FORT WORTH, Texas — Pier 1 Imports posted a 2.6% sales decrease and a 42.7% jump in fiscal fourth quarter profit, citing second-half momentum and an omni-channel strategy that’s working.
Net sales for the period ended Feb. 25, decreased to $528.4 million from $542.3 million for the same period a year ago on a roughly 3% drop in the retailer’s store count. Same-store sales increased 0.2%.
Net income for the quarter increased 42.7% to $26.6 million, or 33 cents per share, from $18.7 million in the fourth quarter last year. The most recent quarter included an approximately $2 million cost connected to the departure of former CEO Alex Smith. The company recently announced former Kmart President Alasdair James will start as Pier 1 President and CEO May 1.
“We gained momentum in the second half of the year, as our initiatives to drive improved financial performance took hold,” Interim President and CEO Terry London said in a release. “Notably, we strengthened our top-line trend, highlighted by positive company comparable sales, improved merchandise margins, controlled operational costs and increased profitability.
“Our omni-channel platform is enabling us to compete effectively in a challenging environment and positions us to deliver long-term success and increased shareholder value,” he added.
The Fort Worth, Texas-based retailer’s e-commerce sales increased 28% in the fourth quarter from the same period a year ago and accounted for about 20% of total sales for the year.
Gross profit for quarter totaled $206.9 million, or 39.2% of net sales, compared to $196.9 million, or 36.3% of net sales, in the fourth quarter a year ago. Merchandise margin (adding back delivery, fulfillment and store occupancy costs to gross profit) was 56.7% of net sales, compared to 52.5% for the same period a year ago.
Pier 1 attributed the margin improvement to “decreased clearance, a more effective promotional strategy and improved operations within the company’s supply chain.”
For the full year, net sales for the Top 100 company decreased 3.4% to $1.83 billion from $1.89 billion the previous fiscal years. Same-store sales were off 1%.
Net income for the full year decreased 24% to $30.1 million, or 37 cents per share, from $39.6 million, or 46 cents per share, a year ago. The most recent results included a roughly $10 million cost tied to the former CEO’s departure.
Pier 1’s store count for the full years decreased by a net 14 stores to 1,018 units, as it closed 21 stores and opened seven showrooms. It expects to close 20 to 25 stores this fiscal year.
In its guidance, the company said it expects first quarter same-store sales growth of 1% to 2%; flat to 1% growth in net sales and an earnings-per-share loss of 3 to 7 cents. Full-year guidance included expectations for a same-store sales increase of 1% to 2%; net sales growth of 2% to 3%; and earnings per share in the range of 46 cents to 52 cents.