UPDATE 2-Pier 1 sees strong Q2 EPS on margins, more traffic
* Sees Q2 EPS $0.10-$0.12 vs est $0.08
* Q2 sales up 8 pct to $310 mln vs est $310.2 mln
* Comp sales up 11.2 pct
* Shares jump 14 pct (Recasts; adds analyst comment, updates stock activity)
BANGALORE, Sept 2 (Reuters) - Pier 1 Imports (PIR.N) forecast its second-quarter earnings would beat estimates as it protected margins by offering fewer promotions. Sales for the quarter rose as the firm's colorful, funky furniture attracted shoppers.
Home goods retailers have been helped by a rebound in consumer spending after a hiatus when a weak U.S. housing market dented demand for home furnishings.
Last month, bigger rival Williams-Sonoma Inc (WSM.N) beat second-quarter earnings and raised its forecast for the third quarter. [ID:nN19243354]
Pier 1, which said earlier it would not hold its 'annual sale', which is usually during the second quarter, has benefited from reduced clearance activity, Raymond James analyst Budd Bugatch wrote in a client note.
Retailers often take to discounts and "sales" to shift excess stock and boost sales, but this often hits margins. Less merchandise reduces the need to discount, and guards margins ... and profit.
Same-store sales at Pier 1 rose 11.2 percent for the second quarter compared with a fall of 7.6 percent last year.
"We continue to see strengths in all parts of the country and in all merchandise categories -- with improvements in traffic, conversion and ticket," Chief Executive Alex Smith said in a statement.
Merchandise margins for the second quarter are expected to be about 58 percent of sales, said the company, whose rivals include, Bed Bath & Beyond Inc (BBBY.O) and Williams-Sonoma.
For the second quarter ended Aug. 28, Pier 1 expects to earn 10-12 cents a share, above analysts' estimate of 8 cents, according to Thomson Reuters I/B/E/S.
Sales in the quarter rose 8 percent to $310 million, in line with analyst estimates.
Shares of the Fort Worth, Texas-based company, which have dropped by a third since a 2010 high in April, rose 14 percent to $7.48 Thursday on the New York Stock Exchange. (Reporting by NR Sethuraman and Vidya Lakshmi in Bangalore; Editing by Aradhana Aravindan)
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