Over the next three years, Pier 1 Imports
The home-furnishings retailer reported strong quarterly numbers last week. The stock fell 4.2% on the news as the numbers disappointed the Street, even though the company's bottom line almost doubled to $14.1 million from the year-ago quarter, boosted by increasing traffic and same-store sales.
Revenues grew by 9% year over year to $334.6 million. The average receipt per customer also improved, and sales per square foot were up to $171 from $155. Operating margin improved from 2.7% last year to 5.9% in the latest period, indicating efficiency in cost management. Same-store sales also jumped 10.2% this quarter, though that number was down from last year's 14.3% surge.
These numbers indicate that the company's underlying performance is improving. That's especially commendable at a time when retail giants such as Wal-Mart
Most retail chains today are looking to expand intelligently and with discipline. Bed Bath & Beyond
A low debt/equity ratio of 2.2% and interest coverage of 34.4 also gives the company the cushion to assume additional debt for expansion, if needed.
Silencing the critics
Analysts had written this company off for dead. In March 2009, shares were trading at a mere dime. In May, they topped $12, and the company is returning value to shareholders through a repurchasing program of up to $100 million in shares, or about 7.5% of the total.
With good numbers, increasing cash balances, and strong growth plans in place, Pier 1 looks poised to do well in the future. Foolish investors should take note.