Pier 1 Imports Inc. followed up a strong third quarter online with a slower-than-expected start to the holiday shopping season.
Pier 1, No. 120 in the Internet Retailer 2017 Top 500, reported online sales of $122.0 million in the third quarter of its fiscal 2018, up 28.2% from $95.2 million during the same time last year. E-commerce accounted for about 26% of its sales during the quarter ended Nov. 25 compared with about 20% of sales in the year-ago period.
For the first nine months of its fiscal 2018, Pier 1 reported online sales of $334.4 million, up 28.6% from $260.0 million a year ago. The web comprised 26% of sales in this period, up from 20% through the first nine months of fiscal 2017.
Pier 1 has been unable to sustain the momentum generated by a strong fiscal third quarter online into the fourth, president and CEO Alasdair James told analysts on the retailer’s Q3 2018 earnings call Thursday.
“We utilized a promotional program during the first two weeks of December which has simply not been effective in delivering sales uplift,” he said, according to a transcript from Seeking Alpha. “Our merchandise is not resonating well enough with the customer to overcome the considerable marketing investments and value-driven messaging of our competitors.”
Analysts say they are concerned about Pier 1’s overall performance during the quarter, given that total sales slid 1.4% and profits fell nearly 50%.
“Despite an arguably strong consumer backdrop and a good housing environment, Pier 1 continues to struggle,” writes Chuck Grom, senior retail analyst with investment research firm Gordon Haskett, who cited stronger performances by The Home Depot Inc. (No. 8), Lowe’s Cos. Inc. (No. 25), and Wayfair Inc. (No. 16). “This is concerning on multiple fronts, including the fact that the company has a new CEO (started 5/1) with a new perspective. Accordingly, the weakness in the business appears more structural in nature, including: (1) significant brand perception issues and (2) heightened competition, particularly from digitally native players (and not just Wayfair),” Grom said.
For the fiscal third quarter ended Nov. 25, Pier 1 reported:
- Net sales of $469.2 million, down 1.4% from $475.9 million during the same time last year.
- A comparable sales decline, including e-commerce, of 0.7%.
- Net income of $7.4 million compared with $13.6 million.
For the first nine months of fiscal 2018, Pier 1 reported:
- Net sales of $1.286 billion, down 1.1% from $1.300 billion during the same time last year.
- A comparable sales gain, including e-commerce, of 0.2%.
- A net loss of $3.4 million, compared with a profit of $3.5 million.