Recently Pier 1 revised its guidance for the 2016 fiscal year. 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.
Unfortunately, a sight that is becoming all too common for Pier 1 is watching its shares fall when the company reports earnings, or at least this has been the case the past few periods. When the company released its revised guidance in February, it was not the first time that the company has seen an earnings-related drop. In fact, looking at the chart, it appears to happen like clockwork for most recent earnings releases.
At this time there was also a 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, was named executive vice president and interim chief financial officer. This was immediately effective on its announcement in February.
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Ahead of the earnings report, a couple analysts weighed in on Pier 1 with somewhat mixed views:
- Wedbush had Neutral rating for Pier 1 and a price target of $13.50, implying upside of 8% from current prices.
- Morgan Stanley downgraded the stock to an Underweight rating from Equal Weight and lowered the price target to $11 from $13, implying downside of nearly 12%.
Shares of Pier 1 were down 1.5% at $12.48 at midday on Wednesday. The stock has a consensus analyst price target of $14.88 and a 52-week trading range of $11.38 to $19.39.
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