After a distressing fourth quarter in which earnings and comparable sales fell significantly, Pier 1 Imports has formed a new strategic plan that will pressure financial results short term but lead to gains down the road, the company asserted.
For the 14-week fourth quarter ended March 3, Pier 1 Imports posted net income of $15.1 million, or 19 cents per diluted share, versus $26.6 million, or 33 cents per diluted share, in the 13-week year-prior period. Adjusted net income, excluding one-time charges, was $16.6 million, or 21 cents per share, versus $27.8 million, or 34 cents per share, in the year-earlier period.
Adjusted earnings per share topped a MarketBeat-published analyst average estimate of 19 cents but revenues were short of Wall Street expectations.
Comparable sales slid 7.5% in the quarter year over year. Net sales were $512.2 million versus $528.4 million in the year-previous period. Operating income was $27.9 million compared with $44.8 million in the year-before quarter.
For the full 53-week fiscal year, Pier 1 posted net income of $11.6 million, or 14 cents per diluted share, versus $30.1 million, or 37 cents per diluted share, in the 52-week year prior. Adjusted net income was $16.8 million, or 21 cents per diluted share, versus $35.7 million, or 44 cents per diluted share, in the year earlier.
Comparable sales slid 2% year over year. Fiscal year net sales were $1.8 billion versus $1.83 billion in the fiscal year previous. Operating income was $27.7 million compared with $54.9 million in the fiscal year before.
Alasdair James, Pier 1 president and CEO, said, “Our financial performance in fiscal 2018, and specifically the fourth quarter, underscores the urgent need for change, which we are addressing in the three-year strategic plan. In fiscal 2019, we will be investing in the tools and resources needed to execute against the plan. We are confident in the potential of the business to respond and have already begun implementing new initiatives across sourcing, supply chain, stores, merchandising, marketing and promotions. These investments will pressure profitability in the near-term, bringing us to an expected net loss for the full year in fiscal 2019, but are expected to drive sales growth and profitability in fiscal 2020 and 2021 and are necessary to help us return the business to a sustainable growth trajectory.”
Pier 1 developed the strategic plan, dubbed “Pier 1 2021: A New Day,” to improve its brand proposition, capture operating efficiencies and drive sales growth, the company stated. The company will focus on updating the brand proposition by segmenting the marketplace and focusing on targeted consumer groups, refining merchandise assortments, delivering value, ensuring that Pier 1 fits the customer’s sense of style and making shopping easier. Pier 1 intends to drive sales growth through new marketing strategies designed around upgrading content, digital communications and customer experience, and leveraging and strengthening the company’s omnichannel platform. In addition, the company has determined to boost operating efficiencies through initiatives across pricing and promotion, inventory reduction, sourcing and supply chain.
Pier 1 expects capital investments in fiscal 2019 to total $60 million, including about $45 million of expenditures for the new strategic plan, primarily involving information technology, supply chain and stores. The company also intends to make SG&A investments in fiscal 2019 in the areas of marketing, corporate services and facilities planning, and store operations to execute against the three-year plan.