Share price of Pier 1 Imports, Inc. (PIR) have plunged 24.3% since Feb 10 when the company lowered its previously provided guidance for fiscal 2015 due to lower than expected sales in January & February and higher supply chain costs.
Full-year 2015 earnings per share are now expected in the range of 80 cents to 83 cents, lower than the prior expectation of 95 cents to $1.05.
The home furnishing company’s comparable sales are now expected to grow about 5%, lower than the prior expectation of mid- to high-single digit increase. Comparable sales include sales from the e-commerce business. The company is witnessing increasing momentum in e-commerce sales, which grew 15% in January and over 10% year-to-date.
Gross margin is expected to be 40.2%, lower than the prior range of 40.5% to 41.5%.
EBITDA, as a percentage of sales, is expected to be at 9.4%, lower than 11% guided previously.
The company reported 8.2% sales increase in December owing to the holiday season. Sales grew 5.7% in Jan 2015 but lagged the company’s expectation. The company is cautious about February sales and for the full year. In fact, the company expects soft sales and increased supply chain expenses to continue into the first quarter of 2016.
Pier 1 Imports carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Better-ranked stocks in the home furnishing sector include Haverty Furniture Companies Inc. (HVT), Kirkland's Inc. (KIRK) and Williams-Sonoma Inc. (WSM). All the three companies carry a Zacks Rank #2 (Buy).
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