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Pier 1 Imports (PIR)
Q4 2011 Earnings Call
April 07, 2011 11:00 am ET
Alexander Smith - Chief Executive Officer, President, Director and Member of Executive Committee
Charles Turner - Chief Financial Officer, Executive Vice President of Finance and Treasurer
Kelley Buchhorn -
John Barrett - Columbia Management
Jennifer Milan - Sterne Agee & Leach Inc.
Budd Bugatch - Raymond James & Associates, Inc.
Bradley Thomas - KeyBanc Capital Markets Inc.
David Berman - Berman Capital
Anthony Chukumba - BB&T Capital Markets
Simeon Gutman - Goldman Sachs
Brian Nagel - Oppenheimer & Co. Inc.
Previous Statements by PIR
» Pier 1 Imports Inc. Q1 2010 Earnings Call Transcript
» Pier 1 Imports, Inc. F4Q10 (Qtr End 02/27/10) Earnings Call Transcript
» Pier 1 Imports, Inc. Q3 2010 Earnings Call Transcript
Thanks, Thea. Good morning, everyone, and thanks for joining us today. Cary Turner, our Executive Vice President and Chief Financial Officer, is with me today, as is Kelley Buchhorn, our Director of Investor Relations.
As you already know, we announced our fourth quarter and fiscal year results earlier this morning. We also announced our board-approved three-year growth plan, formulated to drive sales, increase profitability and maximize shareholder value.
In just a few minutes, Cary will go over the highlights of our fourth quarter and year-end results. I will follow by briefly touching on our exceptional year just ended. But most of my prepared remarks today are about our growth plan and what our well-off company will look like in three to five years time.
As always, before we begin, I will ask Kelley to read to you the Safe Harbor Statement. Kelley?
Thank you, Alex, and good morning, everyone. Prior to market open today, we issued two press releases. One included the detailed financial results for the fourth quarter and fiscal year ended February 26, 2011. And one included details of the company's board-approved three-year growth plan.
In just a few moments, we will hear comments from Alex and Cary about the financial results and growth initiatives, 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 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 statements and 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.
If you do not have a copy of today's press releases, you may obtain them, along with copies of prior press releases and all SEC filings, by linking through to the Investor Relations page of our website, pier1.com.
I would now like to turn the call over to Cary who will provide the highlights of our fourth quarter and fiscal year results. Cary?
Thank you, Kelley. As reported in this morning's financial results press release, total sales for the fourth quarter increased 7.7% over the same period last year, and comp store sales increased 8.9% for the quarter on top of last year's fourth quarter comp store sales increase of 6.5%.
The sales increases resulted primarily from increases in store traffic, conversion rate and average ticket.
Merchandise margins for the quarter increased $27.9 million to $249 million or 58.4% of sales compared to 55.8% of sales last year, an increase of 260 basis points.
Merchandise margins continue to be positively impacted by lower markdown activity, strong input margins and well-managed inventory levels.
Store occupancy costs for the quarter were 15.6% of sales compared to 16.9% of sales in the fourth quarter last year.
Store occupancy cost declined $500,000 this quarter compared to last year. This was primarily attributable to the reduced store count since the end of the fourth quarter last year coupled with the benefit from favorable rent negotiations.
Gross profit for the quarter improved 390 basis points to 42.8% of sales compared to 38.9% of sales last year.
As detailed in the table in today's press release, SG&A expenses totaled $119 million for the fourth quarter compared to $113 million last year.
As a percentage of sales, SG&A expenses for the quarter declined 60 basis points to 27.9% of sales compared to last year's 28.5% of sales for the same period.
Operating income for the fourth quarter was $58.4 million or 13.7% of sales compared to last year's fourth quarter operating income of $36 million or 9.1% of sales.
Total sales for the fiscal year increased 8.2% over last year, and comp store sales increased 10.9% compared to a comp store sales increase of 1.5% last year. As stated earlier, comp store sales increases were driven by improvements in traffic, conversion rate and average ticket.
At the end of the year, sales per retail square foot for the trailing 12 months were $168, up from $152 per square foot at the end of last year.
Merchandise margins for the year improved 380 basis points to a record 58.6% of sales compared to 54.8% of sales last year.