Pier 1 Posts Loss and Cuts Guidance as Sales Slip

Pier 1 Imports Inc., under recent pressure from an activist investor, said its second-quarter revenue fell 6.7%, swinging the company to a loss as fewer shoppers came through its doors.

"Our results on the whole continue to be impacted by soft store traffic and a competitive promotional environment," said Chief Financial Officer Jeffrey Boyer.

The company said it is implementing various initiatives to turn sales around, including a return to television advertising and introducing a gift registry.

Earlier this month, the home-furnishing retailer announced the departure of Chief Executive Alex Smith as the Fort Worth-based company has struggled to improve sales.

Retailers industrywide have been grappling with dwindling foot traffic as consumers increasingly do their shopping online. While Pier 1 and others have moved to beef up e-commerce capabilities, which now represents 20% of the company's sales, the transition to online retail often means slimmer margins.

Tuesday, the Fort-Worth based company unveiled a poison-pill measure to protect itself from activist investors acquiring a 10% or more stake. Pier 1 said the new restriction won't prevent a takeover, "but may cause substantial dilution to anyone acquiring 10% or more of the company's common stock, which may block or render more difficult a merger." The announcement came a week after hedge fund firm Alden Global Capital LLC revealed a 9.5% stake in the company.

Alden president Heath Freeman said Wednesday he was "surprised and disappointed" by the new policy, and that the hedge fund never expressed interest in acquiring the home-goods seller. He said his firm wants to be involved in the company's CEO search and that Pier 1 could benefit from shareholder representation on its board.

Over all for the fiscal second quarter, Pier 1 reported a loss of $4.1 million, or 5 cents a share, down from earnings of $3.2 million, or 4 cents per share, a year earlier.

Revenue dropped to $405.8 million from $435 million. Same-store sales also declined 4.3%.

The company warned Wall Street earlier this month that it would post a steeper drop in revenue for the quarter than its earlier forecast of 1%.

For the full year, Pier 1 now expects earnings per-share of 16 cents to 24 cents and adjusted per-share earnings of 24 cents to 32 cents. The adjusted earnings guidance excludes about $10 million of estimated costs for the planned departure of Mr. Smith. In June, the retailer predicted earnings of 32 cents to 40 cents a share. Pier 1 dropped its revenue projection to a 4% to 6% decline, worsening from a 1% to 3% drop it had guided for in June.

Shares fell 1.6% to $4.20 after hours.

(END) Dow Jones Newswires

September 28, 2016 18:15 ET (22:15 GMT)

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