Question-and-Answer Session
Operator
Your first question comes from Lauren Levitan - Cowen and Company
Lauren Levitan - Cowen and Company
Alex I was wondering if you could provide us with any insights on what you’re learning from the consumer, maybe any sense as to how much of the business is coming from customers who’ve been in your historical file, who have a previous relationship with Pier 1 and are responding to the new product, or are there meaningful numbers of new customers who are new to the brand and similarly responding to what you’ve done. And then separately I’m wondering if you could give us any insights in terms of the marketing budget. I know you said that you’re still refining and making some changes in terms of uses of newspaper and other offerings, but I’m curious if the goal is for marketing to continue to be a source of the expense savings as we go into ’08 or should we think about the marketing levels from the prior year as the appropriate base case.
Alex Smith
Well as far as the marketing spend is concerned, that’s the easy one. We’re going to keep it at around that sort of 4% to 4.5% of sales. We don’t see—we think that’s a good number. What we are doing that’s very different this year though, if you look at how we spent our marketing in the last fiscal year, we spent it pretty evenly by quarter, which means that the marketing as a percent of sales was pretty high at the beginning of the year and then got lower as we went through; which really didn’t make a lot of sense. So what we’re doing this year is making the marketing cadence follow the sales. So in other words, we’ll be spending a lot more on marketing in the third and fourth quarters. The net result of that is for example in March; we spent just under half on marketing compared to LY. So that’s that piece.
In terms of whether we’re looking at frequency of shop from existing customers or acquisition, I can’t tell you the breakdown of what our customers actually are because I have no way of capturing that but I can tell you a few things. Firstly we’re doing very well on our Pier 1 Imports credit card. So those customers obviously are loyal repeat customers and we see an increasing spend on the card which is very encouraging. Secondly when we do do mailings we do divide it up so we send a proportion of—the biggest proportion goes to Pier 1 Imports customers who have shopped in the recent past. A smaller percentage goes to Pier 1 Imports shoppers who haven’t shopped let’s say for a year and then the final piece goes speculatively.
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