Pier 1 Imports shares dipped for a second straight day on Friday on news of another weak earnings report and additional store closures.
The home goods retailer has been pursuing a turnaround strategy amid shrinking sales due in part to online competition. But in the first quarter, the slump continued with net sales declining 15.5% to $314.3 million and comparable store sales down 13.5%.
Pier 1 also posted a net loss of $81.7 million, well above the $28 million shortfall it posted a year ago.
Interim CEO Cheryl Batchelder said the company was “laser focused on the initiatives under our fiscal 2020 action plan, which is designed to reset our operating model and rebuild our business for the future.”
“We believe Pier 1 has strong brand equity and a loyal customer who will return for the right style stories in our assortment,” she added in a news release.
But in an earnings call, Batchelder also disclosed that Pier 1 now plans to close 57 stores in fiscal 2020, a dozen more than it had originally anticipated. “If we are unable to achieve our performance goals, sales targets and reductions in occupancies and other costs, we could close up to 15% of our portfolio” of 967 stores, she said.
In trading Friday, Pier 1 shares fell 5% to $7.53. The stock had rallied on Thursday after falling all the way to $6.71.
As CNN reports, “The company is in the midst of a plan to save as much as $110 million by the beginning of fiscal 2020. It also plans to establish a ‘clearer merchandise focus,’ including eliminating inventory that isn’t ‘uniquely Pier 1 merchandise.’”
“As we expected, our sales and margins remained under pressure in the first quarter and we anticipate this will continue through the second quarter,” Batchelder said.
Gross profit fell in the first quarter to $78.8 million, or 25.1% of net sales, compared to $120.1 million, or 32.3% of net sales, a year ago. CFO Deborah Rieger-Paganis said merchandise margin was being pressured by “increased promotional and clearance activity to drive both traffic and conversion.”