Pier 1 Q1 Net Falls 26 Percent
FORT WORTH, Texas-Pressured by reduced margins resulting from promotions, Pier 1 Imports' first-quarter net income plummeted by 26 percent to $15.1 million.
Gross margin in the quarter, which ended on May 31, dropped 240 basis points to 40 percent, the result of the "highly promotional" retail environment, according to Alex Smith, Pier 1's president and CEO. Smith said this environment will continue to pressure gross profit in the near term. Selling, general and administrative expenses rose 4.8 percent in dollars but declined 40 basis points as a percentage of sales, to 31.4 percent.
Meanwhile, Pier 1 displayed a healthy top line in the quarter. Net sales gained 6.1 percent to finish the quarter at $419.1 million, including same-store sales growth of 6.3 percent. Smith noted that sales from e-commerce showed increasing strength, representing 9 percent of total sales in the quarter, which exceeded the retailer's expectations. "Our expanded spring and outdoor assortments resonated with customers and were buoyed by a strong marketing message," Smith said.
Based on the first quarter, Pier 1 now expects same-store sales to increase in the high single digits for all of this fiscal year. Smith said, "Our timely transformation from a brick-and-mortar retailer to one with full omnichannel capabilities has us well positioned to seize upon this change (in shoppers' behavior toward more e-commerce purchases) and drive brand growth."