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Pier 1 Imports Inc (NYSE:PIR)
Gross Profit
$705 Mil (TTM As of Feb. 2016)

Pier 1 Imports Inc's gross profit for the three months ended in Feb. 2016 was $212 Mil. Pier 1 Imports Inc's gross profit for the trailing twelve months (TTM) ended in Feb. 2016 was $705 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 Feb. 2016 was $212 Mil. Pier 1 Imports Inc's revenue for the three months ended in Feb. 2016 was $558 Mil. Therefore, Pier 1 Imports Inc's Gross Margin for the quarter that ended in Feb. 2016 was 38.06%.

Pier 1 Imports Inc had a gross margin of 38.06% for the quarter that ended in Feb. 2016 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Pier 1 Imports Inc was 43.58%. The lowest was 27.52%. And the median was 38.52%.

Warning Sign:

Pier 1 Imports Inc gross margin has been in long term decline. The average rate of decline per year is -1.5%.


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. 2016 is calculated as

Gross Profit (A: Feb. 2016 )=Revenue - Cost of Goods Sold
=1892.23 - 1187.25
=705

Pier 1 Imports Inc's Gross Profit for the quarter that ended in Feb. 2016 is calculated as

Gross Profit (Q: Feb. 2016 )=Revenue - Cost of Goods Sold
=557.723 - 345.431
=212

Pier 1 Imports Inc Gross Profit for the trailing twelve months (TTM) ended in Feb. 2016 was 164.677 (May. 2015 ) + 149.518 (Aug. 2015 ) + 178.493 (Nov. 2015 ) + 212.292 (Feb. 2016 ) = $705 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 Feb. 2016 is calculated as

Gross Margin (Q: Feb. 2016 )=Gross Profit (Q: Feb. 2016 ) / Revenue (Q: Feb. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=212 / 557.723
=38.06 %

* 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 38.06% for the quarter that ended in Feb. 2016 => Competition eroding margins


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

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
Gross_Profit 474440363440555651743746750705

Pier 1 Imports Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
Gross_Profit 202234168163205233165150178212
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