Four take-aways from Pier 1’s Q4 analyst call

Q4 profit up nicely, but retailer expects Q1 loss

Fort Worth, Texas – Despite fourth quarter profit improvement, Pier 1 expects some rough sledding ahead.

During the retailer’s Q4 conference call this week, executives said its omnichannel turn-around strategy is making headway. Still, Pier 1 expects miniscule first quarter sales growth – flat to up 1% – and an earnings-per-share loss of 3 to 7 cents.

“It’s a very promotional environment. It’s been that way for a number of years, and it’s that way right now,” said evp/cfo Jeffrey Boyer, who added: “Now, we haven’t been any more promotional than we’ve been.”

Key points from the call:

Merchandising. Pier 1 is focusing on top-selling collections and emphasizing newness across all categories.Pier 1 pillows

E-commerce. Grew to over $360 million in sales in the recent fiscal year and now represents roughly 20% of total sales, up from 16% in the previous year. Pier 1 has added drop-ship.

Customer acquisition. Return to television advertising in spring 2016 helped drive traffic. This year, Pier 1 will boost marketing spend to 6% of sales, up 30 basis point. Engagement. The retailer will step up its use of in-store events to build traffic and bricks sales.

Store closings. Pier 1 will close 20 to 25 stores over the next two years ago. It currently just over 1,000 units in the U.S. and Canada.

For the fourth quarter ended Feb. 25, sales fell 3% to $528.4 million, with comp eking up 0.2%. Net income climbed 42.7% to $26.6 million, or 33 cents per share.

Fiscal year sales dropped 3.4% to $1.83 billion, with comp down 1%. Net income tumbled 24.0% to $30.1 million, or 37 cents per share.

Home & Textiles Today Staff | News & Commentary

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