Profits declined by 25 percent at Pier 1 Imports in the first quarter despite higher sales as promotions ate into margins.
But the news wasn't all bad.
Sales totaled $419.1 million, a 6.1 percent increase from a year ago, and comp-store sales -- at stores open at least a year -- increased 6.3 percent.
Alex W. Smith, president and chief executive officer, said online sales showed strong growth and reached 9 percent of total sales. The company now projects that e-commerce sales will reach at least $200 million in this fiscal year and at least $400 million next year.
Still, the Fort Worth-based home furnishings retailer lowered its profit forecast for the year to a range of $1.14 to $1.22 a share, down from previousl guidance of $1.16 to $1.24. The company's stock was down 10 percent, or $1.89, at $16.37 in early trading.
Here's what Smith had to say in the press release:
“We achieved company comparable sales growth of 6.3% in the first quarter, reflecting strong traffic to the Pier 1 Imports brand. We are pleased to see increasing strength in e-Commerce, which exceeded our plans and reached 9% of sales for the quarter. At the same time, our stores continue to serve as an important and productive gateway to Pier1.com, with approximately one-quarter of our online transactions originating at the store and one-third of orders placed at home being picked up in-store. Given the momentum we are experiencing, we now anticipate that sales through Pier1.com will exceed $200 million in fiscal 2015. Nevertheless, the retail environment remains highly promotional and is pressuring gross profit in the near-term. As a result, we are adjusting our full-year earnings forecast accordingly.”
“Our expanded spring and outdoor assortments resonated with customers and were buoyed by a strong marketing message. Our talented merchants continue to curate exceptional merchandise which, combined with our ‘1 Pier 1’ strategy, creates an engaging shopping experience. We believe this is an exciting time to be a retailer – we’re seeing a profound shift in the shopping behavior of our customers. Our timely transformation from a brick-and-mortar retailer to one with full omni-channel capabilities has us well positioned to seize upon this change and drive brand growth.”
The company has a conference call scheduled for this morning.
-- Steve Kaskovich