Alco net loss widens on taxes; CFO departs
Coppell, Texas – Alco Stores Inc. reported a net loss of $8.1 million in the first quarter of its fiscal year, up from a loss of $1.7 million in the year-ago period, amid an elimination of a tax benefit. The company also announced its CFO has left the company.
Net sales decreased 4.1% to $104.7 million, compared to $109.2 million in the first quarter of fiscal 2014. Same-store sales, excluding fuel centers, decreased 7.1%. Alco president and CEO Richard Wilson cited several ongoing initiatives as providing promise for future performance.
"While the first-quarter business environment and Alco’s performance were disappointing, we have made significant progress on several of the company’s operating initiatives,” said Wilson. “Working capital improved as a result of a $25 million reduction in first quarter inventory compared to the first quarter of last fiscal year. We increased Alco’s overall credit facility by $17.5 million and extended the term through 2019 by amending an existing credit facility with Wells Fargo. We have opened three new stores during the past nine months, whose results thus far remain very encouraging.”
Separately, Alco announced that Wayne Peterson, senior VP and CFO, has left the company. Alco has begun a search for a new CFO.
Mike Juniper, senior VP, Deloitte Transaction and Business Analytics LLP, will serve as interim CFO until a permanent replacement is named, and Brian Assmus, VP and controller of Alco, is serving as principal accounting officer.
Promotions impact Pier 1 profit
Fort Worth, Texas – Promotions took their toll on profitability at Pier Imports Inc. during the first quarter of fiscal 2015. The company reduced its earnings guidance for fiscal 2015.
Net earnings fell 25% to $15.1 million from $20.3 million in the same quarter of fiscal 2014.
Total sales for the first quarter were $419.1 million, a 6.1% increase from $394.9 million in the year-ago quarter. Same-store sales increased 6.3%, attributable to increases in total brand traffic, conversion and higher average ticket.
"The retail environment remains highly promotional and is pressuring gross profit in the near-term," said CEO Alex W. Smith. "As a result, we are adjusting our full-year earnings forecast accordingly."
Pier 1 Imports’ e-commerce strategy gains momentum
Increasing strength in Pier 1 Imports’ e-commerce business translated into better-than-expected sales that fueled the company’s overall financial results for the first quarter.
Total sales for the quarter were $419.1 million, a 6.1% increase versus $394.9 million in the year-ago quarter. Comparable sales increased 6.3% during the quarter, driven by increases in total brand traffic, conversion and higher average ticket. E-commerce sales exceeded the company’s estimates, reaching 9% of sales for the quarter.
“Our stores continue to serve as an important and productive gateway to Pier1.com, with approximately one-quarter of our online transactions originating at the store and one-third of orders placed at home being picked up in-store,” said president and CEO Alex W. Smith. “Given the momentum we are experiencing, we now anticipate that sales through Pier1.com will exceed $200 million in fiscal 2015. Nevertheless, the retail environment remains highly promotional and is pressuring gross profit in the near-term. As a result, we are adjusting our full-year earnings forecast accordingly.”
The company’s expanded spring and outdoor assortments resonated with customers, according to Smith, and were buoyed by its marketing efforts. Smith added that investments in omnichannel capabilities has positioned the company well to drive brand growth.
Looking ahead, the company now expects to achieve e-commerce sales of at least $200 million in fiscal 2015, and e-commerce sales of at least $400 million in fiscal 2016. This compares to previous expectations for e-commerce sales to represent 10% of total sales by the end of fiscal 2016. The company reiterated its previously stated goals for sales per retail sq. ft. of $225 and operating margins of approximately 11% to 11.5% by the end of fiscal 2016.