Pier 1 Sales Decline In Q4, Earnings Beat Wall Street

For the fiscal fourth quarter ended February 27, Pier 1 Imports posted net income of $18.7 million, or 23 cents per share, versus $33.1 million, or 37 cents per share, in the period a year earlier.

Non-GAAP adjusted net income for the quarter, excluding the after-tax effect of retirement related expenses for the company’s former CFO, was $35.1 million, or 39 cents per share, the company reported.

Pier 1 exceeded a Thomson Reuters analyst average estimate of 21 cents per share.

Pier 1 comparable sales decreased 0.6% but gained 0.3% on a constant currency basis versus the prior-year quarter. Total sales for the fourth quarter slipped 1.4%, or 0.5% on a constant currency basis, to $542.3 million. E-commerce represented 15% of total sales in the fourth quarter versus 13% of total sales in the period the year before. Operating income was $33.6 million compared with $53.1 million in the previous quarter.

For the full fiscal year, Pier 1 posted net income of $39.6 million, or 46 cents per share, versus $75.2 million, or 82 cents per share, for the fiscal year earlier. Non-GAAP adjusted net income was $77.2 million, or 84 cents per share.        

Pier 1 comps increased 0.7%, or 1.7% on a constant currency basis, versus the prior year. Total sales for the year advanced 0.4%, or 1.4% on a constant currency basis, to $1.89 billion. E-commerce represented 16% of total sales versus 11% of total sales in fiscal 2015. Operating income was $75.2 million compared with $127.3 million in the previous year.

"Although fiscal 2016 was a challenging year, we made solid progress toward stabilizing top line trends, cutting costs and reducing inventory levels," said Alex Smith, Pier 1 president and CEO. "We also delivered another year of strong e-commerce sales, which increased 45% on top of 193% growth last year. We entered fiscal 2017 with much improved distribution center operations. The significant strides we made on the inventory front helped us put many of the issues in our distribution centers behind us. We’re now starting to see improved efficiency across the network, which will help us strengthen merchandise margin.”

He added, "In fiscal 2017, we will emphasize more forcefully our newest products and our strongest categories. With an increased marketing spend and the extension of our rewards program, we expect not only to continue to build frequency and retention but, additionally, to drive new customers to the brand. Known customers accounted for more than 70% of total sales in fiscal 2016, while repeat customers accounted for approximately 60%. We believe our enhanced capabilities will enable us to push these rates higher going forward.”

During the fourth quarter, Pier 1 closed 24 stores and opened one, and currently operates 1,032 stores. The company expects to have approximately 20 store closures in fiscal 2017.