Third Quarter Results
For the third quarter ended November 24, 2012, the Company reported net income of $23.7 million, or $0.22 per share. Third quarter adjusted net income on a non-GAAP basis, which excludes the estimated impact of Hurricane Sandy and utilizes an estimated 35.6% annual effective tax rate for fiscal 2013 (as described below under Financial Disclosure Advisory), was $27.1 million, or $0.25 per share. For the third quarter ended November 26, 2011, the Company reported net income of $23.0 million, or $0.21 per share. Total sales for the third quarter of fiscal 2013 were $424.5 million, an increase of 10.9% versus $382.7 million in the year-ago quarter. Comparable store sales increased 7.9% during the third quarter on top of last year’s 7.0% gain. Strong comparable store sales results for the period were primarily attributable to increases in store traffic and higher average ticket.
Merchandise margins at the store level for the third quarter were essentially flat compared to the same period last year. Merchandise margins, including the direct-to-consumer business (“Pier 1 To-You”), were 60.2% for the third quarter of this year. Store occupancy costs were $69.4 million, or 16.3% of sales, compared to $66.2 million, or 17.3% of sales, last year. Gross profit for the quarter was $186.3 million, or 43.9% of sales, a 70 basis point improvement from $165.5 million, or 43.2% of sales in the third quarter of last year.
Third quarter selling, general and administrative expenses were $139.2 million, or 32.8% of sales, compared to $127.5 million, or 33.3% of sales, in the same period of fiscal 2012. The 50 basis point improvement was primarily due to the leveraging of store salaries and fixed expenses, and was slightly offset by increases in marketing expense.Operating income for the third quarter increased 18% to $38.8 million, or 9.1% of sales, compared to last year’s third quarter operating income of $32.9 million, or 8.6% of sales.