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Pier 1 misses forecast, stock drops 21 percent

Pier 1 Imports shares plunged Thursday morning, after the company reported a first-quarter loss that was substantially worse than Wall Street expected.

Pier 1 said it lost $32.8 million for the quarter, which ended May 31, compared to a $56.4 million loss for same period the prior year. The loss for the most recent quarter amounted to 37 cents per share of common stock; Wall Street average estimates were for 14.9 cents per share.

Pier 1's stock was off $1.31 at $4.94 at 10:30 a.m. Central, and had fallen as low as $4.90.

Even though the loss was worse than expected, Pier 1 said its turnaround is "on track," profit margins strengthened, and inventories declined $27 million from the year-end. Sales in comparable stores, those for stores open at least a year, dropped 5.4 percent.

"Throughout the quarter we continued to focus on our business priorities, which are designed to return our company to profitability and beyond even in difficult times," Alex Smith, the company's CEO, said.

Smith said the company expected comparable-store sales to be "challenging" in March and April because of a clearance sale and "we moved fiscal 2009 marketing dollars into the second half of the year so there was less marketing support."

Smith said the company expects to see "continued growth" in its merchandise profit margins through the rest of the year.

"As we look ahead, we will continue to execute our plan with the financial and operational discipline that we have demonstrated over the past year," Smith said. "While there is work yet to be done, we are well positioned and will remain focused on generating profitable sales."

Sales fell 13 percent to $310 million from $356 million, Pier 1 said. Same-store sales declined 5.4 percent in the quarter. Pier 1 has made a offer to buy Cost Plus. It recently completed the sale of its headquarters to Chesapeake Energy Corp., generating $100 million.

Scott Nishimura, (817) 390-7808

Sandra Baker, (817) 390-7727