With a CEO search underway and a hedge fund recently taking a stake in the company, departing Pier 1 Imports chief executive officer Alex Smith had to report a second quarter constrained by soft store traffic.
In the second quarter, which ended August 27, Pier 1 recorded a net loss of $4.1 million, or five cents per diluted share, versus net income of $3.2 million, or four cents per diluted share, in the period a year prior. The loss was in line with an analyst average estimate compiled by MarketBeat.
Comparable sales for the quarter decreased 4.3% versus the quarter a year before. Net sales slipped 6.7% to $405.8 million. E-Commerce represented about 20% of net sales in the second quarter versus 17% of net sales in the year-earlier period.
“Our top-line results reflect soft store traffic levels throughout the second quarter, most notably in July,” Smith said. “To drive our business, we have many initiatives currently underway which include our return to television advertising, merchandise refreshes, including the arrival of new and fall seasonal goods, new floor sets, gift registry introduction, full implementation of our multi-tender loyalty program and an effective and balanced promotional plan. As we moved through August and into September, we have seen improvement in our sales and merchandise margin trends, however, we remain cautious regarding our sales outlook given that it’s early in the quarter and our biggest selling season is still ahead. We believe our stores and website are well positioned moving into the holidays.”
Smith added, “With our omnichannel model in place, we are confident in the programs we have underway to help drive sales, improve our supply chain efficiency, optimize our real estate portfolio and further reduce costs, which we believe will lead to greater value creation for our shareholders.”
Earlier this week, Pier 1 announced it had put a poison pill defense in place after hedge fund Alden Global Capital filed a form with the United States Securities and Exchange Commission declaring that it had taken a 9.5% stake in the company, and that it was looking to have a voice in management supervision, including the CEO search. Pier 1 has also previously announced that Smith would leave the company effective December 31 and that the company was initiating a search for a new chief executive.
Pier 1 operates 1,023 stores.