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Pier 1 Betters Assortment, Tightens Operations

Specialty retailer Pier 1 Imports narrowed its second-quarter loss and is on track to continue its turnaround, said president and ceo Alex Smith, speaking at the Goldman Sachs Global Retailing Conference here.

Pier 1 said Q2 comp sales fell "approximately" 1.7% (full results will be released on Sept. 18). Smith said traffic was up but average ticket down.

EBITDA before special charges was projected at a loss of $15 million to $17 million — better than last year's $23 million measure.

Smith said results were hampered by heavier-than-planned markdowns on outdoor furniture and garden accessories at summer's end. He noted this defect was especially pronounced in the chain's Sunbelt locations.

Still, Smith glowed about the improvements to the Pier 1 merchandise mix. "More and more of what our merchant team selects is on target," he said. "Conversion rates, unit sales increases, and unit per transaction support this statement."

Pier 1 inventory levels are currently "slightly better" than plan, he said, and operations are "leaner" than last year by nearly every measure. Smith said there are further supply chain savings ahead, and announced that Pier 1 has hired Michael Benkel as svp of planning and allocation. Benkel, who hails from the operations side of the Pottery Barn unit of Williams-Sonoma, will start with Pier 1 on Sept. 17.

On the company's cash position, Cary Turner, evp and cfo, noted that Pier 1 this summer sold its headquarters building for over $100 million, now has "just under $200 million" in cash, and has a $325 million line of credit which it intends to use solely for capital spending on infrastructure. "We will continue to be very conservative," Turner noted.

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