Pier 1 Imports shares dived in extended trading Wednesday after the struggling home goods retailer posted another big same-store quarterly sales decline and a $100 million loss amid increased clearance activity.
For the second quarter, Pier 1’s revenue fell 14.3% to $304.6 million from $355.3 million a year ago and comparable sales declined 12.6% after a 13.5% decrease the previous quarter.
The company’s net loss almost doubled to $100.6 million, or $24.29 a share, while gross profit came in at 16.7% of sales compared with 26.3% in the year-ago period.
In the extended session, the stock tumbled 13.1% to $10.60 following an 11% dip during regular trading.
Margins shrank in part to the continued clearance of lower-priced and lower-margin goods to drive traffic.
“As we expected, sales and margins remained under pressure in the second quarter,” interim CEO Cheryl Bachelder said in a news release. “We exited non-go-forward products through aggressive clearance actions, which was the primary driver of our net loss in the quarter. However, the strategic decision to clear through goods paved the way for our merchandise and marketing reset this fall.”
Pier 1 has closed 70 stores so far this year as part of a plan to save as much as $110 million by the beginning of fiscal 2020. “We’re having ongoing active discussions with our landlords and have made some progress on our rents,” Bachelder told the Dallas Morning News.
In June, the company completed a 1-for-20 reverse stock split to meet minimum share price requirements and prevent its stock from being delisted from the New York Stock Exchange.
Bachelder said Pier 1 expects to reach its cost-cutting target and that its “merchandising and marketing initiatives will start to gain traction during the second half” of 2019.
“We expect a gradual recovery and believe we’ll be positioned to demonstrate year-over-year improvement in company comparable sales and gross margin rate beginning in the fourth quarter,” she added.