Pier 1 generates positive EBITDA in 2008 fiscal Q3
25 Dec '07
3 min read
Management estimates the impact on margins resulting from the clearance of the Pier 1 Kids merchandise was 130 basis points. Gross profit margins for the third quarter were 33.6% of sales, up from 30.9% in the year ago period, and although the store count was significantly reduced from the year ago period, gross profit dollars improved $1.3 million.
Selling, general and administrative expenses for the third quarter were $59.7 million less than the year ago period, and were 33.1% of sales compared to 45.6% of sales last year. The primary contributors to the decrease in on-going costs were savings of approximately $21.2 million in marketing expense, $10.8 million in payroll, and $5.4 million in other general administrative costs when compared to the same period last year.
Additionally, during the third quarter, selling, general and administrative expenses included $6.5 million in special charges compared to $28.8 million reported in the same period last year, a decrease of $22.3 million. The following table shows these charges in each of the periods presented.
Excluding the impact of these charges, adjusted selling, general and administrative expenses for the third quarter declined $37.4 million from the year ago period and for the year declined $91.0 million when compared to the first nine months of fiscal 2007.
As previously reported, management expects to realize additional savings throughout the balance of this year, and now estimates the savings to be at least $110 million for this fiscal year. On an annualized basis, the on-going savings are now estimated to be $160 million.
Return to Profitability and Beyond: Alex W. Smith, the Company's President and Chief Executive Officer, said, "During the third quarter, we have begun to see improvements in conversion rates, units per transaction, and total transaction value. This is only the beginning; we still have a lot of work to do.
However, the fact that we achieved these results with less than perfect execution gives me great optimism about our ability to return to profitability and beyond. I look forward to discussing this in more detail later this morning on our scheduled conference call."
marketing@alchempro.com
