Pier 1 Imports, Inc. Reports 2008 Fiscal Fourth Quarter and 2008 Fiscal Year End Financial Results

Business Wire, April 10, 2008

FORT WORTH, Texas -- Pier 1 Imports, Inc. (NYSE:PIR):

Highlights:

* Fourth quarter EPS $0.16 per share - first positive earnings in 12 quarters

* Fourth quarter comp store sales gain of 2.5% - first gain in 17 quarters

* Fourth quarter positive EBITDA of $24.9 million

* Fiscal 2008 cost savings of $124.9 million over Fiscal 2007

* Announced sale of headquarters to be completed by June 30, 2008

Fourth Quarter Results

Pier 1 Imports, Inc. today announced net income from continuing operations of $13.7 million or $0.16 per share for the fourth quarter ended March 1, 2008 versus a net loss of $58.7 million or $0.67 per share for the year ago period. In the fourth quarter, the Company generated EBITDA (earnings before interest, taxes, depreciation and amortization) of $24.9 million.

Comparable store sales increased 2.5% for the quarter. Total sales for the fourth fiscal quarter declined 7.8% to $436.7 million from $473.7 million in the year ago quarter. Total sales were negatively impacted by the net closure of 79 stores as well as the additional week that was included in the fourth quarter results in fiscal 2007.

Merchandise margins in the fourth quarter were 48.1% of sales, up from 40.6% in the year ago quarter. Merchandise margins during the quarter were impacted by the winter sale, including the clearance of holiday merchandise. Gross profit margins for the fourth quarter were 31.8% of sales, up from 24.6% in the year ago period, and although the store count was significantly reduced from the year ago period, gross profit dollars improved over $22 million.

Selling, general and administrative expenses for the fourth quarter were $50.2 million less than the year ago period, and were 26.2% of sales compared to 34.8% of sales last year. The primary contributors to the decrease in on-going costs were savings of approximately $13.6 million in payroll, $9.0 million in marketing expense and $11.9 million in other general administrative costs when compared to the same period last year.

Additionally, during the fourth quarter, selling, general and administrative expenses included a decrease of $15.7 million in special charges, when compared to the same period last year. Excluding the impact of the charges detailed below, adjusted selling, general and administrative expenses for the fourth quarter declined $34.5 million from the year ago period.

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Fiscal Year 2008 Results

For the fiscal year, total sales declined 6.9% to $1.5 billion, down from $1.6 billion in fiscal 2007. Additionally, the Company reported a net loss from continuing operations of $96.0 million, or $1.09 per share. During the fiscal year, the Company improved EBITDA by $127.4 million over fiscal 2007. Fiscal 2008 reported EBITDA includes special charges of $21.1 million which are outlined below.

For the year, selling, general and administrative expenses declined $161.1 million when compared to fiscal 2007. Expense savings included $53.4 million in marketing, $46.5 million in payroll, $25.0 million in other general and administrative costs, and $36.2 million reduction in special charges outlined below. Management expects to continue to realize these on-going savings and on an annualized basis expects these savings to total $160 million during Fiscal 2009 when compared to Fiscal 2007.

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Sale of Headquarters Facility

Last week, the Company announced the sale of its corporate headquarters facility to Chesapeake Energy Corporation. As part of the transaction, the Company will lease approximately 250,000 square feet for an initial term of seven years, with an option to extend for a period of three years, and a right to terminate the lease after five years. While the terms of the lease have not been disclosed, it is anticipated that the net result of the transaction will have a positive impact on earnings per share. The transaction is expected to close no later than June 30, 2008.

Return to Profitability and Beyond

Alex W. Smith, the Company's President and Chief Executive Officer, said, "To see our customers respond so enthusiastically to our merchandise and in-store experience during the fourth quarter was very energizing for all of us at Pier 1 Imports. We have confidence that if we concentrate on developing powerful assortments that speak to our customer base and further enhance our customer service and in-store presentation, that we will continue making progress in returning our Company to profitability and beyond. I look forward to discussing our opportunities for Fiscal 2009 later this morning on our conference call."

Conference Call Information

The Company will host a conference call to discuss the 2008 fourth quarter and year end results at 10:00 a.m. Central Time today. A web cast is available on the Company's website at www.pier1.com by linking through to the "Investor Relations" page and the "Events" page, or you can dial into the conference at 1-800-498-7872 or if international dial 1-706-643-0435 and the conference ID number is 39209770. The teleconference will be held in a "listen-only" mode for all participants other than the Company's current sell-side analysts and buy-side investors.