Pier 1 Posts Loss and Cuts Guidance as Sales Slip
29 September 2016 - 8:30AM
Dow Jones News
Pier 1 Imports Inc., under recent pressure from an activist
investor, said its second-quarter revenue fell 6.7%, swinging the
company to a loss as fewer shoppers came through its doors.
"Our results on the whole continue to be impacted by soft store
traffic and a competitive promotional environment," said Chief
Financial Officer Jeffrey Boyer.
The company said it is implementing various initiatives to turn
sales around, including a return to television advertising and
introducing a gift registry.
Earlier this month, the home-furnishing retailer announced the
departure of Chief Executive Alex Smith as the Fort Worth-based
company has struggled to improve sales.
Retailers industrywide have been grappling with dwindling foot
traffic as consumers increasingly do their shopping online. While
Pier 1 and others have moved to beef up e-commerce capabilities,
which now represents 20% of the company's sales, the transition to
online retail often means slimmer margins.
Tuesday, the Fort-Worth based company unveiled a poison-pill
measure to protect itself from activist investors acquiring a 10%
or more stake. Pier 1 said the new restriction won't prevent a
takeover, "but may cause substantial dilution to anyone acquiring
10% or more of the company's common stock, which may block or
render more difficult a merger." The announcement came a week after
hedge fund firm Alden Global Capital LLC revealed a 9.5% stake in
the company.
Alden president Heath Freeman said Wednesday he was "surprised
and disappointed" by the new policy, and that the hedge fund never
expressed interest in acquiring the home-goods seller. He said his
firm wants to be involved in the company's CEO search and that Pier
1 could benefit from shareholder representation on its board.
Over all for the fiscal second quarter, Pier 1 reported a loss
of $4.1 million, or 5 cents a share, down from earnings of $3.2
million, or 4 cents per share, a year earlier.
Revenue dropped to $405.8 million from $435 million. Same-store
sales also declined 4.3%.
The company warned Wall Street earlier this month that it would
post a steeper drop in revenue for the quarter than its earlier
forecast of 1%.
For the full year, Pier 1 now expects earnings per-share of 16
cents to 24 cents and adjusted per-share earnings of 24 cents to 32
cents. The adjusted earnings guidance excludes about $10 million of
estimated costs for the planned departure of Mr. Smith. In June,
the retailer predicted earnings of 32 cents to 40 cents a share.
Pier 1 dropped its revenue projection to a 4% to 6% decline,
worsening from a 1% to 3% drop it had guided for in June.
Shares fell 1.6% to $4.20 after hours.
(END) Dow Jones Newswires
September 28, 2016 18:15 ET (22:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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