Pier 1 posts loss
By Clint Engel -- Furniture Today, September 21, 2008
FORT WORTH, Texas — Pier 1 Imports reported a fiscal second quarter net loss of $30.2 million or 34 cents a share last week, and said it was withdrawing its earnings guidance for the year due to economic uncertainties.
The loss for the period ended Aug. 30 was an improvement over a net loss of $43.4 million or 49 cents per share in the same quarter a year ago.
President and CEO Alex Smith said the second quarter merchandise margins were not what the company had hoped for, “but we took the necessary steps to clear seasonal inventory and to prepare our stores for the arrival of our fall and harvest merchandise.”
In a conference call with analysts, Smith blamed the worse-than-expected performance in part on the challenging economic environment and in part on the retailer's own mistakes. In marking down clearance goods, for instance, the company moved too quickly to deep discount items at 50% to 75% off, he said. It also had a less successful back-to-school strategy this year, as an emphasis on lower-priced items cut the average ticket.
Smith said early results show margin improvements in the fiscal third quarter, he said.
Second quarter sales declined 7% to $320 million and same-store sales were off 1.7%. Through the first six months, sales were off 10% to $630.5 million and same-store sales were down 3.9%.
Pier 1, which has been struggling to return to “profitability and beyond,” as Smith says, said it will not provide guidance for the rest of its fiscal year and withdrew previous guidance due to “the difficulties and uncertainties surrounding the macroeconomic environment.”
It said its turnaround hinges on merchandise margins and operating profits. In the second quarter, merchandise margins improved to 49.3% from 47% a year earlier, the company said.
The company, which operates 1,112 stores in the United States and Canada, saw selling, general and administrative expenses decline $10.4 million in the second quarter to $107 million. That included $5 million is special charges — compared with $7.4 million a year ago — including a one-time cost of $1.7 million related to withdrawing its offer to buy Cost Plus and $2.4 million in lease termination charges primarily related to exiting a warehouse.
Smith said the company has the right strategies to return to profitability and that despite the difficult economy, “we remain confident that we are on the right trajectory.”
| Pier 1 Imports | |||
|---|---|---|---|
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 8/30 | 2008 | 2007 | Change |
| Sales | $320,494,000 | $344,566,000 | (7.0%) |
| Operating income | (20,908,000) | (29,933,000) | — |
| Net income | (30,156,000) | (43,409,000) | — |
| Earnings per share | (0.34) | (0.49) | — |
| 6 months ended 8/30 | 2008 | 2007 | Change |
| Sales | $630,514,000 | $700,941,000 | (10.0%) |
| Operating income | (42,670,000) | (74,879,000) | — |
| Net income | (62,980,000) | (99,787,000) | — |
| Earnings per share | (0.71) | (1.14) | — |
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Pier 1 cuts loss to $30.2 million
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