Pier 1 Imports Inc's (NYSE:PIR) quarterly profit beat Wall Street estimates as the home goods chain's targeted marketing, product changes and decision to stock more seasonal goods paid off.
This was the fifth consecutive quarterly profit for the Fort Worth, Texas-based retailer after years of losses during the housing downturn and the recession.
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The company, whose wares range from wicker chairs to wine glasses, said its net income fell to $21 million, or 18 cents a share, in the third quarter ended on November 27 from $38.8 million, or 37 cents a share, a year earlier.
Analysts on average were expecting a profit of 14 cents a share, according to Thomson Reuters I/B/E/S.
"We are impressed with the newness and breadth of the seasonal assortment, as well as attractive price points," Wedbush analyst Joan Storms said earlier this week.
Sales rose about 8.2 percent to $353.8 million, above Wall Street's average estimate of $352.8 million. Sales at stores open at least a year rose 10.2%, as its stores attracted more customers and as those customers spent more per visit.
"Stores transitioned from fall to holiday toward the end of October and were in full holiday mode by November 1, three weeks earlier this year," she said.
The company, whose rivals include Bed Bath & Beyond Inc (NasdaqGS:BBBY - News), Williams-Sonoma Inc (NYSE:WSM - News) and Cost Plus Inc (NasdaqGS:CPWM - News), said merchandise margins were 58.9 percent of sales in the quarter, compared with 56.6 percent a year earlier.
Many of these chains changed their products, marketing and pricing strategies as they watched Linens 'N Things, once the No. 2 U.S. home goods chain, and smaller players like Gottschalks go bankrupt during the downturn.
Pier 1 began offering more decorative furniture items such as end- and side-tables rather than bulky pricier goods like couches and armoires. While it offered fewer items in large numbers in prior years, it is now offering a wider selection of products.
The company said in November that it added about $3 million of store payroll and marketing in the quarter to maintain strong traffic.
"Carefully targeted monthly event mailers have proved very successful recently," Storms said, adding that the company was continuing with these into the holiday selling season.