Pier 1 Comps Gain But It Still Has Work To Do

For the fourth quarter ended February 28, one that president and CEO Alex Smith said marks the start of a new phase in the company’s transformation into a multi-channel retail operation, Pier 1 Imports posted net income of $33.1 million, or 37 cents per share, versus $42.6 million, or 41 cents per share in year-prior period.

Adjusted net income for the quarter, excluding the after-tax effect of retirement related expenses for the company’s former chief financial officer, was $35.1 million, or 39 cents per share, according to the company.

Pier 1 comparable sales advanced 5.7%, or 6.4% on a constant currency basis, due to increases in brand traffic and average ticket, as well as online conversion, the company reported. Total sales for the fourth quarter were $543.6 million versus $515.8 million in the same period the year before, the company stated.

For the full fiscal year, Pier 1 posted net income of $75.2 million, or 82 cents per share, versus $107.5 million, or $1.01 per share, in the year prior. Adjusted net income for the quarter was $77.2 million, or 84 cents per diluted share, according to the company.

Pier 1 comparable sales gained 4.7%, or 5.2% on a constant currency basis, due to increases in brand traffic, store and online conversion as well as average ticket. Total sales for the fiscal year were $1.87 billion versus $1.77 billion last year, the company maintained.

Smith said an inability to match self-defined objectives and financial guidance had been “frustrating” for the company. He added, however, that the emerging Pier 1 business model, with its multi-channel focus, is a substantial departure from the past.

He acknowledged that Pier 1 still has to improve performance in its distribution centers and in its initiatives to reign in SG&A costs. As the company tackles those challenges, Smith said, Pier 1 can move forward based on the initiatives it has launched facing the consumer that now provide “great products, great marketing and selling vehicles. We now need to get our lean infrastructure back,” he said.

In announcing the financial results, Smith said, “Our omni-channel transformation is largely complete and from a brand strength and customer facing perspective we could not be more pleased with the results. However, fiscal 2015 clearly did not turn out as we had originally budgeted, and we are very disappointed with the result. Our job now is to use the strength of the Pier 1 Imports brand and our investments in it to improve our profitability.

“We are confident in the investments we have made which have allowed us not only to build a $200-plus million e-commerce channel in just two years, but also a platform to develop new growth vehicles and brands. We now have the ability to engage our customers more frequently through broader product offerings, expanded customer service options, tailored merchandising and marketing strategies, and aspirational brand positioning. Pier 1 Imports’ brand health and competitive positioning remain strong, our customer can shop however she chooses, and we have multiple paths to grow the business and drive improved profitability.”