Pier 1 turnaround slowed but ‘stabilized’

James Mammarella, April 7, 2009

Fort Worth, Texas – Struggling home furnishings specialty retailer Pier 1 Imports posted a deeper loss in 2008, but executives painted a picture of a stabilized, disciplined strategy during today’s Q4 and full year earnings call.

“The recession has hit us hard,” Alex Smith, president and ceo, told analysts. Smith reiterated that the Pier 1 plan to break even and improve margins had been on track until last August, and that “what we initially expected to be a three-year turnaround is going to take longer.”

Rather than a break-even, Pier 1 recorded a full year net loss of $129.2 million, or $1.45 per share – broadened from the prior-year loss of $96.0 million, or $1.09 per share.

For the quarter ended February 28, Pier 1 logged a net loss of $29.4 million, or 33 cents per share – in sharp contrast to the year-ago net profit of $13.7 million, or 16 cents EPS.

However, Cary Turner, evp and cfo, ticked off a number of solid statistics regarding the 1,092-store company’s credit facility, debt and cash positions, the closing of 26 stores and the Chicago distribution center, lower cap ex plans, and some progress in rental reductions – as well as the cutting of approximately $100 million from year-end inventory.

On that last point, Smith lauded his merchants for their better buying in 2008, which he said continues in the current year; he said that average ticket and store traffic metrics have stabilized in early 2009.

“We are seeing meaningful increases in the percentage of our sales generated by repeat and continuity skus – which is helping us to reduce our markdown exposure going forward,” Smith said.

Pier 1 saw sales fall 12.6% to $1.32 billion for the year, with comps down 9.2%. Sales in Q4 sagged 11.0% to $389.2 million as comps dropped 9.7%.

Looking ahead Smith noted, “We will have some sku reductions, but the treasure hunt feel of our stores will remain.” He added that the furniture segment – about 40% of sales – has been “quite resilient recently.”

Speaking about the vendor community, Smith said that Pier 1 is seeing some lower costs “compared to six months ago.”

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 Current issue for September 2017

See the September 2017 issue of Home & Textiles Today. In this issue, we look at the Attack of the Killer Third Tier: Monster off-pricers are climbing to the top of the food chain, plus New Products: 40 pages of new products debuting at the New York Home Fashions Market; Home Stores: TJX unveils first U.S. HomeSense store; Clicks to Bricks: Boll & Branch moves from digital to physical retailing; and much more... See details!