Pier 1 Scales Back

The locally based retailer said a drop in customer traffic and competition from big box retailers contributed to losses that more than doubled during the three months ending March 27, when the company racked up $23.2 million, or 27 cents per share, of red ink. Losses for the same period last year were $12.5 million, or 14 cents per share. The current numbers included a $407,000, or one-cent-per-share loss from discontinued operations, the company said.

Quarterly revenue also dropped by 3.6 % during the period, slipping to $376.1 million from $390.3 million in the prior year's quarter. Sales at stores open at least a year were also off by 6.6% in the quarter.

In a conference call with analysts Thursday, Pier 1 Chairman and CEO Marvin J. Girouard said the company responded to the sharp increase in losses by introducing its Modern Craftsman merchandise in a bid to attract more upscale customers. The new product line, which required the company to update its catalogs and create a new advertising campaign, failed to bolster the numbers, however.

"During the first quarter, customer traffic remained weak," said Girouard. "We recognize that it will take time to attract new customers and inform our existing customers of the significant changes in our merchandise assortment."

He said Pier 1 also plans to introduce another new merchandise line in mid-July and will begin its summer clearance in late June. Plans also call for a new print advertising campaign to reinforce the new brand's position at Pier 1.

The furnishing and home décor importer has been struggling in the last few years to hold its market niche against other big-box discounters, including Target, that have started selling products long found in Pier 1 stores.

In a bid to pare back expenses, company executives said they plan to close between 45 and 50 stores within the next year, which is between 15 and 20 more than the 30 previously announced. The company will also close five Pier 1 Kids stores, despite same store sales increases for that division of 9%. The company will also open 35 stores, which is five fewer than previously announced, in the next 12 months. The company currently operates 1,200 Pier 1 stores in 49 states, Canada, Mexico and Puerto Rico, along with 43 Pier 1 Kids stores in the US.