UPDATE 2-Pier 1’s seasonal goods win holiday shoppers

* Q3 EPS $0.18 vs. Wall Street view $0.14

* Sales up 8.2 pct to $353.8 million, beat Street
(Adds merchandise margins, analyst comment, background)

By Dhanya Skariachan

NEW YORK, Dec 16 (BestGrowthStock) -Pier 1 Imports Inc’s (PIR.N: )
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.

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 Nov. 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 percent, 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 Nov. 1, three weeks
earlier this year,” she said.

The company, whose rivals include Bed Bath & Beyond Inc
(BBBY.O: ), Williams-Sonoma Inc (WSM.N: ) and Cost Plus Inc
(CPWM.O: ), 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
[LNNHDL.UL], once the No. 2 U.S. home goods chain, and smaller
players like Gottschalks (GOTTQ.PK: ) 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.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn and
Derek Caney)

UPDATE 2-Pier 1’s seasonal goods win holiday shoppers