Pier 1 ramps up store expansion - Pier 1 Imports - Brief Article

DSN Retailing Today, March 6, 2001 by Debbie Howell

ORLANDO, FLA. -- A slowing economy may be impacting many retailers this year, but Pier 1 Imports isn't one of them. While some of the industry's largest chains have been closing stores and cutting expenses, Pier 1 is actually ramping up its store growth program and seeking other potential acquisition targets following its recent purchase of Cargo Furniture.

At a Raymond James & Associates investment conference in Orlando earlier this month, cfo Cary Turner said Pier 1 may pursue other chains that complement its flagship retail concept. "As we go forward, there are other things out there that we'll probably be looking at and if it fits the right criteria ... then we'll do it," Turner said.

The Ft. Worth, Texas-based retailer has made no secrets of its intention to buy or spin off a second concept since announcing it was in the market for a new growth vehicle two years ago. Negotiations to buy furniture and accessories retailer Z Gallerie in 1999 failed, prompting Pier 1 to slow down its pursuits. Offers had been streaming in regularly since then, including some from struggling e-tailers.

"The last few years everybody has come to Turner said. "We decided what we needed to do first is sit down and decide what do we want. We didn't want something mature, but wanted something with growth potential."

The 21-store furniture chain that Pier 1 bought from financially troubled Tandycrafts fit the bill.

Turner said the casual lifestyle and high level of imports were similar to Pier 1's strategy, as was the small-box format primarily in strip shopping centers. Cargo Furniture stores are found primarily in Dallas, Houston, Atlanta and Washington, D.C. "We really feel there's a niche here for children's furniture. There really isn't a value player here in this industry," he said.

Turner said Cargo Furniture will be kept as a separate retail concept and evaluated for several months as the company tweaks the format and improves sales and profits.

Under Tandycrafts, the division brought in about $15 million in annual sales. Over the next decade, Pier 1 plans to roll out Cargo Furniture nationwide to a potential 300 locations in North America. Former Tandycrafts president and coo James Allen has been hired as president of Cargo; new executive vp of merchandising and marketing will be Lisa Thornton, former Cargo president.

The sale of Cargo Furniture is the latest in a string of divestitures by the financially strapped Tandycrafts.

Last year, the company sold its 41-unit Sav-On office supplies chain and Tandy Leather Company to separate buyers, retaining its Pinnacle Art & Frame manufacturing business.

As of mid-March, Tandycrafts was frantically searching for financing with $32.4 million still owing on a revolving credit facility set to expire March 31.

Such isn't the case for Pier 1, which has enjoyed sales gains and profits for several years running. With plenty of cash on hand, sales rising 14.7% to $1.41 for the fiscal year ended March 3, 2001, and comps up 7.8%, the future for Pier 1 appears bright despite an economic slowdown.

Turner said the company would open 75 to 85 new stores this year, an increase from 65 in 2000. The retailer has more than 870 stores in 48 states, Puerto Rico, Canada, the United Kingdom, Japan and Mexico.