Total second-quarter sales were $344.6 million. That representsa 7%-decline from $370.7 million in the same quarter of 2006. Storeoccupancy expenses for the quarter ended this Sept. 1 were down$2.5 million from second-quarter 2006. Other expenses dropped moredramatically and were $35.6 million less than the year-ago quarter.Chief among the contributors were savings of about $14 million inmarketing costs and $13.9 million in payroll.

Trimming costs is key to the turnaround effort, and, during aconference call, management said it estimates savings of "at least$100 million for the year." It expects on-going annual savings of$150 million as it improves efficiency and simplifies all aspectsof its organizational structure.

Re-merchandising the mix is equally important, especially inlight of "the impact of the macro environment on home retailers,"said Alex W. Smith, president and CEO, during a conference call. Hesaid he does not expect the Federal Reserve Board's September cutin interest rates will (positively) impact Pier 1's business.