Pier 1 reported weaker than expected results in its third quarter, while noting that it is building a strategic growth plan to improve performance.
For the third quarter, Pier 1 Imports posted net income of $7.4 million, or nine cents per share, versus $13.6 million, or 17 cents per share, in the previous third quarter. According to the company, adjusted net income was $7.5 million, or nine cents per share, versus $17.6 million, or 22 cents per share, in the year-before quarter. Pier 1 fell two cents short of an analyst average estimate published by MarketBeat.
Comparable sales declined 0.7%. The company estimated that the retail impact of the hurricanes in Florida and Texas trimmed 100 basis points off its comparable store sales metric. E-commerce represented 26% of net sales versus 20% in the year-prior quarter. Net sales decreased 1.4% to $469.2 million in the quarter year over year. Operating income was $13.4 million compared to $22.3 million in the year-period period.
“Our third quarter financial performance was impacted by the hurricanes in Texas and Florida, as well as deeper than expected promotional activity in October and November,” said Alasdair James, Pier 1 president and CEO. “We saw improved sales in November, including a solid Black Friday weekend, driven by our strong promotional message. However, overall trends dropped considerably during the first two weeks of December. We have adjusted our promotional plans for the remainder of the holiday season and significantly revised our financial guidance to reflect the current tone and volatility of business.”
James said the company had recently completed a comprehensive business review. He noted, “Importantly, we see compelling go-forward opportunities to broaden the appeal of the brand, maximize the role of stores and e-commerce, and substantially improve our operating margins. We are building a three-year strategic plan to transform the business, and are beginning to set things in motion with initiatives, testing and select organizational changes in the key areas of sourcing, supply chain, real estate, marketing and promotional effectiveness. We look forward to sharing our detailed blueprint in early 2018.”
In addition, the company appointed William Savage to the newly created position of evp/global sourcing. Savage was president of Sears Holdings’ home division. Previously, he was executive commercial director for apparel, home, hardlines and electronics at Tesco in China, and evp/chief merchandising officer, retail, for Walmart India.
“William brings 20 years of experience from highly-respected consumer brands and the leadership and technical expertise to elevate our sourcing operation,” James said. “His diverse skill set and deep experience in both sourcing and home furnishings will be invaluable as we set our new strategic course for the Pier 1 Imports brand. Sourcing, supply chain and inventory management are among the critical elements of our future plans to drive efficiency and improve long-term profitability, and we look forward to William’s contributions.”