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Pier 1 Imports falls Q1 guidance

Jun '07
Pier 1 Imports Inc announced a net loss from continuing operations of $56,378,000, or $0.64 per share, for the first quarter ended June 2, 2007.

Total sales declined 5.2% for the first fiscal quarter to $356,375,000 from $376,092,000 in the year-ago quarter, and comparable store sales declined 5.4%.

During the first quarter, merchandise margins declined to 45.5% as a direct result of the Company's aggressive liquidation of modern craftsman merchandise. Excluding the estimated impact of the aggressive markdown strategy, merchandise margins for the quarter would have approximated 52.2% compared to 53.8% last year.

Store occupancy costs remained flat compared to the year ago quarter. Selling, general and administrative expenses declined $15.5 million from the year ago period, and were 37.1% of sales compared to 39.2% of sales last year.

The primary drivers of the decrease in costs were savings of approximately $9 million in marketing expense, $6 million in store payroll, and $4 million in other general administrative costs when compared to the same period last year.

These cost savings were partially offset by one-time and unusual charges of $3.5 million related to severance and outplacement costs incurred with the Company's previously announced reduction in force.

Excluding the impact on merchandise margins and the one-time charge discussed above, management believes the pre-tax loss for the first quarter would have been more in line with the pre-tax loss for the year ago period.

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