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Pier 1 Imports Inc (NYSE:PIR)
Gross Profit
$750 Mil (TTM As of Nov. 2014)

Pier 1 Imports Inc's gross profit for the three months ended in Nov. 2014 was $205 Mil. Pier 1 Imports Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2014 was $750 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Pier 1 Imports Inc's gross profit for the three months ended in Nov. 2014 was $205 Mil. Pier 1 Imports Inc's revenue for the three months ended in Nov. 2014 was $485 Mil. Therefore, Pier 1 Imports Inc's Gross Margin for the quarter that ended in Nov. 2014 was 42.29%.

Pier 1 Imports Inc had a gross margin of 42.29% for the quarter that ended in Nov. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Pier 1 Imports Inc was 43.95%. The lowest was 27.52%. And the median was 41.12%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Pier 1 Imports Inc's Gross Profit for the fiscal year that ended in Feb. 2014 is calculated as

Gross Profit (A: Feb. 2014 )=Revenue - Cost of Goods Sold
=1771.743 - 1026.18
=746

Pier 1 Imports Inc's Gross Profit for the quarter that ended in Nov. 2014 is calculated as

Gross Profit (Q: Nov. 2014 )=Revenue - Cost of Goods Sold
=484.501 - 279.588
=205

Pier 1 Imports Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2014 was 214.436 (Feb. 2014 ) + 167.714 (May. 2014 ) + 162.637 (Aug. 2014 ) + 204.913 (Nov. 2014 ) = $750 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Pier 1 Imports Inc's Gross Margin for the quarter that ended in Nov. 2014 is calculated as

Gross Margin (Q: Nov. 2014 )=Gross Profit (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=205 / 484.501
=42.29 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Pier 1 Imports Inc had a gross margin of 42.29% for the quarter that ended in Nov. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Pier 1 Imports Inc Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
Gross_Profit 704602474440363440555651743746

Pier 1 Imports Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Gross_Profit 152186255168161202214168163205
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