Home décor retailer Pier 1 Imports swung to a loss in its first quarter amid heavy promotions caused by weak sales.
The chain reported a loss of $6 million for the quarter ended May 28, compared to net income of $6.9 million in the year-ago period.
Revenue fell 4.2% to $418.4 million in the quarter, also less than expected. Same-store sales were down 2.5%.
“Our first quarter sales were not as strong as we would have liked,” said president and CEO Alex Smith. “Although many of our merchandise categories performed satisfactorily, outdoor furniture was affected by internal and external pressures, including competitive pricing. At the same time, the headwind of a challenging store traffic environment remains.”
Pier 1 dropped its guidance for the full year. The company is now predicting net sales between a 1% loss and 1% gain, and EPS between 32 cents and 40 cents. It had previously forecasted flat net sales and EPS between 42 cent and 50 cents.
“Our profitability in the first half of the year is largely being impacted by planned investments in marketing, a competitive promotional environment and the costs related to prior distribution center network inefficiencies,” said CFO Jeffrey Boyer. “At the same time, soft store traffic continues to weigh on our performance.”
Boyer said the company expect to pick up momentum in the second half of fiscal 2017 as key initiatives designed to drive sales and margins take hold and it moves into its seasonally strong holiday period.
“Given the challenging retail environment and moderate start to fiscal 2017, we believe it is prudent to adjust our financial guidance,” he stated.