Pier 1 Imports Q1 Results Down, Miss Estimates; Trims FY15 Earnings View

(RTTNews) - Pier 1 Imports, Inc. (PIR), a specialty retailer of decorative home furnishings and gifts, reported Thursday a decline in first-quarter profit, below Wall Street analysts' estimates, reflecting margin pressure, despite higher comparable sales. Total sales also missed analysts' estimates. Further, the company trimmed its fiscal 2015 earnings forecast.

Net income for the first quarter dropped to $15.06 million or $0.16 per share from last year's $20.35 million or $0.19 per share. On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter were $419.06 million, a 6.1 percent increase from last year's $394.85 million. Wall Street expected revenues of $422.81 million.

The company's comparable sales increased 6.3 percent during the first quarter, attributable to increases in total brand traffic, conversion and higher average ticket.

Gross profit was $167.71 million, approximately flat with prior year's $167.60 million. Gross margin, meanwhile, declined to 40 percent from 42.4 percent a year earlier.

First-quarter earnings before interest, taxes, depreciation and amortization or EBITDA was $36.4 million, compared to $42.3 million ilast year. Operating income for the first quarter was $25.8 million, lower than $33.2 million a year ago.

Looking ahead for fiscal 2015, Pier 1 Imports now expects earnings per share to be in the range of $1.14 to $1.22, representing year-over-year growth of 13 percent to 21 percent. This is compared to previous guidance of $1.16 to $1.24 per share, which represented year over year growth of 15 to 23 percent. Analysts project annual earnings per share of $1.21.

The company expects annual comparable sales growth, which includes e-Commerce, to be in the high-single digits. The company said in April that it expected Comparable-store sales growth to be in the mid single-digit range.

EBITDA growth is now projected in the range of 9 percent to 14 percent, compared to previous guidance for growth of 11 percent to 17 percent.

The company reiterated its previously stated goals for sales per retail square foot of $225 and operating margins of approximately 11 percent to 11.5 percent by the end of fiscal 2016.

In response to the early success of its '1 Pier 1' omni-channel strategy, the company announced that it now expects to achieve e-Commerce sales of at least $200 million in fiscal 2015, and e-Commerce sales of at least $400 million in fiscal 2016. The company previously expected e-Commerce sales to represent 10 percent of total sales by the end of fiscal 2016.

Alex Smith, President and Chief Executive Officer, said, "We are pleased to see increasing strength in e-Commerce, which exceeded our plans and reached 9 percent of sales for the quarter. … Nevertheless, the retail environment remains highly promotional and is pressuring gross profit in the near-term. As a result, we are adjusting our full-year earnings forecast accordingly."

Pier 1 Imports stock closed Wednesday's trading at $18.26, up $0.08 or 0.44 percent.