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A Dogged Buyer Of Bedraggled Pier 1

From bad to worse. That's how Pier 1 Imports (PIR) has fared, with its stock dropping from 25 in early 2004 to 13.87 on Aug. 10. Poor sales and disappointing profits have bedeviled North America's largest retailer of imported home furnishings.The Street has turned cold, but Mark Boyar of Boyar Asset Management is buying -- again. This is his third time: In 1991 he bought at 2 and sold in 1997 after shares jumped to 9, when growth investors moved in. The stock leaped to 20 by March, 1998. Soon after, sales dropped, and by October it had plunged to 9. Enter Boyar. He sold in early 2002, when the stock hit 20. It rose as high as 24. Pier 1, which runs 1,100 stores in North America, is selling at 1.5 times book value -- "a steal," says Boyar. As a result, he isn't ruling out a takeover by a large retailer. "Pier 1 is now a much more valuable business -- and is taking steps to turn itself around," he says. It cut prices, reduced inventory by 15%, and is on a marketing blitz, says Boyar, who sees the stock at 30 in five years, based on cash flow of $2.50 to $3 a share. Zacks Investment Research's consensus estimates are 35 cents a share for 2006, ended Feb. 28, and 63 cents in 2007, vs. 68 cents in 2005. Pier 1 was discussed in this column on Mar. 21, at 18. Pier 1 declined comment.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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