Pier 1 Imports slumped in the fourth quarter and is weighing more store closings and cost cutting measures, as the retailer ramped up its turnaround plans.
The company posted a net loss of $68.8 million, or 85 cents per diluted share, versus net income of $15.1 million, or 19 cents per diluted share, in the year-previous period. Net loss per diluted share topped a MarketBeat-published analyst consensus estimate, which was for a loss of 22 cents per diluted share.
In the quarter year over year, Pier 1 asserted that comparable sales fell 13.7% versus the like 13-week period of fiscal 2018, with the shift of certain holiday selling days relative to the fiscal period depressing comps by 750 basis points. Net sales were $412.5 million versus $512.2 million in the year-before fourth quarter. Operating loss was $65.3 million as compared to operating income of $28.2 million in the period a year earlier.
For the full fiscal year, Pier 1 posted a net loss of $198.8 million, or $2.46 per diluted share, versus net income of $11.6 million, or 14 cents per diluted share, in the year-previous period. Net sales were $1.55 billion versus $1.8 billion in the fiscal year before. Operating loss was $188.1 million as compared to operating income of $28.6 million in the year earlier.
Cheryl Bachelder, Pier 1 interim CEO, said the company is moving to turn its operations toward profitability. “We are pleased to be sharing our fiscal 2020 action plan today, which is designed to reset our operating model and rebuild our business for the future,” she said. “As anticipated, our fourth quarter sales and profitability were disappointing and reflect the execution issues we identified earlier in the year and have been working with urgency to correct. Since December, we assembled a capable leadership team, brought consulting expertise onboard, began a rapid diagnostic process and selected priority initiatives designed to improve our operating model and financial performance. Short term, we exited some legacy inventory, revamped the focus of our spring/summer merchandise and marketing, and implemented an organizational redesign in support of our go-forward plan.”
The action plan is set to capture efficiencies and drive improvement in the revenue and margin, marketing and promotional effectiveness, sourcing and supply chain, cost cutting, and store optimization.
The company has identified $100 to $110 million in gross margin and cost structure benefits, as well as $70 to $80 million of SG&A savings opportunity in fiscal 2020, the majority of which it expects to realize in the year’s second half. After having closed 30 stores in fiscal 2019, the company is contemplating closing up to 45 more. Pier 1 has conducted a store portfolio review and will be seeking occupancy cost reductions. The store closure number could increase and constitute up to 15% of stores if the company is unable to achieve performance goals, sales targets, reductions in occupancy and lowering of other costs.
Bachelder said, “We are continuing to focus on opportunities and initiatives to help drive incremental benefits in the coming years, creating the runway to return our brand to long-term health and sustainable financial performance. I am pleased to see our teams executing against our new action plan with urgency and believe our customer will return to a revitalized Pier 1 this fall.”