Pier 1 Imports is yet another retailer to have performed badly. Shares of the company declined by 11% after trading hours on Wednesday. Its share price plummeted to $13.89, which is the lowest price since 2011.
The drop occurred following the news that Piers 1 Import’s profit for the quarter was lackluster and was much less compared to the same quarter last year.
Net income dropped from $17.8 million last quarter down to $9.2 million this quarter (a 48% decline).
The company reported revenue for the period of $418.6 million – lower than what most Wall Street analysts had predicted. According to Zacks, analysts expected revenue of at least $427.3 million.
Despite the decline in revenue, quarterly sales for the home decor company increased by 5.8% to $418.6 million.
Fiscal 2015 earnings projections lowered again
For the second time since June Pier 1 has lowered its fiscal 2015 earnings projections, stating that it now predicts to earn between 95 cents and $1.05 per share.
CEO of the company, Alex Smith, said that the reason why the company hasn’t performed as well as it should is because of the increased number of promotions and the high costs associated with online sales – with fewer people actually shoping at stores.
He expressed his concerns about online sales, which make up 10% of the company’s overall sales, but has operating costs that are significantly reducing the company’s net earnings. The company launched its eCommerce site Pier1.com in July 2012.
Alex Smith said:
“As we move into the second half of the year and prepare for the all-important holiday season, we are also bolstering our marketing and promotional strategies to drive both store and web site traffic, conversion and average ticket, while reinforcing Pier 1 Imports’ competitive positioning.”
“Our initiatives include additional circulation of our mailers and catalogs, new TV spots that feature fresh creative, new digital programs and a more aspirational brand message.”
He added:
“We have strengthened our real estate portfolio in recent years and believe the stores are well-positioned to play a critical role in our omni-channel business. Fortunately, as brand traffic patterns evolve, the fact that approximately 15 percent of our lease portfolio turns over each year provides us with the ability to take decisive action when our real estate needs change.”
“We will continue to strategically review each store and each market and determine the appropriate number of stores to maximize market share and optimize our profitability.”