A few years ago, home furnishings retailer Pier 1 Imports (PIR) was dying. The retailer was struggling with plummeting sales, possible delisting from the New York Stock Exchange, and a badly hammered stock price, hovering under $1.
Today, the California retailer is thriving. Fueled by stronger home-furnishing sales, Pier 1 has strengthened its balance sheet and has aggressive growth plans. The chain already has more than 1,000 stores in the United States and Canada with booming sales. The retailer sells imported goods from more than 50 countries.
The upshot is that Pier 1 is gushing profits. First-quarter fiscal sales rose 9.3 percent to $334.6 million versus a year ago. Comparable store sales rose 10.2 percent. Earnings skyrocketed 83.3 percent. S&P analysts say that Pier 1 has “done an admirable job improving its product mix.”
Using this newfound cachet, Pier 1 is spending $200 million on an aggressive three-year growth plan to pump up sales and profits. Plans include accelerating online revenues, revamping stores, and expanding the store portfolio. For example, newly launched “Pier 1 To-Go” is a free service that lets customers reserve goods online and then pick them up at the store.
Analysts like the specialty retailer. Of the eight followed by Thomson/First Call, five have strong buy recommendations and one has a buy, with two holds.
S&P analysts aren’t as optimistic. They have a sell rating on Pier 1, citing its lackluster long-term growth prospects and overvalued share price. The challenge, they add, is navigating a softer market for home furnishings this year. The company next reports in early September.
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