"We're finding that landlords are much more willing to makeconcessions than they were a year ago," Smith said. "We havealready made progress and started to achieve significant rentalreductions, and we intend to continue to do so."

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The company now plans to close between 25 and 30 stores thisyear. However, store closings are not the main goal right now.

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"As we've been doing for the last year, we're going to belooking at every single lease, every single opportunity," said CaryTurner, EVP and CFO. "Our best solution would be to close zerostores, as we negotiate with our landlords. But right now, we don'thave a definite number of what that would be."

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Traffic in a sense is improving at the stores, as the company'smarketing campaign and improved merchandise mix is becomingevident, Smith said. While it is still negative compared with lastyear, it is less so than in October and November. And the companyis continuing to experiment, adding wine to the mix in five unitsthis year, and expanding the test to more stores next year.

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Total sales for the third fiscal quarter declined to $301million from $374 million in the year-ago quarter. Comparable storesales declined 17.8%. The company reported a net loss of $36.9million for the quarter, vs. $10 million for the same period lastyear. At the end of the quarter, Pier 1 operated 1,108 stores inthe US and Canada.

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