QUOTE AND NEWS
SeekingAlpha  Oct 7  Comment 
By Marshall Hargrave: Tuesday Mornings (NASDAQ:TUES) is an $800 million market cap pure-play brick-n-mortar retailer, focusing on the home goods space. Which puts it in direction competition with the likes of TJX Companies (NYSE:TJX), Ross Stores...
Market Intelligence Center  Oct 6  Comment 
Pier 1 Imports Inc. (PIR) presents a trading opportunity that offers a 10.09% return in just 165 days. A covered call on Pier 1 Imports at the $12.00 level expiring on Mar. '15 offers an assigned return rate of 10.09% or 22.32% annualized. This...
Benzinga  Oct 1  Comment 
In a report published Wednesday, Wedbush analyst Seth Basham assumed coverage on Pier 1 Imports Inc (NYSE: PIR) with a Neutral rating, down from Outperform, and $13.00 price target, down from $20.00. In the report, Wedbush noted, “We are...
Forbes  Sep 26  Comment 
AT&T (T) declared a quarterly dividend of $0.46 a share on the company's common shares. The dividend is payable on November 3, 2014, to stockholders of record at the close of business on October 10, 2014.
Forbes  Sep 25  Comment 
Looking at the universe of stocks we cover at Dividend Channel, in trading on Thursday, shares of Pier 1 Imports Inc. (NYSE: PIR) were yielding above the 2% mark based on its quarterly dividend (annualized to $0.24), with the stock changing hands...
SeekingAlpha  Sep 25  Comment 
By Musings of a Banker: Q2 Earnings Announcement Pier 1 Import's (NYSE:PIR) second quarter earnings miss has frightened investors causing its share price to fall approximately 22%. As stated in my previous Rite Aid (NYSE:RAD) article, I like...
SeekingAlpha  Sep 22  Comment 
By Marshall Hargrave: Pier 1 Imports' (NYSE:PIR) Current CEO Alex Smith has grown the company into a profitable business after the brink of bankruptcy in the mid-2000s. But of late, the company has continued to fall short of expectations, with...
SeekingAlpha  Sep 19  Comment 
By Daniel James: Overall, the home furnishing industry has been doing well in recent years, in tandem with a resurgence of the US housing market which has led consumer demand for new furniture. Some companies, such as Restoration Hardware...
Benzinga  Sep 19  Comment 
In a report published Friday, Bank of America analyst Denise Chai reiterated an Underperform rating on Pier 1 Imports Inc (NYSE: PIR), but lowered the price target from $13.00 to $12.00. In the report, Bank of America noted, “We are staying...
SeekingAlpha  Sep 19  Comment 
By Orange Peel Investments: By Thom Lachenmann Pier 1 (NYSE:PIR), like many retail stocks, ran into some bumps on Wednesday after hours when it reported earnings. The stock was trading down almost 10% around $14/share as after hours trading...




 
TOP CONTRIBUTORS

Pier 1 Imports (NYSE: PIR) sells moderately priced, imported home furniture which it sells through its chain of retail stores. Revenue comes from sales of furniture (40% of 2009 sales)[1] and decorative home items (60% of 2009 sales)[1], including floor lamps, vases, candles, and gifts.

The company faces increasing competition from mass retailers. Companies like Wal-Mart and Target are able to lure away some PIR's more price sensitive customers by offering lower prices.[2][3] Unable to effectively compete with the mass discounters, Pier 1 attempted to reposition itself as a vendor of more modern merchandise by substituting leather and metal furniture for its more traditional items. The goal of this strategy was to introduce more appealing merchandise while appealing to a higher income demographic.

The 2008 U.S. housing market slump caused by the sub-prime lending crisis has also exacerbated the company's situation. Fewer housing starts translates into less demand for home furnishings retailers. Moreover, for importers like PIR, the declining value of the dollar has made purchasing goods abroad more expensive.

In fiscal 2010, the Company closed 38 Pier 1 Imports stores.[1] During the fourth quarter of fiscal 2009, the Company began negotiating with landlords to achieve rental reductions across its store portfolio. Unsuccessful rental reduction negotiations have led to the execution of early termination agreements for underperforming store locations.

