Pier 1 Imports blew past its fiscal third quarter guidance, posting a 0.4% decline in sales but a 24.3% increase in net income, as business picked up following the November elections.

Separately, the Top 100 company announced the appointment of Chairman Terry London as interim president and CEO of the 1,022-store retailer as its continues a search to replace current President and CEO Alex Smith, who leaves at the end of the year.

Net sales for the period ended Nov. 26, declined to $475.9 million from $478 million in the same period last year, when the retailer operated 33 additional stores. Same-store sales increased 1.8%, beating Pier 1’s previous guidance of a 1% to 3% decline.

Pier 1’s e-commerce sales totaled $97.4 million, up about 28% from a year ago and represented about 20% of net sales in the quarter vs. about 16% last year.

Net income was $13.6 million, or 17 cents per share, up from $10.9 million, or 13 cents per share, in the third quarter last year. Adjusted for the cost and tax benefit related to Smith’s departure, net income totaled $17.6 million, or 22 cents per share.

Pier 1's stock was up more than 21% in early trading.

“Sales trends rebounded in the second half of November, following the election, which enabled us to deliver third quarter results well ahead of our forecast,” Smith said in a release. “We are making progress on our strategies to deliver shareholder value through our merchandising, marketing, supply chain and real estate initiatives. Our seasonal assortments are resonating with customers and we’re seeing strength across nearly all our product categories.”

Smith said the company is confident in Pier 1’s brand positioning and long-term financial outlook, noting that its foundation of “inspirational merchandise, great value and outstanding customer service along with its omnichannel capabilities “makes Pier 1 Imports a formidable force in the home furnishings space.”

Gross profit for the third quarter was $196.4 million, or 41.3% of net sales, compared to $184 million, or 38.5% of sales for the same quarter last year. Merchandise margin totaled $286.4 million, or 60.2% of sales, up from $268.6 million, or 56.2% last year, with the company attributing the improvement primarily to a more cost efficient promotional strategy and improved distribution center operations.

Selling, general administrative expenses increased to $160.8 million, or 33.8% of sales, from $151.6 million, or 31.7% of sales, as cost reductions were offset by increased marketing and advertising expenses and costs associated with Smith’s coming departure.

For the first nine months of the year, Pier 1 posted a 3.7% decrease in net sales to $1.3 billion and 1.5% decrease in same-store sales. Net income totaled $3.5 million, or 4 cents per share, down from $21.0 million, or 24 cents per share, through the first nine months of last year. Adjusted net income for the nine months this year was $7.5 million, or 9 cents per share.

The retailer upped its full-year earnings and sales guidance. It now expects sales for the fiscal year to be down 2% to 4%, vs. the earlier call for a 4% to 6% decrease. Same-store sales are expected to be flat to down 2%, compared to down 2% to 4% in earlier guidance.

Earnings per share for the year are now expected to be in the 30 cents to 34 cents range, up from previous expectations for 16 cents to 24 cents per share.

London, in the announcement of his appointment as interim president and CEO, said the Pier 1 is continuing to work with Korn Ferry on a long-term CEO replacement. He has served as non-executive chairman since June 2012 and has been a director since 2003.

(Source: furnituretoday.com  Author: Clint Engel)