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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