June 3, 2010 / 10:57 AM / 9 years ago

UPDATE 3-Pier 1 reports strong Q1 sales; shares rise

* Q1 comp sales up 14.3 percent

* Q1 sales $306 mln, above estimates

* Shares up as much as 15 percent (Recasts; adds background, analyst comment; updates share movement)

By Abhishek Takle

BANGALORE, June 3 (Reuters) - Home-goods retailer Pier 1 Imports (PIR.N) said same-store sales surged in the first quarter as consumers spent more on their homes, sending its shares up as much as 15 percent.

An improving economy has renewed demand for home goods, benefiting Pier 1 and larger rivals Williams-Sonoma (WSM.N) and Bed Bath & Beyond (BBBY.O).

“It clearly shows that they (Pier 1) have continued sales momentum in their business and that the merchandising changes the company has made over the last few years have been effective,” BB&T Capital Markets analyst Anthony Chukumba told Reuters.

Unlike prior years when it offered fewer items in large numbers, Pier 1 now gives shoppers more choice by offering a wider array of decorative items, while managing inventory purchasing decisions to hold prices on merchandise.

Same-store sales in the quarter, which rose 14.3 percent, benefited in March from an early Easter holiday and stayed solid through the rest of the quarter, ending with a strong Memorial Day weekend, the company said.

The increase in same-store sales was driven by a consistent rise in conversion rate, average ticket and traffic, Chief Executive Alex Smith said in a statement.

“Pier 1 is clearly hitting on all cylinders, which is very encouraging,” analyst Chukumba said.

“...as opposed to it just being one of those three variables improving, it’s all three.”

The company also said total first-quarter sales rose 9 percent to $306 million. Analysts on average had expected sales of $300.7 million, according to Thomson Reuters I/B/E/S.

As the housing market slumped, reduced discretionary spending took its toll on Pier 1, which sells goods ranging from wicker chairs to rugs and wine glasses.

Shares of the company, which had plummeted to below a dollar in early 2009, were trading up 11 percent at $8.23 in mid-day trading Thursday on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Anne Pallivathuckal and Don Sebastian)

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