Company Overview

As of 2010, the Company operates 973 Pier 1 Imports stores in the United States and 81 Pier 1 Imports stores in Canada.[1] The Company supplies merchandise and licenses the Pier 1 Imports name to Grupo Sanborns and Sears Puerto Rico, which sell Pier 1 Imports merchandise primarily in a “store within a store” format in 34 Sears Mexico stores and one Dorian’s store.[1] Pier 1 Imports stores in the United States and Canada average approximately 9,900 gross square feet, which includes an average of approximately 7,900 square feet of retail selling space.[1] Pier 1 Imports stores generally have their highest sales volumes during November and December as a result of the holiday selling season. In fiscal 2010, net sales of the Company totaled $1.3 billion.[1]

First Quarter 2010 Results[4]

Pier 1 Imports (PIR) announced that its first-quarter net income dropped to $7.7 million, or 7 cents a share, from $29.3 million, or 32 cents a share, in the year-ago period. But last year's quarterly results were boosted by a $47.8 million gain on the repurchase of debt and a $10 million gain from litigation recovery. Sales rose to $306.3 million, an increase of 8.9% from $281.1 million last year, mostly due an increase in store traffic, conversion rates and average ticket prices. The consensus estimate was for $306.13 million.

Product Selection

Pier 1 Imports offers a selection of merchandise consisting of more than 4,000 items throughout the year imported from many countries around the world. The principal categories of merchandise include the following:

Decorative Accessories (60% of 2009 sales)[1]

This merchandise group constitutes the broadest category of merchandise in Pier 1 Imports’ sales mix. These items are imported primarily from Asian and European countries, as well as some domestic sources. This category includes decorative wood accents, lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, bath and fragrance products, candles, bedding, seasonal and gift items.

Furniture (40% of 2009 sales)[1]

This merchandise group consists of furniture and furniture cushions to be used in living, dining, office, kitchen and bedroom areas, sunrooms, and on patios. Also included in this group are wall decorations and mirrors. These goods are imported from a variety of countries such as Vietnam, Malaysia, Brazil, Thailand, China, the Philippines, India and Indonesia, and are also obtained from domestic sources. This merchandise is generally made of metal or handcrafted natural materials, including rattan, pine, beech, rubberwood and selected hardwoods with either natural, stained, painted or upholstered finishes.

Divestitures and Terminations

As of October 19, 2009, Pier 1 terminated its agreement with Sears Roebuck de Puerto Rico, Inc. and ceased operations in Puerto Rico.[1] The Company had a product distribution agreement with Sears Puerto Rico, which allowed Sears Puerto Rico to market and sell Pier 1 Imports merchandise in a “store within a store” format in certain Sears Puerto Rico stores. The Company had no employee or real estate obligations in Puerto Rico because Sears Puerto Rico operated these locations. Pier 1 Imports merchandise was offered in seven Sears Puerto Rico stores prior to the termination of the agreement.

During fiscal 2007, Pier 1 sold its credit card operations, which included its credit card bank located in Omaha, Nebraska, that operated under the name Pier 1 National Bank, N.A. to Chase Bank USA, N.A.[1] The sale was comprised of the Company’s proprietary credit card receivables, certain charged-off accounts and the common stock of the Bank.

In August 2007, the Company discontinued its e-commerce business.[1]

Trends and Forces

U.S. housing market slump taking a toll on PIR

Pier 1 was already struggling with to boost sales and profitability before the housing slump began. With fewer new homes being built, demand for decorative products and furniture has also been on the decline. Despite the sub-prime mortgage crisis pushing home prices down, the housing market is short of buyers. The National Association of Home Builders forecasts an additional 30% drop in housing starts in 2008.[5]

A declining dollar makes imports more expensive

PIR imports its furniture and decorative items in large quantities from Europe, Asia, Brazil, Mexico, and other emerging markets. This leaves the company vulnerable to variations in the value of the dollar, even if the company pursues hedging strategies. When the dollar's value declines and foreign currency becomes more expensive, PIR has to pay more for their inventory. The dollar has been losing value relative to other currencies (though the dollar has gained modest value in short bursts over this period). Pier 1's management is aware of this risk and the company tries to make inventory purchases in dollars.

