[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / October 3, 2016 / Active Wall St. announces its post-earnings coverage on Pier 1 Imports, Inc. (NYSE: PIR). The company reported its second quarter fiscal 2017 financial results on September 28th, 2016. The company came in above market expectation on earnings; however its sales were below expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
For the quarter ended on August 27th, 2016, Pier 1 swung to a loss of $4.01 million, or $0.5 per share, from income of $3.2 million, or $0.4 per share, in the same quarter last year. The Fort Worth, Texas-based company reported that net sales declined 6.7% to $405.8 million compared to $435.0 million in the same period last year. The company's comparable sales for the quarter decreased 4.3%. Analysts were expecting loss of $0.6 per share on revenue of $406 million.
E-Commerce represented approximately 20% of net sales in Q2 FY17 as compared to approximately 17% of net sales in Q2 FY16.
Operating Metrics
For Q2 FY17, Pier 1 reported gross totaled of $145.0 million, or 35.7% of net sales, compared to $154.6 million, or 35.5% of net sales, in Q2 FY16. Q2 FY17 merchandise margin (the result of adding back delivery and fulfillment net costs and store occupancy costs to gross profit) totaled $229.8 million, or 56.6% of net sales, compared to $239.8 million, or 55.1% of net sales, in Q2 FY16. The company attributed that gain in merchandise margin to a more balanced promotional strategy and improved operational execution within the company's distribution centers.
Balance Sheet
As of August 27th, 2016, Pier 1 had $38.3 million of cash and cash equivalents, $196.0 million outstanding under its senior secured term loan and $20.0 million of working capital borrowings outstanding under its $350 million secured revolving credit facility. Inventories at the end of Q2 FY17 decreased approximately 10% to $481.3 million compared to $533.6 million at the end of Q2 FY16.
During the reported quarter, the company repurchased 805,000 shares of its common stock at a cost of approximately $4.5 million. Of the company's $200 million share repurchase program announced in April 2014, $36.6 million remains available for repurchases.
Real Estate
During Q2 FY17, Pier 1 closed six stores and opened two. The Company expects to close approximately 15 to 20 stores in fiscal 2017.
Poison Pill
On September 27th, 2016, Pier 1 announced that its Board of Directors has adopted a Shareholder Rights Protection Agreement and declared a dividend of one right on each outstanding share of the Company's common stock, payable to holders of record as of the close of business on October 7th, 2016.
Terry E. London, Chairman, stated:
"The board feels it is important to ensure that all shareholders have the opportunity to realize the long-term value of the iconic Pier 1 Imports brand, and to guard against coercive or unfair tactics to gain control of the Company without paying all shareholders an appropriate premium."
The agreement restricts people or groups from purchasing 10% or more of the company's shares. Hedge fund firm Alden Global Capital LLC has revealed a 9.5% stake in the company on September 19th, 2016, stating that Pier 1, which is searching for a new CEO, is at a "critical juncture".
Outlook
For Q3 FY17, Pier 1 is forecasting earnings in the range of $0.9 per share to $0.15 per share. For FY17, the company expects earnings in the range of $0.24 per share to $0.32 per share. The company expects comparable sales contraction, which includes e-Commerce, of approximately 4% to 2%. Additionally, net sales are expected to shrink approximately 6% to 4%.
Stock Performance
Pier 1 Imports' share price finished yesterday's trading session at $4.24, slipping 5.15%. A total volume of 4.42 million shares exchanged hands, which was higher than the 3 months average volume of 2.85 million shares. The stock is trading at a PE ratio of 13.21 and has a dividend yield of 6.60%.
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