WASHINGTON (dpa-AFX) - Pier 1 Imports Inc. (PIR) Wednesday reported a plunge in profit for the second quarter despite a 6 percent increase in revenues, reflecting lower gross margins and higher operating costs. Pier 1 shares took a beating after the home furnishing retailer lowered its full-year earnings outlook.
Fort Worth, Texas-based Pier 1 Imports second-quarter profit dropped to $9.2 million or $0.10 per share from $17.8 million or $0.17 per share last year. On average, 16 analysts polled by Thomson Reuters expected earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude one-time items.
Sales for the second quarter grew 5.8 percent to $418.6 million from $395.6 million last year. Analysts had a consensus revenue estimate of $426.02 million for the second quarter.
Comparable sales increased 4.5 percent during the second quarter, attributable to increases in brand traffic, conversion and average ticket.
Gross margins dropped to 38.9 percent from 40.8 percent last year, hurt by increase in promotional activity as well as a higher mix of e-commerce sales. Second-quarter selling, general and administrative expenses rose to $134.8 million from $122.6 million last year.
'The pace of growth of e-Commerce sales remains high, with sales penetration nearing 10% this quarter,' said CEO Alex Smith. 'With the acceleration of investments in our '1 Pier 1' omni-channel strategy, we expect this momentum to continue. These incremental investments are impacting our near-term financial performance as anticipated, as we rapidly evolve into our new business model.'
The company expects the heavy investments made on its long-term strategy of expanding e-commerce platform will help it strengthen its margins and profit in near-future.
Looking forward, the company now expects full year 2015 earnings of $0.95 to $1.05 per share, down from its prior outlook of $1.14 to $1.22 per share. Analysts currently expect earnings of $1.13 per share for fiscal year 2015.
PIR closed Wednesday's trading at $15.54, up $0.14 or 0.91%, on the NYSE. The stock, however, dropped $1.59 or 10.23% in the after-hours trade.
Copyright RTT News/dpa-AFX
© 2014 AFX News
