Pier 1 shares jump on improving trends

By Lisa Baertlein

LOS ANGELES (Reuters) - Home furnishings retailer Pier 1 Imports Inc (PIR.N) said sales at established stores rose 9.9 percent in September and said merchandise margins continue to improve, sending its shares up 12 percent.

Pier 1 stock -- which fell to 10 cents a share in March -- rose to $4.94 in extended trade from its close of $4.41 on the New York Stock Exchange.

To put that seven-month share gain in perspective, a person who invested $10,000 in Pier 1 when shares were at 10 cents would now have an investment worth nearly half a million dollars.

Fort Worth, Texas-based Pier 1, which sells goods ranging from teak patio furniture and Papasan chairs to dinner plates and wine glasses, competes with retailers such as Crate and Barrel, Williams-Sonoma Inc's (WSM.N) Pottery Barn, Cost Plus Inc (CPWM.O) and Bed Bath & Beyond Inc (BBBY.O).

Such retailers have seen sales slump with the housing-led recession.

After slashing jobs, closing stores, renegotiating rents and tightly managing inventories, Pier 1 is starting to see its business turn.

Some of the improvement is due to easier comparisons. For example, September's 9.9 percent rise in same-store sales compares with a decline of 11.7 percent the year earlier.

The company significantly reduced markdown and clearance activity, which is helping merchandise margins improve for the current third-quarter ending November 28.