Case Study: Specialty Department Store Profitability

This case study looks at the relative profitability of Cost Plus World Market and Pier 1 Imports.

Cost Plus has a breakeven sales level a little under $100 million per quarter. It did not begin exceeding this level in all quarters until 2000, although the fourth quarter was exceeding it at least as far back as 1998 (and probably earlier).

Pier 1’s sales are well above its breakeven level of around $175 million per quarter.

Pier 1 is the more mature chain, and its higher store count is reflected in its higher breakeven level and its greater sales level. Capital is not included in this case study, so we can not determine which company is producing a greater return.