Global importer of decorative home furnishings and gifts Pier 1 Imports, Inc. reported financial results for its second quarter ending August 31. The company posted a total sales increase of 7.6%, however profits fell due to lower-than-expected store traffic, the company said.
Net income totaled $17.8 million, down 32% from $26.2 million in the same quarter last year. The company lowered its full-year earnings guidance to a range of $1.23 to $1.29 a share, from its raised June view of earnings of $1.27 to $1.32 a share.
Alex W. Smith, president and chief executive officer commented, “For each of the last 15 quarters we’ve prided ourselves on our ability to deliver consistent short-term results while building out our ‘1 Pier 1’ omni-channel strategy. During the second quarter, the efforts focused around our short- and long-term goals fell slightly out of balance. In particular, our marketing initiatives did not include appropriate messaging around clearance and promotional activity in our stores, or customer acquisition generally, which contributed to lower than expected store traffic. We should also have done a better job of flowing new product to the stores and reflecting those items in the floor set.
“On the other hand we continue to make great progress with ‘1 Pier 1’ and are very pleased with online sales during the period. We are enjoying increases in traffic to Pier1.com and conversion rates are steadily moving upward. Indeed, in August our online business achieved a new high water mark of 5% of total sales— a great way to celebrate the first anniversary of our new e-commerce enabled web site. We also completed the installation of our new point-of-sale system in all 1,066 store locations, another important milestone for our company.”
Mr. Smith concluded, “We’ve entered the third quarter with a very clean inventory position and a terrific assortment of fall product newly set in the stores. Customers are responding favorably to both regular and seasonal merchandise. We’re confident in our plans for the holiday season, including a stepped up marketing campaign which will see our return to advertising on network TV. We believe the business is well-positioned for the second half of the year and expect to return to our historical levels of quarterly sales and profit growth. Additionally, we remain solidly on track to achieve the goals laid out under our Three-Year Growth Plan.”
The Company remained in strong financial condition with $124.9 million of cash and cash equivalents. Inventory totaled $444.7 million, an increase of 5.7% compared to $420.8 million a year ago, in line with management’s expectations.