Pier 1 lowers profit guidance again, blaming bad weather

02/28/2014 9:51 AM

02/28/2014 9:52 AM

Shares of Pier 1 Imports fell more than 5 percent Friday after the company said bad weather and temporary closings led to “considerably softer” store traffic, prompting the retailer to lower earnings forecasts for the second time in two months.

“Our fourth-quarter results are frustrating and disappointing,” CEO Alex Smith said in a statement. “However, we know the weather will eventually end and we can get back to more typical business trends.”

The Fort Worth-based home furnishings chain now predicts fourth-quarter earnings of 40 or 41 cents a share, down from 47 to 52 cents. Analysts surveyed by FactSet had expected fourth-quarter earnings of 50 cents a share and full-year earnings of $1.10 a share, The Associated Press reported.

Pier 1’s full-year forecast was reset to $1 or $1.01 a share, down from $1.07 to $1.12. Sales are now predicted to increase about 5.5 percent while the chain previously expected revenue to rise by a mid- to high-single-digit percentage, the AP reported.

Analyst Bradley Thomas of KeyBanc Capital Markets called the lowered forecast disappointing but understandable, and he maintained his “buy” recommendation for the stock.

“The update is not surprising given the now well-publicized commentary from numerous other retailers,” Thomas wrote in a research note.

On the bright side, Smith noted continued improvement of online sales, which resumed in 2012.

“We saw another sequential increase in e-commerce sales, which reached 5 percent of total sales in the quarter, while traffic to the site increased to 1.9 million visitors per week,” the CEO said.

“For the full year, e-commerce will contribute approximately 4 percent to fiscal 2014 total sales — putting us readily on track to reach our targeted contribution of 10 percent of total sales by the end of fiscal 2016.”

Smith said he remains confident in the company’s long-term outlook.

“We are entering fiscal 2015 in a clean inventory position,” he said. “We have a compelling assortment of spring merchandise in store and online and the initial customer response has been extremely positive. We’re particularly excited about our outdoor collection this spring, which is our strongest to date.”

Pier 1 stock (ticker: PIR) declined $1.14 a share, or 5.68 percent, to close at $18.92 after falling as low as $18.05 in the morning. The company will report its fourth-quarter and full-year results April 10.

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