Pier 1 Imports isn’t optimistic about its near-term prospects as the housewares chain re-evaluates its business.
Already mired in a lengthy slump, the Fort Worth-based retailer cut back its profit outlook for fiscal 2018 and reported a second-quarter loss and deteriorating gross-profit margin on Wednesday.
The underwhelming results have prompted the company to undertake a review of its operations in order improve long-term profitability. The drop in share price Thursday was the most in three months. Pier 1 (ticker: PIR) dropped 30 cents, or nearly 7 percent, to close at $4.20.
“It is clear that we’re not living up to the full potential of our brand and our organizational capabilities,” said Alasdair James, a former Kmart executive who joined Pier 1 as chief executive officer in May, on a conference call with analysts. “We know there is much more opportunity to be captured as we formulate and begin implementing our new operating and growth strategies.”
James said the company’s review would be completed by the end of the third fiscal quarter.
For the three-month period ended Aug. 26, Pier 1 reported a net loss of $7.8 million, or 10 cents a share, compared to a loss of $4.1 million a year earlier. Net sales increased less than 1 percent to $407.6 million, while same-store sales — at stores open at least a year — grew by 1.8 percent. E-commerce grew to 27 percent of total sales, up from 20 percent a year ago.
Pier 1 curtailed its fiscal 2018 comparable-store sales outlook to a range of 1 percent growth to 1 percent contraction, down from a previous forecast of 1 percent to 2 percent growth.
James said the company’s third-quarter results will be pressured by the hurricanes in Texas and Florida, expected to reduce comparable-store sales by about two percentage points. The company was forced to close about 125 stores in Texas, Florida and parts of eight other states over three weeks from late August to mid-September. All have reopened except one store, he said, though traffic has been soft.
Pier 1 has seen its shares lose about half of their value this year as it has turned to discounts to attract shoppers, who are increasingly opting for online outlets to buy what they need.
Staff writer Steve Kaskovich contributed to this report which includes material from Bloomberg News.