PIR stock took a dive after Pier 1 Imports, Inc. (NYSE:PIR) posted disappointing first quarter financial results and investors reacted to a wider than expected net loss compounded by a 15% sales fall.
Sluggish Loss and Revenues
The home-furnishing retailer said it generated a net loss of $81.7 million or $19.97 a share, worse than a year-ago net loss of $28.5 million or $7.11 a share reported. Revenue for the first three months of the year tanked 15.5% to $314.3 million as comparable sales dropped 13.5%, attributed to lower average spending by customers.
Gross margins remained under pressure in the quarter, dropping to 25.1% from 32.3% reported a year earlier. The decline was a result of an increase in promotional and clearance activity in merchandise. Inventory levels were down 1% year-over-year to $314.3 million. Pier 1 Imports exited the quarter with $30.5 million in cash and cash equivalent.
PIR stock is down 20% and now trading at $7.03.
In defense of the poor performance, Chief Executive Officer Cheryl Bachelder insist the company is laser-focused on the 2020 action plan that seeks to reset operating model and reinvigorate growth.
“We believe Pier 1 has strong brand equity and a loyal customer who will return for the right style stories in our assortment. As we expected, our sales and margins remained under pressure in the first quarter, and we anticipate this will continue through the second quarter,” Bachelder explained.
Amidst the remarks, PIR stock continues to take a beating in the market, as has been the case for the better part of the past year. After an impressive start to the year depicted by a 300% spike, the stock has once again tumbled, losing a good amount of the gains in the process.
A seventh straight quarter of sales decline should continue to pile pressure on Pier 1 stock as investor sentiments appear to have taken a dive in recent months. While the company has embarked on a cost savings plan, until sizeable gains are realized, the stock could remain under pressure.
Despite today’s fall, PIR stock is still up 15% year-to-date.
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