Fort Worth, TX, September 16, 2005--Pier 1 Imports said its sales would finally pick up in November after months of declines and the news helped push the struggling home retailer's shares up about 6 percent.
The company said business is too unpredictable to forecast earnings results for the current period because of the slow response to new merchandise and marketing initiatives, but investors were encouraged by its sales forecast.
Chief Financial Officer Cary Turner said same-store sales are expected to drop by a low double-digit percentage rate in September, excluding stores closed due to Hurricane Katrina, and fall between 10 percent and 18 percent in October.
In November, however, he said the company expects same-store sales to grow at a low single-digit percentage rate. The gain would mark the company's first gain in monthly same-store sales in more than a year.
The impact of Hurricane Katrina will cost the company about 2 to 3 cents per share in the third quarter, the company said. The impact is split equally between damage to inventories and fixtures at stores, and lost sales from store closings. Initially 26 stores were closed because of the storm, and currently nine remain shuttered.
For the second quarter, ended Aug. 27, the company reported a loss of $10.2 million, or 12 cents per share, compared with a year-earlier profit of $10.4 million, or 12 cents per share. Analysts on average were expecting a loss of 13 cents per share, according to Reuters Estimates.
This was the first set of back-to-back quarterly losses for the home furnishings chain since the third and fourth quarters of fiscal 1991.
Pier 1 has struggled amid intense competition from specialty chains and discounters, moving it to mark down merchandise and reduce its store openings during the quarter.
Sales fell 3 percent to $438.6 million, while sales at stores open at least a year, a key retail performance measure, fell 7.7 percent.
Pier 1, known more for items such as wicker chairs rather than modern home accessories, also started a new advertising campaign showcasing contemporary items to try to compete with trendy offerings from Target Corp. (TGT.N: Quote, Profile, Research) and other chains.
Customer response to the company's advertising, particularly its newspaper inserts, has been tepid, and Pier 1 plans to put its money and efforts primarily in catalog and TV advertising to drive traffic to stores this fall, the company's chief executive officer and chairman, Marvin Girouard, said on a conference call.
The company is making a push with a new catalog mailed last week to over 3 million U.S. homes, and plans to send a holiday catalog to more consumers in early November.
