All Gussied Up At Pier 1

Still Biding Its Time
The past two years have been rough for Pier 1 Imports (PIR ), No. 1 in imported decorative items: Its same-store sales and earnings took a dive. With the stock at 18.56, down from nearly 25 a year ago, most analysts remain wary. Indeed, Standard & Poor's rates Pier 1 a sell. But Rodney Hathaway of investment firm Heartland Advisors, who says he's a contrarian, spies a turnaround. Pier 1 has shipped out old wares and hauled in new -- including a fresh ad blitz to fire up sales. "We expect a rebound in the next quarter," he says. Its 1,000 stores "now look uncluttered and more attractive," says Hathaway. The new push, he adds, includes higher prices on some items. Hathaway has a 12-month stock target of 30. He estimates earnings of 74 cents a share on sales of $1.9 billion in the year ended February 2005, and $1.12 in 2006 on $2.7 billion. The retailer made $1.31 in 2004 on sales $1.8 billion. Pier 1 "remains our best idea for 2005," notes Budd Bugatch of Raymond James & Associates in a Mar. 7 report. He rates the stock a strong buy.

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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