Pier 1 Imports (PIR 4.17, -1.67) has plunged 28.6% in response to disappointing earnings and soft guidance. With today's decline, the stock is down 51.2% for the year, trading near its lowest level from November.
Aware of its difficulties, the company plans to present a three-year strategic plan in early 2018.
The specialty retailer reported below-consensus third quarter earnings of $0.09 per share on a 1.4% year-over-year decline in revenue, which was just ahead of expectations. However, the company's weak guidance more than offset the slight revenue beat. Pier 1 Imports expects that fourth quarter earnings will be between $0.16 per share and $0.24 per share, which is well below market expectations. Fourth quarter revenue is expected between $533 million and $544 million, which is also shy of market estimates.
Returning to third quarter results, the company's gross margin worsened to 57.3% from 60.2% one year ago due to increased promotional activity. Furthermore, the company noted that hurricanes in Texas and Florida weighed on quarterly results.
Comparable sales declined 0.7%, which was roughly in the middle of the company's guidance range. Pier 1 Imports noted that hurricanes in Texas and Florida reduced comparable sales by about 100 basis points.
Online sales made up roughly 26.0% of the company's total revenue, up from 20.0% of revenue one year ago. Marketing expense increased to 7.2% of sales from 6.8% of sales one year ago, but total SG&A expense made up 32.1% of net sales, down from 33.8% of net sales one year ago.
The company closed one store during the quarter and plans to close another nine stores during the fourth quarter.