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Pier 1 Imports Inc  (NYSE:PIR) Gross Profit: $695 Mil (TTM As of Aug. 2017)

Pier 1 Imports Inc's gross profit for the three months ended in Aug. 2017 was $140 Mil. Pier 1 Imports Inc's gross profit for the trailing twelve months (TTM) ended in Aug. 2017 was $695 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 Aug. 2017 was $140 Mil. Pier 1 Imports Inc's Revenue for the three months ended in Aug. 2017 was $408 Mil. Therefore, Pier 1 Imports Inc's Gross Margin % for the quarter that ended in Aug. 2017 was 34.39%.

Pier 1 Imports Inc had a gross margin of 34.39% for the quarter that ended in Aug. 2017 => 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 38.96%.

Warning Sign:

Pier 1 Imports Inc gross margin has been in long term decline. The average rate of decline per year is -3%.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Pier 1 Imports Inc Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 743.06 765.26 768.48 704.98 697.31

Pier 1 Imports Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
Gross Profit Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 145.04 196.39 206.91 151.60 140.16

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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. 2017 is calculated as

Gross Profit (A: Feb. 2017 )=Revenue - Cost of Goods Sold
=1828.446 - 1131.138
=697

Pier 1 Imports Inc's Gross Profit for the quarter that ended in Aug. 2017 is calculated as

Gross Profit (Q: Aug. 2017 )=Revenue - Cost of Goods Sold
=407.607 - 267.443
=140

Gross Profit for the trailing twelve months (TTM) ended in Aug. 2017 was 196.393 (Nov. 2016 ) + 206.912 (Feb. 2017 ) + 151.597 (May. 2017 ) + 140.164 (Aug. 2017 ) = $695 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 Aug. 2017 is calculated as

Gross Margin % (Q: Aug. 2017 )=Gross Profit (Q: Aug. 2017 ) / Revenue (Q: Aug. 2017 )
=(Revenue - Cost of Goods Sold) / Revenue
=140 / 407.607
=34.39 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 34.39% for the quarter that ended in Aug. 2017 => Competition eroding margins


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