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The stock (ticker: PIR), which sank as low as 11 cents earlier this year, gained 25 cents to close at $4.41 Monday on the New York Stock Exchange.
Pier 1 said same-store sales -- activity at stores open at least a year, an industry benchmark -- rose 9.9 percent in September. That compared to an 11.7 percent drop in the same month last year.
Alex Smith, Pier 1's CEO, said improvement in the business that occurred during the second quarter has "continued through the month of September and into October."
Store traffic, and the percentage of shoppers who buy, improved, he said.
"Although it is still early in the [third] quarter, we have seen nothing to indicate that recent sales and traffic trends will not continue," Smith said in a statement, which the company released ahead of a store tour planned for investment analysts today in New York.
Profit margins continue to improve as "a result of significantly reduced markdown and clearance activity," Pier 1 said.
The company said it expects inventory to peak at $350 million at the end of the quarter.
"As we head into November and December, we feel confident about our inventory level and our ability to manage it with significantly less markdowns than last year," Smith said.
"The economic environment may continue to be a challenge," but the company feels good about its fall and holiday marketing campaigns, he added.
If recent strength in the company's stock price continues, it will be able this month to terminate the "conversion rights" of holders of the company's 9 percent convertible debt notes, which Pier 1 issued during the second quarter to raise capital.
"It is expected the company will exercise that right" to terminate the conversion rights, Pier 1 said.
To date, debtholders have converted, or submitted for conversion, about $15 million of the original $61.2 million in bonds into 6 million shares of Pier 1, the company said.
SCOTT NISHIMURA, 817-390-7808
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