The stock of Pier 1 Imports (PIR 4.15, -0.35, -7.8%) was down 47.3% for the year as of Wednesday's close, but that's not quite the half of it. Shares of PIR are down 84% from the high they saw in May 2013 after an early sell-off that has followed the company's latest earnings report.
In fact, there were no earnings to report for its fiscal second quarter.
Pier 1 Imports had a GAAP loss per share of $0.10 and an adjusted loss per share (non-GAAP) of $0.05. The latter was slightly better than analysts' average estimate, yet that hasn't accounted for much when pitted against the understanding that its gross margin rate was pressured and its guidance was disappointing.
Net sales for the period increased 0.4% to $407.6 million and comparable sales increased 1.8%, both of which were roughly in-line with the company's prior guidance. Those sales, however, were fueled by increased promotional activity and higher fulfillment costs to satisfy online customer demand.
The merchandise margin in the fiscal second quarter improved to 57.0% of net sales from 56.6% of net sales in the same period a year ago due primarily to lower supply chain costs. However, the gross profit margin rate sank 130 basis points to 34.4% of net sales.
Pier 1 Imports said its e-commerce business accounted for roughly 27% of net sales in the second quarter, up from approximately 20% of net sales in the same period a year ago. Growth in that area is key, yet it underscores how driving traffic to its brick-and-mortar stores, and converting that traffic into sales, remains integral for this specialty retailer of home furnishings and accessories.
The fiscal third quarter is going to prove more challenging, partly because of the impact of the hurricanes, which forced the closure of approximately 125 locations from late-August to mid-September, but also because of the competitive environment in general.
Pier 1 Imports is forecasting net sales to be down 1% to 3% and comparable sales to be flat to down 2%. Its merchandise margin is expected to be approximately 59% and its GAAP earnings per share are anticipated to be between $0.08 and $0.14. The high end of the earnings guidance range is well below analysts' average expectation.
For the important fourth quarter, which will encompass the holiday selling season, Pier 1 Imports expects net sales to be up 5% to 7%, comparable sales to be flat to up 2%, and adjusted earnings per share to be between $0.36 and $0.46, which brackets analysts' average estimate.
Altogether, Pier 1 Imports expects fiscal 2018 net sales to be down 1% to up 1%, comparable sales to be flat to up 2%, and adjusted earnings to be between $0.38 and $0.48.