Net sales                        $ 419,059     100.0 %   $ 394,853     100.0 %                                                                         Cost of sales                     251,345    60.0  %    227,256    57.6  %                                                                         Gross Profit                       167,714     40.0  %     167,597     42.4  %                                                                         Selling, general and               131,466     31.4  %     125,470     31.8  % administrative expenses Depreciation and amortization     10,418     2.4   %    8,912      2.2   %                                                                         Operating income                   25,830      6.2   %     33,215      8.4   %                                                                         Nonoperating (income) and expenses: Interest, investment income        (275    )               (352    ) and other Interest expense                  2,001                749                                           1,726      0.4   %    397        0.1   %                                                                         Income before income taxes         24,104      5.8   %     32,818      8.3   % Income tax provision              9,049      2.2   %    12,471     3.1   %                                                                         Net income                       $ 15,055     3.6   %   $ 20,347     5.2   %                                                                         Earnings per share: Basic                            $ 0.16                 $ 0.19                                                                             Diluted                          $ 0.16                 $ 0.19                                                                             Dividends declared per share:    $ 0.06                 $ 0.05                                                                             Average shares outstanding during period: Basic                             94,656                105,989                                                                          Diluted                           95,925                107,790                                                                  Pier 1 Imports, Inc.                                                                    CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) (unaudited)                                                                                                                                                                           May 31,        March 1,       June 1,                                      2014         2014         2013      ASSETS                                                                    Current assets: Cash and cash equivalents, including temporary investments of $185,245, $121,446 and           $ 220,607      $ 126,695      $ 241,898 $202,316, respectively Accounts receivable, net              21,824         24,614         20,418 Inventories                           417,643        377,650        383,321 Prepaid expenses and other           51,519       47,547       50,453    current assets Total current assets                  711,593        576,506        696,090                                                                    Properties, net                       187,804        183,352        154,026 Other noncurrent assets              46,276       43,765       45,830                                        $ 945,673     $ 803,623     $ 895,946                                                                      LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    Current liabilities: Accounts payable                    $ 133,476      $ 84,238       $ 108,977 Gift cards and other deferred         60,553         57,428         53,206 revenue Accrued income taxes payable          7,013          14,025         17,963 Current portion of long-term          1,500          -              - debt Other accrued liabilities            103,420      110,278      97,353    Total current liabilities             305,962        265,969        277,499                                                                    Long-term debt                        206,026        9,500          9,500 Other noncurrent liabilities          78,541         78,722         64,870                                                                    Shareholders' equity: Common stock, $0.001 par, 500,000,000 shares authorized, 125,232,000 issued                    125            125            125 Paid-in capital                       223,704        235,637        223,666 Retained earnings                     669,551        660,040        589,280 Cumulative other comprehensive        (4,833   )     (6,114   )     (4,813   ) loss Less 31,360,000, 26,517,000 and 18,174,000 common shares in treasury, at        (533,403 )    (440,256 )    (264,181 ) cost, respectively                                      355,144      449,432      544,077                                       $ 945,673     $ 803,623     $ 895,946     Pier 1 Imports, Inc.                                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)                                                                                                                         Three Months Ended                                                     May 31,        June 1,                                                      2014         2013                                                                         Cash flow from operating activities: Net income                                          $ 15,055       $ 20,347 Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization                         12,031         10,679 Stock-based compensation expense                      3,232          4,054 Deferred compensation                                 1,467          2,237 Deferred income taxes                                 2,748          1,987 Amortization of deferred gains                        (893     )     (729    ) Other                                                 227            (1,358  ) Changes in cash from: Inventories                                           (39,993  )     (27,268 ) Proprietary credit card receivables                   (264     )     (888    ) Prepaid expenses and other assets                     (3,924   )     (19     ) Accounts payable and accrued expenses                 44,824         37,282 Accrued income taxes payable, net of payments        (7,377   )    (7,286  ) Net cash provided by operating activities            27,133       39,038                                                                       Cash flow from investing activities: Capital expenditures                                  (15,325  )     (14,070 ) Proceeds from disposition of properties               33             2,542 Proceeds from sale of restricted investments          494            356 Purchase of restricted investments                   (823     )    (1,551  ) Net cash used in investing activities                (15,621  )    (12,723 )                                                                     Cash flow from financing activities: Cash dividends                                        (5,544   )     (5,273  ) Purchases of treasury stock                           (105,796 )     (16,992 ) Stock options exercised, stock purchase plan and other, net                    (915     )     6,317 Issuance of long-term debt, net of discount           198,000        - Debt issuance costs                                  (3,345   )    (25     ) Net cash provided by (used in) financing             82,400       (15,973 ) activities                                                                     Change in cash and cash equivalents                   93,912         10,342                                                                     Cash and cash equivalents at beginning of period     126,695      231,556                                                                      Cash and cash equivalents at end of period          $ 220,607     $ 241,898   Contact:  Pier 1 Imports, Inc. Cary Turner, 817-252-8400  
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