Pier 1 sales rise 4.1% but earnings fall 33%

Retailer Pier 1 Imports said sales jumped 4.1% in the quarter ended Nov. 29, but earnings declined due to increased marketing expenses and costs related to its fast-growing 1 Pier 1 e-commerce effort.

Sales for the quarter totaled $484.5 million, and the company said 12% of that total came from e-commerce. Comparable sales rose 2.5%.

Net income totaled $17.9 million or 20 cents per share. That was down more than 33% from $26.8 million or 26 cents per share, in the same quarter last year.

“Our ambitious omni-channel transformation continues to progress well. E-commerce sales have grown threefold over the last year,” said Alex Smith, president and CEO. “Importantly, this quarter saw a return to a more balanced mix of full and promotional pricing. We are confident that the value proposition created by our exclusive and unique product remains strong, and our refined promotional strategy — which benefited this period — will contribute to gradual improvement in our gross margin rate over the coming quarters.”

In the most recent quarter, gross margin was 42.3%, down from 43.4% in the same quarter last year. Smith said the lower margin reflected a higher mix of e-commerce sales, including fulfillment costs.

He said more than 60% of e-commerce sales involved a consumer picking up the product in a Pier 1 store after an online purchase, or ordering it online while inside the store.

For the nine months ended Nov. 29, sales totaled $1.32 billion, an increase of 5.3% from $1.26 billion in the first nine months of the previous fiscal year.

Nine-month net income was $42.1 million or 45 cents per share. That was down more than 35% from $64.9 million or 61 cents per share in the comparable period.

The retailer reiterated financial guidance issued in August. Earnings per share for the fiscal year are projected at 95 cents to $1.05. Comparable sales are projected to rise in the mid- to high single digits, while gross margin is projected at 40.5% to 41.5%.

Source: Furniture Today