Pier 1 Imports suffered its worst stock retreat in seven months Thursday after forecasting a deeper loss than expected, renewing concerns that the housewares chain isn’t bouncing back from a retail slump.
The deficit in the first quarter will be 3 cents to 7 cents a share, the Fort Worth-based company said Wednesday when it released results after the close of trading. Analysts had estimated a loss of 2 cents on average, according to data compiled by Bloomberg.
Shares (ticker: PIR), which tumbled as much as 12 percent, closed down 70 cents, or nearly 10 percent, at $6.55.
Pier 1 said its fourth-quarter net income increased by 40 percent to $26.6 million even as net sales declined by 2.6 percent. But its outlook signals that Pier 1 is struggling to break out of the industry’s funk.
Retailers have had to rely heavily on discounts to get customers in the door, weighing on earnings. And analysts think Pier 1’s margins will remain under pressure as sales continue to shift to less profitable e-commerce.
In a research note Michael Lasser, an analyst at UBS, wrote that it’s unlikely that Pier 1’s improved financials signal a sustainable turnaround because same-store comparable sales are expected to continue down.
On a conference call, interim Chief Executive Officer Terry London acknowledged that the company transformation to an omnichannel approach has been “a tough go” but said that the company is headed in the right direction.
He described Alasdair James, the Kmart executive picked last week to be Pier 1’s next CEO, as aggressive and smart, and cited his experience in China as a positive. James will start his new job May 1.