Pier 1 reports Q3 profit plunge
Despite reporting a 33% year-over-year decline in profits during the third quarter, Pier 1 Imports CEO Alex Smith said he is confident in the chain’s value proposition going forward in 2015.
“We are confident that the value proposition created by our exclusive and unique product remains strong, and our refined promotional strategy, which benefited this period, will contribute to gradual improvement in our gross margin rate over the coming quarters,” said Alex W. Smith, chairman and CEO at Pier 1. “We have in our stores and online business two mutually supportive and interdependent vehicles to drive long-term, profitable growth.”
The retailer reported that net income fell to $17.9 million in the third quarter from $26.8 million in the prior-year quarter, with an increase in selling, general and administrative expenses driving the reduction.
Total sales were $484.5 million, a 4% increase from $465.5 million. Same-store sales rose 2.5%. E-commerce sales tripled to comprise 12% of total sales in the third quarter.
More than 60% of e-commerce transactions touched the stores during the period. For the full fiscal year, Pier 1 expects same-store sales growth in the mid-to-high single digits. This figure includes e-commerce sales.
“Our ambitious omnichannel transformation continues to progress well,” Smith added. “E-Commerce sales have grown three-fold over last year, reaching 12% of total sales in the third quarter. Notably, over 60% of our e-Commerce transactions touched the stores during the period. Importantly, this quarter saw a return to a more balanced mix of full and promotional pricing. We are confident that the value proposition created by our exclusive and unique product remains strong, and our refined promotional strategy -- which benefited this period -- will contribute to gradual improvement in our gross margin rate over the coming quarters. We have in our stores and online business two mutually supportive and interdependent vehicles to drive long-term, profitable growth. We remain focused on consistent cash generation and a balanced capital allocation strategy, which is enabling us to return capital to shareholders by way of share repurchases and an ongoing dividend, while also investing decisively in our ‘1 Pier 1’ vision. We had a solid start to our fourth quarter, marked by a successful five-day event surrounding Thanksgiving. We’re pleased about how well the business is positioned this season, with an inspiring merchandise assortment and multiple ways to shop Pier 1 Imports.”