Pier 1 Outlook Not as Bad as Feared

Home furnishings retailer Pier 1 Imports Inc. (PIR) Tuesday posted a sharp fall in third-quarter earnings as forewarned with weak sales, but its share price jumped as analysts had feared more bad news.

The retailer lowered its forecast for fourth-quarter earnings but not as much as expected, especially after Tuesday Morning Corp. (TUES) on Monday issuing a profit warning due to poor sales of decorative home and seasonal goods.

Pier 1 shares rose 4.14 percent, or 74 cents, to $18.60 on the New York Stock Exchange (search).

"People were expecting something to be much worse than what resulted with prices under pressure yesterday with Tuesday Morning's warning," said Crystal Lanigan, an analyst with D.A. Davidson and Co..

Pier 1 posted earnings for the quarter ended Nov. 27 of $19.48 million, or 22 cents per share, down from $32.19 million, or 35 cents per share, a year earlier.

Wall Street analysts expected Pier 1 to post earnings of 22 cents per share, according to Reuters Estimates.

This month the retailer, which specializes in imported decorative home furnishings, cut its quarterly outlook for a second time, citing lower traffic and flat average ticket prices. It forecast earnings of 21 to 23 cents per share.

Sales for the third quarter nudged up 1.1 percent from a year ago to $487.7 million, but sales at its stores open at least a year — a key retail gauge known as same-store sales — fell 6.3 percent, which was more than expected.

Chief Executive Marvin Girouard said December same-store sales were expected to fall 2 percent to 6 percent from a year ago.

For the fiscal fourth quarter ending Feb. 26 the retailer expected same-store sales to be down mid-single digits with earnings of between 43 and 52 cents a share. In September the company had estimated fourth-quarter earnings of 52 cents to 62 cents per share.

This would result in the Fort Worth, Texas-based company posting earnings of between 90 and 99 cents a share for fiscal 2005.

Analysts had on average expected fourth-quarter earnings of 52 cents per share and 2005 earnings of 99 cents, according to Reuters Estimates.

Lanigan said the market was pleased by the way the company was managing its selling, general and administrative costs when same-store sales (search) were falling.

"Given the difficult environment, the management is doing a good job," she said.