E-commerce accounted for 11% of total sales at Pier 1 Inc. in fiscal 2015, nearly triple the percentage in 2014—4%—and reflecting the housewares and home furnishings merchant’s new emphasis on the web. The 190% year-over-year growth in online sales outweighed a drop in store sales.

After pulling the plug on e-commerce in 2007 when the retailer’s annual online sales peaked at about $15 million, Pier 1 launched a limited comeback in 2010 and a full-scale return to e-commerce in 2012.

Since then the retail chain has invested in e-commerce technology and new fulfillment centers while developing its strategy of uniting store and web sales through Pier1.com. That strategy, which it calls 1 Pier 1, includes online ordering from stores via tablets and PCs, and expanded online-only product lines. Other e-commerce improvements in the past year include optimizing Pier1.com for mobile devices, enhancing site navigation and streamlining checkout, adding online recommendations and opening a second e-commerce fulfillment center, in Columbus, Ohio.

As e-commerce sales grow Pier 1 will reduce its store count, president and CEO Alex Smith told analysts on the company’s year-end earnings call Wednesday. “Our national footprint is a critical component of our omnichannel platform, and will remain an important driver of growth and profitability over the long term,” he said. “But, as we have insinuated before, we don’t need all the stores we have today.” The company said it plans to close approximately 100 stores over the next three years, primarily through lease expirations and relocations.

Stores played a central role in online sales performance in fiscal 2015, Laura Coffey, executive vice president and interim chief financial officer, told analysts on the earnings call. “For the full-year, approximately 60% of our 2015 e-commerce sales touched our stores, whether originating on an in-store device or being picked up in a store.”

Pier 1 expects to reach $400 million in web sales, or 20% of all sales, by 2017, Coffey says.

For the 2015 fiscal year ended Feb. 28, Pier 1 reported:

• Total sales of $1.866 billion, a 5.3% increase from $1.772 billion last year.
• E-commerce salesrepresented 11% of total sales. Based on that metric, Pier 1’s web sales were $205.3 million, up by 190.0% from $70.9 million in fiscal 2014, when the web accounted for 4% of total sales.
  • Comparable-store sales, including e-commerce revenue, increased 4.7%.
  • Net income of $75.2 million, down by 30.0% from $107.5 million in fiscal 2014.

Web sales growth totaled $134.4 million in fiscal 2015, accounting for 143.0% of 2015 growth of $94 million.

For the fourth quarter, Pier 1 reported:

• Total sales of $543.6 million, a 5.4% increase from $515.8 million in the same period last year.
• The company did not break out online sales for the quarter in its earnings report filed with the U.S. Securities and Exchange Commission. However, during Pier 1’s year-end earnings call, Coffey said e-commerce accounted for 12.6% of total sales, compared with 5% of Q4 2014 web sales. Based on those metrics, Q4 web sales were $68.5 million, up by 165.5% from $25.8 million in the prior year quarter.
• Comparable-store sales, which include e-commerce, increased 5.7%.
• Net income of $33.1 million, down by 22.3% from $42.6 million in the same period last year.

Coffey said Pier 1 incurred $6 million in supply chain expenses in the fourth quarter due to higher-than-expected inventory levels at distribution centers for stores.

“These costs are solely related to our six distribution centers, not the fulfillment centers that support our e-commerce fulfilled sales,” Coffey told analysts. She added that those costs “have continued into the first quarter of fiscal 2016, and will impact the results for the first half of the year. In fiscal 2016, we expect to reduce our capital expenditures to approximately $60 million, with the following breakdowns: 50% towards technology and infrastructure, 30% toward stores, and 20% toward supply chain.”

 

 

 

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