PIR is in midst of turnaround

PIR hired a new CEO on February 19, 2007, but despite new leadership the firm continues to struggle to overcome high operating costs and failed product lines. Losses from closed stores totaled nearly $100M in the last year. In 2008, Pier 1 ran 1,034 stores in the United States and 83 stores in Canada.[6] Yet for the past two years, PIR has been cutting costs and trying to hone its focus as a retailer. On March 20, 2006 Pier 1 sold off its UK subsidiary "The Pier" and since then PIR has closely followed a domestic downsizing schedule. All 36 remaining Pier 1 Kids stores and an additional 22 clearance outlets have also been closed.[7] The company plans to close an additional 100 stores in 2008.

Stale brand and increasing competitive pressure leave Pier 1 without a niche

As early as 2005, Pier 1's weakening brand was failing to attract customers to buy its wicker and rattan furniture. Larger, low-cost stores like Wal-Mart had expanded into the furniture market. Competitive pricing pressure combined with a weakening brand eroded the company's operating margins. PIR's new strategy was to replace 70% of its merchandise with new items (which in the past were only about 40% of shelf space).[8] PIR announced that it would abandon wicker and rattan products to pursue a more "modern" look, featuring furniture with more leather and metal components.[9]

Competition

As a specialty retailer, Pier 1 Imports competes with a wide variety of other firms, many of which participate in other retail markets. The company competes with many large, low cost retailers like Wal-Mart, Target, and Bed Bath & Beyond. In the high cost and high quality home furnishings market, established firms like Williams-Sonoma make it difficult to compete as well, albeit with less relative influence than a company like Wal-Mart might in the low cost sector. Other competitors include Restoration Hardware, Cost Plus World Market, and K-Mart. Attempting to further expand its market share within the niche it occupies, PIR's bid of $4/share (for a total of $88M) for Cost Plus on June 9, 2008 was met with mixed reception; the stock price dropped nearly $2 on announcement. PIR management was convinced that the acquisition of Cost Plus can help bring Pier 1's income back into the positive range, but Cost Plus turned down the offer on June 17.

Company Store Changes ' Sales Per Square Foot Inventory Net Income
Store OpeningsStore Closings
Pier 1 Imports[10]482$164 $412M($96M) - Loss
Wal-Mart[11]1092$423 $35.2B$17.5B
Target[12]11815$296 $6.8B$2.85B
Bed Bath and Beyond[13]83 (net)-$234 $1.6B$563M
Williams-Sonoma[14]4937$638 $694M$196M
Cost Plus World Market[15]154$223 $273M($46M) - Loss
Restoration Hardware[16]-1$547 $200M($52M) - Loss

PIR lags behind its competitors in sales per square foot, a common metric used to compare retail stores. While Williams-Sonoma and Restoration Hardware have the highest ratios, their products tend to be more expensive than stores like Pier 1 or Wal-Mart. Even so, PIR and Cost Plus struggle relative to larger competitors where alternative products mitigate the risk of austere consumer budgets.




References

  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 Pier 1 Imports Annual Report 2009
  2. CEO's Plans Lift Pier 1, February 12, 2007, Forbes.com
  3. Pier 1 Under Water, June 21, 2007, Forbes.com
  4. Biz Brief: Pier 1 Imports Earnings Top Estimates; Same-Store Sales Rise 14%
  5. Bloomberg.com - "U.S. Housing Starts Slide to Lowest Level in 17 Years" - 04/16/08
  6. PIR FY2008 10-K, Item 1 p.4
  7. PIR FY2008 10-K, Item 1 p.3
  8. The Motley Fool - "Lower Comps Plague Pier 1 Imports" - 12/30/2004
  9. The New York Times - "The Markets: An Odd 'Witching' Day Closes out a Mixed Week" - 12/17/05
  10. PIR FY2008 10-K
  11. Wal-Mart FY2007 10-K
  12. Target FY2007 10-K
  13. Bed Bath and Beyond FY2007 10-K
  14. Williams-Sonoma FY2007 10-K
  15. Cost Plus FY2008 10-K
  16. Restoration Hardware FY2007 10-K
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki