The reason behind Pier 1’s drop this time was revised guidance on the 2015 fiscal year, coupled with a change in management.
The outlook reflects softer than expected sales in January and February, as well as higher than forecast expenses primarily related to incremental supply chain costs. The company expects comparable-store sales growth, including e-commerce, of 5%. Gross profit as a percentage of sales is expected to be 40.2%. Earnings per diluted share are expected to be in the range of $0.80 to $0.83.
In terms of the change in management, Senior Executive Vice President and Chief Financial Officer Charles H. Turner retired and Laura A. Coffey, a 17-year veteran of Pier 1 Imports, has been named Executive Vice President – Interim Chief Financial Officer, effective immediately.
Alex W. Smith, president and chief executive officer, stated:
I am extremely disappointed that we will not achieve our prior financial guidance. Following a strong holiday period, we registered respectable company comparable sales growth of 5.7% in January — but the results were well below our forecast, which had overestimated the recapture of lost sales from last year’s storms. This is also causing us to take a more cautious view of sales for February.
He went on to comment further on the guidance:
From an earnings perspective, our revised outlook reflects the sales shortfall, as well as unplanned supply chain expenses, some of which will be ongoing through the first quarter of fiscal 2016. These primarily include incremental distribution center costs that affect our gross profit.
Shares of Pier 1 were down 23% at $13.08 in the last two hours of trading Wednesday. The stock has a consensus analyst price target of $17.23 and a 52-week trading range of $11.38 to $20.15.
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