Pier 1 Posts $10.2M Loss

The Fort Worth, TX-based specialty retailer posted a $10.2 million loss, or 12 cents a share, in the second quarter ending Aug. 27. For the same period a year earlier, Pier 1 reported a net income of $10.4 million, or 12 cents a share. The loss followed a lackluster first quarter.

Sales in the second quarter fell 3% to $438.6 million, while same store sales dropped nearly 8%. Third quarter results are also expected to be down by 2 cents to 3 cents a share following the closing of nine of its 26 stores in the area affected by Hurricane Katrina, the company said.

The home products retailer, which operates more than 1,200 stores in the United States, Canada, Mexico, Puerto Rico and the United Kingdom. has been facing growing competition from big box merchants like Target and Wal-Mart in recent quarters, prompting it to struggle with a merchandising and marketing mix that has not been well received by consumers.

As a result of what the firm called the "unpredictability" of market conditions, Pier 1 said it was suspending its future financial guidance as it implements plans to reverse the losses.

"Our management team is working to reclaim Pier 1's place in the home-furnishings sector and to take back market share and return to our core competencies that made us successful," Chief Executive Marvin Girouard said in a conference call with analysts and investors Thursday. "Although it has taken longer than we expected, we do believe the company is moving in the right direction."

Girouard said he expects reverse the company's losses by November, as the holiday season gets underway, by focusing on its catalogue and new media segments to re-image the brand.

To help with that reversal, the company will begin television advertising, which it suspended nearly a year ago, and will send out a holiday catalogue. The company recently mailed out its first ever fall catalogue to 3 million households. Internet advertising has already helped, particularly with college-age customers, Girouard said.