Pier 1 earnings fall 32% despite sales increase
Larry Thomas, Furniture Today -- Home Accents Today, 9/19/2013 9:50:46 AM
FORT WORTH, Texas - Pier 1 Imports said its sales rose 7.6% in the quarter ended Aug. 31, but profits tumbled due to lower-than-expected store traffic.
Sales totaled $395.6 million in the retailer's fiscal second quarter, up from $367.6 million in the same period last year. Same-store sales rose 3.5%, but that was below the 6.7% same-store gain in last year's second fiscal quarter.
Net income totaled $17.8 million or 17 cents per share. That was down 32% from $26.2 million or 24 cents per share in the same quarter last year.
The retailer said marketing initiatives didn't properly balance short-term promotional activity with long-term merchandising strategy, but said the issue has been corrected. Alex Smith, president and CEO, said the retailer is entering the third fiscal quarter "in a very clean inventory position and a terrific assortment of fall product newly set in the stores."
"We're confident in our plans for the holiday season, including a stepped-up marketing campaign which will see our return to advertising on network TV," Smith said. "We believe the business is well positioned for the second half of the year and expect to return to our historical levels of quarterly sales and profit growth."
He said the company's year-old e-commerce enabled website continues to grow, and represented 5% of overall sales in August.
"We are enjoying increases in traffic to Pier1.com and conversion rates are steadily moving upward," Smith said.
For the six months ended Aug. 31, sales totaled $790.5 million, an increase of 8.5% from $728.7 million in the first half of the previous fiscal year.
Six-month net income was $38.2 million or 35 cents per share. That was down 13.3% from $44.1 million or 40 cents per share in the comparable period.
The company also trimmed its earnings estimates for the fiscal year. It is now projecting earnings per share of $1.23 to $1.29. That's below its June estimate of $1.27 to $1.32.
The company said total sales growth should be in the high single-digits, while same-store sales should increase in the mid-single digits.
As of Aug. 31, Pier 1 had 1,066 locations.
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