Pier 1 narrows loss, shares crash   

Fort Worth, Texas – Turnaround-bent Pier 1 Imports made substantial progress in reducing its first-quarter loss, but a Wall Street digesting the Pier 1 bid for Cost Plus World Market was anything but enthusiastic and drove the Pier 1 share price down more than 20% this morning.

Extremely heavy trading today (more than 8 million shares before noon, vs. the recent daily average of 2.2 million shares) took the Pier 1 share price under $4.90.


At that price, the standing bid – of 0.6 share of Pier 1 common stock for 1.0 share of Cost Plus common stock – would equate to $2.94 per share, a drastic reduction since the June 9 offer by Pier 1, which it then estimated would equate to $4 per share.

Pier 1 traded as high as $8.18 on May 1. Cost Plus shares were trading this morning around $3.29, down 6%.

Pier 1 today reported a net loss of $32.8 million, or $0.37 per share, for the first quarter ended May 31 – tightened from the loss of $56.4 million, or $0.64 per share, in the same period one year ago.

Net sales fell 13.0% to $310.0 million from $356.4 million. Comps were down 5.4%, the company said – but stressed that comps in the third month, May, were up 7.5%.

Pier 1 slashed its SG&A costs in the quarter to $109.4 million, or 35.3% of sales, from $132.1 million, or 37.1% of sales – a convincing cut of 220 basis points. The company said the main elements were a reduction of $8.2 million in marketing expense, $4.6 million in store payroll, and $6.9 million in other general administrative costs.

This was enough to reduce the operating loss before interest and taxes (EBIT) to $30.4 million from $55.5 million in the year-ago quarter. Pier 1 has also hacked away at inventory levels, and earlier this month sold its headquarters building – which generated about $100 million in fresh cash.

Alex Smith, president and ceo of the $1.5 billion specialty retailer, told analysts this morning that the 1,116-store chain is on pace to return to operational profitability.

“Customers like what we’re doing,” said Smith, pointing to two merchandising gainers in the quarter: the new impulse item department and the expanded low-ticket department.

Notably, Pier 1 cut its first quarter marketing outlay by 40%, as it plans a major shift of advertising to the second half of 2008.

Smith asked that questions on the proposed Cost Plus acquisition be deferred, and there were none. He said that the “naught-point-six shares” offer was a move by Pier 1 “to create a stronger and more competitive company.”

For what it’s worth – “the company does not make a practice of providing guidance” – Pier 1 projects “a modest net income before special charges for the full year.” But that’s contingent, it said, “upon achieving expected results during the holiday selling period November through January.”

Home & Textiles Today Staff | News & Commentary

 Home Textiles Today is the market-leading brand covering the home and textiles markets, offering a comprehensive package of print and online products. Home & Textiles Today provides industry news, product trends and introductions, exclusive industry research, consumer data, store operations solutions, trade show news and much more.

Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.


HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!