Cost Plus scales back expansion plans

Cost Plus Inc. said Thursday it was reducing the number of stores it plans to open in the fiscal year as the nation's economy slows.

The specialty home retailer said it expects third quarter sales of $217 million to $228 million. It did not provide an earnings per share estimate.

Analysts surveyed by Thomson Reuters expect the owner of Cost Plus World Market stores to lose 84 cents per share on revenue of $222.2 million.

Same-store sales -- which measures sales at established stores -- could fall as much as 2 percent or rise 2 percent, the company said.

"The Company has reduced the number of stores planned to open in fiscal 2008 from 17 to 15 and will not open any more new stores this year," Cost Plus executives said in a statement Thursday.

Separately, Cost Plus said its second quarter loss widened as weak dollar, higher energy costs cut into profits.

For the three months ending Aug. 2, the home decor retailer said it lost $26.6 million, or $1.21 per share. That compares to a year-ago loss of $18 million, or 81 cents per share.

The company said its second-quarter results were weighed down by a $2.8 million expense incurred by the unsolicited buyout offer from Pier 1 Imports Inc. and increased energy costs, higher health benefit expenses and the weak dollar.

Excluding the impact of those expenses, the company said its operating loss was $25.2 million, or $1.14 per share.

Revenue rose 5.6 percent, as sales climbed to $221 million, up from $209.3 million during the same period last year.

Shares of Cost Plus, which operates 296 Cost Plus World Market stores in 33 states, fell 6 cents Thursday, or 3.4 percent, to $1.73.

Source: BusinessWeek

Pier 1 withdraws offer to buy Cost Plus

FORT WORTH -- Retailer Pier 1 Imports Inc. said Tuesday that it was withdrawing its offer to buy rival Cost Plus Inc. for $88 million.

Pier 1 said it was unlikely that it would be able to buy the company at a price that would make sense for its shareholders.

The company offered to buy Cost Plus this month in a stock swap transaction. In the proposal, Pier 1 said it would issue 0.6 of a share of its common stock for each share of Cost Plus common stock, implying a value of $4 a share.Last week, Cost Plus' board of directors rejected Pier 1's offer.

Pier 1 shares rose 3 cents to $4.03.

Source: Los Angeles Times

Pier 1 seeks to buy Cost Plus

FORT WORTH, Texas and OAKLAND, Calif. (Jun. 9) Pier 1 Imports is looking to acquire all of the outstanding shares of Cost Plus common stock for $4.00 per share. The company said it sent a letter to Cost Plus detailing the proposal and said it believed the transaction could be finished by the third quarter of 2008.

“We believe that the combination of Pier 1 Imports and Cost Plus is extremely compelling and would create significant value for the stakeholders of both companies,” said Alex Smith, president and ceo. “Given our similar customer bases and broadly similar business models, but distinct market positions, we believe Cost Plus is an excellent fit with Pier 1 Imports. We are confident that combining our two companies would create a stronger and more competitive company that is better positioned for future growth. Furthermore, we believe the combination will result in improvements in Cost Plus’s operating margins and significant synergies, anticipated to come from organizational efficiencies in the supply chain management, shared services, store operations and other general administrative costs. Cost Plus shareholders will enjoy significant benefits from the combination, including improved operational liquidity of the combined company as well as a more active trading market for their shares.

In response to Pier 1's proposal, Cost Plus said it would review the offer, and noted that its shareholders do not need to take any action with regards to this proposal.

Peter J. Solomon Company is acting as financial advisor to Cost Plus and Skadden, Arps, Slate, Meagher & Flom LLP and Wilson, Sonsini, Goodrich & Rosati LLP are acting as legal advisors.

Source: Retailing Today