Home decor retailer cuts Q1 loss; online continues to grow
Pier I Imports reduced its loss in the first quarter amid a boost in its gross margin and other operational improvements.
Pier 1 reported its first-quarter loss narrowed to $3 million, or 4 cents a share, from $6 million, or 7 cents a share, a year earlier. Its results beat expectations.
Revenue fell to $409.5 million, less than expected, from $418.4 million. The home decor retailer noted that the average number of stores operating in the quarter decreased approximately 1% compared to the year-ago period. Same-store sales were flat.
Analyst Neil Saunders, managing director of GlobalData Retail, commented that Pier's I's poor store performance is partially due to the fact that some of its stores are in locations that suffer from weak customer traffic. Another problem is the nature of the stores themselves, he said.
"While we recognize that improvements have been made to the layout, we maintain our view that the proposition is not as clear and compelling as it should or could be," Saunders said. "Pier 1 has some nice pieces, often at good price points, but these can be hard to find. Meanwhile, categories like furniture need more space if they are to be showcased properly. In short, stores are not terrible; but neither are they compelling enough to drive visitation."
Online sales totaled $99.3 million, representing year-over-year growth of approximately 23%. E-commerce represented approximately 24% of net sales in quarter, as compared to approximately 19% last year.
Pier I opened one store and closed three during the quarter, ending with 1,106 stores as of May 27. It plans to close a net of 20 to 25 stores by the end of the current fiscal year.
“Whilst we’ve shown operational improvement for several consecutive quarters, there is still much to be done to build the business to its full potential, significantly strengthen our profitability and increase shareholder value.” said Alasdair James, who took the reins as Pier I president and CEO on May 2. "Pier 1 Imports has a loyal customer base, productive store portfolio, large and growing e-Commerce presence and strong balance sheet."
For the full year, Pier 1 expects net sales growth in the 1.5% to 2.5% range, same-store sales increase of 1% to 2%, and earnings per share in the range of 46 cents to 52 cents.
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