Water Rising Around Pier 1

Its loss estimate widens as 'strategic alternatives' are studied.
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Pier 1's

(PIR) - Get Report

beleaguered loyalists took another body blow Thursday as the struggling furniture chain reported pitiable April sales and said its first-quarter loss would be twice as wide as feared.

The company, whose stock has been a flier on receding turnaround hopes for a year, hired JP Morgan to help it explore strategic alternatives.

For April, same-store sales plunged 11.5% from a year ago; analysts had been hoping for no change. Total sales were $111.6 million in the month, down 8.7% from a year ago. As a result of the performance, Pier 1 pegged its first-quarter loss at 24 cents to 28 cents a share. Analysts had estimated a loss of 11 cents a share.

The April numbers must be particularly depressing to shareholders who interpreted Pier's guarded optimism of April 6 as foretelling improved trends. On April 6, Pier said: "It is too early to make any assertions on longer-term success; however, we are encouraged by initial feedback on the new merchandise and easy-to-shop store presentations. We believe that by the end of the first quarter and into the beginning of the second quarter, we will begin to see notable improvement in customer traffic."

On Thursday the tone changed. "Sales in April were disappointing. The slight improvement in customer traffic in late March did not continue into April," Pier 1 noted.

The company continues to keep to its story, noting that its new summer catalog goes out to 12 million customers this month, and saying that it plans to increase advertising spending this month and next to boost traffic. "We will also continue to carefully monitor inventory and cash. Over the next several months, we believe that the new merchandising and marketing strategies will begin to improve customer traffic and sales."

JP Morgan will help in "evaluating strategic alternatives in an effort to enhance shareholder value," language the Wall Street generally interprets as signaling a company is for sale. "JP Morgan will also advise management and the board of directors on a potential transaction to sell the company's proprietary credit-card business, a review of its store portfolio and the possible sale of other assets," it said.