Sales and same-store sales dive as retailer clears out lower-priced, low-margin goods
FORT WORTH, Texas — Pier 1 Imports posted a 15.5% slump in fiscal first quarter sales and a jump in its net loss for the period, as the retailer worked to clear out lower-margin, lower-priced goods in a bid to turn around its struggling business.
Net sales for the quarter ended June 1, decreased to $314.3 million from $371.9 million for the same period a year ago. Comparable sales decreased 13.5% due to lower average customer spend, which the retailer attributed to a change in its merchandise mix and less store traffic.
The $81.7 million net loss for the period was up from the $28.5 million loss for the same quarter last year and included about $19 million in business “transformation costs.”
On a per share basis, the net loss was $19.97 vs. $7.11 a year ago. Both loss-per-share numbers reflect Pier 1’s 1-for-20 reverse stock split effective June 20 to bring the company’s share price back above $1 per share and into compliance with New York Stock Exchange listing requirements.
Pier 1’s stock price was down more than 19% to $7.10 per share in pre-market trading Thursday.
Gross profit for the quarter totaled $78.8 million, or 25.1% of net sales, compared with $120.1 million, or 32.3% of sales for the first quarter of the previous fiscal year. The decline reflects lower merchandise margins — attributed to more promotional and clearance activity — as well as 2.7 percentage points of deleverage on occupancy costs, it said.
Pier 1 operated 967 U.S. and Canadian stores at quarter end, down 30 showrooms from the same period last year.
In a release, Cheryl Bachelder, interim CEO of the Top 100 company, said sales and margins remained under pressure in the first quarter as expected, “and we anticipate this will continue through the second quarter.”
“This reflects our decision to take aggressive clearance actions to move through lower-priced, lower-margin goods and ensure we provide our customers with a strong, on-brand style statement for fall,” she said.
Bachelder said Pier 1’s teams “are laser focused on the initiatives under our fiscal 2020 action plan, which is designed to reset our operating model and rebuild our business for the future. We believe Pier 1 has strong brand equity and a loyal customer who will return for the right style stories in our assortment.”
The company remains on track to achieve previously noted benefits of $100 million to $110 million this year, she said, and now expects most of this will come through cost reductions.
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