Pier 1 Imports predicts 16% to18% same-store sales decline
Shoppers wanted ‘small treats' in third quarter
From Furniture Today -- Clint Engel, Retail Editor -- Home Accents Today, 11/18/2008 10:16:00 AM
Pier 1 Imports warned that fiscal third quarter same-store sales will be down 16% to 18% from the same period last year as the slowdown in consumer spending continues.
"The deterioration in customer traffic that we reported for September continued into October, resulting in traffic that was down 10% below last year," said Alex Smith, president and CEO of the Top 100 chain.
At the same time, however, customers visiting the stores are buying, as "we see meaningful improvement in both conversion rate and units per transaction," he said.
"These increases are offset by the fact customers primarily shopped for ‘small treats,' such as Halloween and holiday decor and smaller home furnishings and furniture purchases, resulting in a lower average ticket," said Smith.
Merchandise margins for the period ended Nov. 29 are expected to be about 52.5%, a "healthy rate," Smith said, noting that the company has been judicious in its inventory buys and use of markdowns. Pier 1's expects to post a loss in earnings before interest, taxes, depreciation and amortization of $16 million to $20 million for the quarter.
The retailer offered the guidance in advance of the shareholder and analysts event it is holding today.
Smith said that heading into the holiday selling season, the company's balance sheet is strong and inventories are under control. It will continue to increase marketing spending as it heads into the holidays.
"Our stores look fresh and exciting, and we are well positioned to make the most of the holiday customer traffic," he said.
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