Pier 1 experiences significant pressure from adverse weather

Adverse weather in many of Pier 1 Imports’ major markets has continued to plague the home furnishings retailer, prompting president and CEO Alex W. Smith to update fourth-quarter and full-year expectations.

The severe winter has resulted in considerably softer store traffic and has even forced the retailer to close some stores temporarily, further pressuring fourth quarter sales and merchandise margin.

“Our fourth-quarter results are frustrating and disappointing. However, we know the weather will eventually end and we can get back to more typical business trends,” said Smith. “Our ‘1 Pier 1’ strategy — which lets our customers shop however they choose — continues to gain traction, and although store traffic was tough in the quarter, Pier1.com once again outperformed our expectations. We saw another sequential increase in e-commerce sales, which reached 5% of total sales in the quarter, while traffic to the site increased to 1.9 million visitors per week. For the full year, e-commerce will contribute approximately 4% to fiscal 2014 total sales — putting us readily on track to reach our targeted contribution of 10% of total sales by the end of fiscal 2016.”

Smith added that the company has strengthened its portfolio of stores and is starting fiscal 2015 in a clean inventory position.

“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 thanks to the early success of both Pier1.com and Express Request, which enable us to broaden the assortment available to our customers,” added Smith.

The company’s fourth quarter and fiscal year will include 13 weeks and 52 weeks of operating results, respectively. This compares to the fourth quarter and full year of fiscal 2013, which included 14 weeks and 53 weeks, respectively. As previously disclosed, the company estimates the 53rd week of fiscal 2013 contributed $29 million to net sales and approximately $0.03 to earnings per share.

Based on a comparable 13-week basis, the company expects total sales for the quarter of approximately $512 million to $514 million; comparable-store sales for the 13 weeks ended March 1 to be flat versus the 13 weeks ended March 2, 2013; comparable-store sales to decline approximately 5% for the 13 weeks ended March 1, compared to the 13 weeks ended February 23, 2013; and earnings per share in the range of $0.40 to $0.41, compared to prior guidance of $0.47 to $0.52.

Based on a comparable 52-week basis, the company expects total sales to grow approximately 5.5%; comparable-store sales to grow approximately 2%; and earnings per share in the range of $1 to $1.01, compared to prior guidance of $1.07 to $1.12.

The company last offered a holiday sales update at the beginning of January and is scheduled to report full financial results for fiscal 2014 April 10.