Pier 1 Imports (PIR 4.99, -0.39, -7.3%) is a retailer of home furnishings and accessories. That description alone should offer a pretty good clue that the company has its share of struggles given the emergence of competitors like Amazon (AMZN 980.94, -9.39, -1.0%) and Wayfair (W 74.97, -1.06, -1.4%) in addition to traditional brick-and-mortar competitors like Williams-Sonoma (WSM 48.51, -0.32, -0.7%) and Bed Bath & Beyond (BBBY 30.50, +0.31, +1.0%). The bigger clue, though, is the company's fiscal first quarter results and guidance.
After Wednesday's close, Pier 1 Imports delivered its first quarter results and they were less than stellar.
Some of the more encouraging developments included a 23% increase in e-commerce sales to $99.3 million, an expansion in its merchandise margin to 58.6% of sales versus 55.6% in the same period a year ago, and a 190 basis points improvement in its operating margin rate of 18.3%.
The discouraging developments, however, were sales oriented. Net sales for the period totaled $409.5 million, down 2.1% year-over-year, which was below analysts' average expectation and the company's guidance of flat to up 1.0%. Similarly, comparable sales decreased 0.2% year-over-year despite an easy comparison, falling below the company's guidance of up 1.0% to 2.0%.
The sales disappointment was attributed to a weaker than expected performance from its Outdoor category, which the company said is going to adversely impact sales and merchandise margin in the second quarter.
Pier 1 did a reasonable job of managing its expenses during the quarter, yet the lack of sales leverage negatively impacted the bottom line, which featured a net loss of $3.0 million or ($0.04) per share. That was at the upper end of the company's guidance range and slightly better than analysts' average expectation, yet that understanding got overshadowed by the sales struggles and the company's guidance.
For the fiscal second quarter, Pier 1 Imports expects net sales to be approximately flat, comparable sales to be flat to up 2.0%, and a loss per share between ($0.08) and ($0.04), which is worse than analysts' average expectation.
Pier 1 reaffirmed its fiscal 2018 outlook for earnings per share to be between $0.46 and $0.52 and comparable sales to increase 1.0% to 2.0%. Net sales growth is anticipated to be up 1.5% to 2.5%, which is a moderation from the company's prior guidance of 2.0% to 3.0%.
Shares of PIR have declined 7.3% in the wake of the latest earnings report, which has failed to alter the perception that the retailer faces an uphill competitive road. That concern has clearly manifested itself in the stock price, which is down 42% year-to-date.