Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of retailer Pier 1 Imports
So what: Same-store sales climbed 10.8% in the second quarter, contributing to sales of $340 million, above estimates. Better yet, the increase in sales flowed well to the bottom line as gross margins improved to about 59.3%, and expected earnings per share of $0.14 topped estimates by a penny.
Now what: Strong same-store-sales growth is every retailer's dream, and Pier 1 has made all the right moves to make that happen. A focus on smaller items in a down economy has not only helped sales but also margins. I think the forward P/E ratio of 12 shares currently trade at is a nice value for investors willing to bet that retailers will continue to benefit when the economy improves.
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