Updated from 11:26 a.m. EDT.
The new head of
laid out a plan for the struggling home-goods retailer's survival Thursday, as the company's fourth-quarter loss before items still managed to beat analysts' expectations.
Pier 1 has been mired in a deep sales slump that has put its quarterly results in the red for the past year and a half. President and CEO Alex W. Smith told analysts during a conference call that the Fort Worth, Texas-based company had alienated loyal customers with dramatic shifts in the looks of its products and by removing some of their favorite categories.
"Fiscal 2007 was a truly horrible year for Pier 1," Smith said. "Pier 1 has been bleeding, not because of the economy, not because of competition, but from self-inflicted wounds."
The retailer said its loss for the period ended March 3 swelled to $58.7 million, or 67 cents a share, from $10 million, or 8 cents a share, a year earlier.
Excluding charges for items like inventory writedowns, goodwill impairment and an accounting change, Pier 1's loss totaled 14 cents a share. On a comparable basis a year earlier, the company had a loss of 4 cents a share. Analysts polled by Thomson Financial expected a loss of 32 cents a share, before items.
Pier 1's sales slid to $473.7 million from $506 million, but beat Wall Street's estimate of $457.5 million.
In the conference call, Smith laid out a six-point strategy designed to bring company back to profitability, including reducing costs by streamlining the organization. Smith noted that the company had eliminated 175 positions last month, which Pier 1 estimated will generate annualized savings of about $17 million.
Pier 1 will also improve its merchandise assortments, tighten the supply chain and create a cost-effective marketing plan.
The company said it no longer will release its sales information on a monthly basis, and instead will shift to a quarterly reporting schedule. Pier 1 said it believes the new schedule will allow for more meaningful sales comparisons within the context of merchandise margins, selling, general and administrative expenses, and other performance criteria.
For the most recent fiscal year, the company's loss from continuing operations ballooned to $227.2 million, or $2.59 a share, from $39.8 million, or 32 cents a share, a year earlier. Sales slid to $1.62 billion from $1.78 billion, while same-store sales fell 11.3%. The company has been "exploring strategic alternatives" for almost a year, but so far hasn't found any buyers.
"I know that many of you are disappointed with the performance of Pier 1 over the past few years," Smith said, "but we are committed to returning the company to profitability and beyond, which in turn will restore shareholder value. Our plan is for 2008 to start this process."
Shares were trading up 4 cents to $7.89 recently.