Pier 1 Imports, Inc. (PIR)

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Pier 1 Imports (PIR)

Q3 2013 Earnings Call

December 13, 2012 11:00 am ET


Kelley Buchhorn

Alexander W. Smith - Chief Executive Officer, President, Director and Member of Executive Committee

Charles H. Turner - Chief Financial Officer, Senior Executive Vice President and Treasurer


Kate Wendt - Wells Fargo Securities, LLC, Research Division

Rupesh Parikh - Oppenheimer & Co. Inc., Research Division

Alan M. Rifkin - Barclays Capital, Research Division

Simeon Gutman - Crédit Suisse AG, Research Division

Bradley B. Thomas - KeyBanc Capital Markets Inc., Research Division

Anthony C. Chukumba - BB&T Capital Markets, Research Division

Adam H. Sindler - Deutsche Bank AG, Research Division

Denise Chai - BofA Merrill Lynch, Research Division

Thomas J. McConville - Raymond James & Associates, Inc., Research Division

John Marrin - Jefferies & Company, Inc., Research Division



Good morning, ladies and gentlemen, and welcome to the Pier 1 Imports Third Quarter Fiscal 2013 Earnings Call. At the request of Pier 1 Imports, today's conference call is being recorded. [Operator Instructions] I would now like to introduce Kelley Buchhorn, Director of Investor Relations for Pier 1 Imports.

Kelley Buchhorn

Thank you, and good morning, everyone. Prior to market open today, we issued a press release, which included the detailed financial results for the third quarter ended November 24, 2012. In just a few moments, we will hear comments from Alex and Cary about the financial results and the company's growth initiative, followed by a question-and-answer period.

Before we begin, I need to remind you that certain comments made during this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and can be identified by the use of words such as may, will, expect, anticipate, believe and other similar words and phrases. Our actual results and future financial conditions may differ materially from those expressed in any such forward-looking statement as a result of many factors that may be outside of our control.

Please refer to our SEC filings, including our annual report on Form 10-K, for a complete discussion of the major risks and uncertainties that may affect our business. The forward-looking statements made today are as of the date of this call, and we do not undertake any obligation to update our forward-looking statements.

The company will also discuss non-GAAP financial measures on this conference call. Pursuant to the requirements of Regulation G and Item 10e of Regulation S-K, the company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures in our earnings press release that was issued earlier this morning. If you do not have a copy of today's press release, you may obtain one, along with copies of prior press releases and all SEC filings, by linking through to the Investor Relations page of our website, Pier1.com.

Now I'd like to turn the call over to Alex Smith, our President and Chief Executive Officer. Alex?

Alexander W. Smith

Thank you, Kelley. Good morning, everyone, and thanks for joining us today. Also on the call with us is, of course, Cary Turner, our Senior Executive Vice President and Chief Financial Officer. Cary will provide a detailed review of our financial results a little later in the call, so I'll just touch on the highlights of the quarter and talk about the growth opportunities for our company.

We enjoyed another strong quarter, our 13th consecutive period of growth in total sales, comp store sales, operating profit and earnings per share. Also during the quarter, we celebrated the company's golden anniversary, 50 years since our first store opened the day after Thanksgiving in 1962. It has been a pleasure and a privilege, this milestone year, to acknowledge all of our current associates, along with some of our former associates for their role in making Pier 1 Imports an exceptional company and a great place to work.

During the quarter, sales trends were fairly consistent across all our product categories. Of particular note, we are seeing continued strength in our furniture business, which has been gaining momentum throughout the year. The improvement is, of course, due to our strong assortments and the selling skills of our store associates and additionally, what we view as the very beginnings of a long-awaited recovery in the housing market.

As you know, we always focus on maximizing merchandise margin dollars here at Pier 1 Imports. And for the third quarter, our comp store sales increase of a very strong 7.9% and a very healthy store merchandise margin of 60.4% represent a great result, a good balance between sales growth and margin rates.

We think our clear strategies and first-rate execution are a winning formula, driving robust results and allowing us both to reinvest in our business and return value to our shareholders. Over the last few years, we have increased the productivity of our stores very significantly. However sales to retail square foot are still below their peak and have plenty of room to expand as we continue to finesse our assortments and in-store experience.

Additionally with the introduction of e-Commerce, many more opportunities to drive profitable growth have opened up both in-stores and online. To that end, having just completed our first full quarter of e-Commerce, we're pleased to tell you that the business is off to a solid start. It has only been 4 months, 4 months since the launch. Remember, crawl, walk, run, but early indicators are very positive.

Traffic to Pier1.com has increased and is up in the high double-digits with over 1 million visits per week, with customers spending nearly double that of our in-store customers. Customers are shopping broadly across our online assortments, and to date, have purchased over 90% of the available items.

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