The decision to close more stores comes as no surprise. Pier 1 has been challenged by declining same-store sales and has fallen into the red. During fiscal 2006, the chain saw same-store sales decline 7.1% and posted a net loss of $27.5 million, or 32 cents per share. Last year, Pier 1 achieved a profit of $60 million, although same-store sales declined 5.8%.
Pier 1's chairman and CEO Marvin J. Girouard tried to reassure investors and Wall Street by asserting that the chain is well under way with its turnaround strategy. "We believe that our business will improve through the successful implementation of strategies in the areas of merchandising, marketing and store portfolio rationalization, as well as corporate and field restructuring programs," he said during the chain's earnings conference call.
Specifically, Girouard said that he expects to see a marked improvement in customer traffic by the end of the first quarter fiscal 2007. This year, the company rolled out its "Pier 1 meets modern" look and new colors for the season.
However, the chain's March results were not much improved: sales were $143.7 million, an increase of 1.3% from $141.8 million last year, and comp-store sales declined 2%. Shortly after Pier 1 announced its earnings and March sales results, Wachovia Securities analysts issued a report that it was lowering its same-store sales estimates from a 2% increase to a 3% decline for the first quarter and from a 0.2% increase for fiscal 2007 to a decline of 1.4%.
"We continue to believe that the future success of Pier 1 is dependent upon consumer acceptance of the new spring merchandise and its ability to attract new customers," the Wachovia report said.
Despite the poor results, the chain still plans to open 40 new Pier 1 stores this year and doubled the number of Pier 1 outlet stores during 2006. Currently, the company operates 34 outlet stores, which are intended to eliminate excess inventory.
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