Polar Vortex Hits Pier 1 Imports

NEW YORK (TheStreet) - The polar vortex is hitting home furnishings and decor chain Pier 1 Imports (PIR) in the gut.

Shares were down 7.2% to $18.62 on Friday after the Fort Worth-based company lowered guidance for both sales and earnings for its March 1-ending fourth quarter.

Pier 1 said sales for the final quarter of its fiscal year 2014 would range between $512 million and $514 million, with comparable store sales flat versus last year.

Pier 1 also lowered quarterly earnings guidance to a range of 40 cents to 41 cents compared to its prior guidance of 47 cents to 52 cents a share.

Analysts had expected earnings of 51 cents on revenue of $542 million for the final quarter of the year. Same-store sales are expected to fall -0.13%, according to Thomson Reuters.

Pier 1 will report earnings on April 10.

"Since our holiday sales update on January 9 we have continued to experience significant disruption from adverse weather in many of our major markets," President and CEO Alex Smith said in a statement on Friday. "This has resulted in considerably softer store traffic, as well as some temporary store closings, which further pressured fourth quarter sales and merchandise margin. Our fourth quarter results are frustrating and disappointing. However, we know the weather will eventually end and we can get back to more typical business trends."

Pier 1 joins the growing list of retailers that have had to lower guidance over a rough holiday season, which included severe winter weather. The continued rough weather season has further hampered the home decor store's sales as consumers are reluctant to go out of the house. That said, competitors like TJX's (TJX) HomeGoods are still posting positive comps, despite dealing with that same winter weather problem. TJX said on Wednesday that comparable store sales for its HomeGoods subsidiary rose 4% for the quarter, which ended on Feb. 1.

Pier 1 said in January that comps for the five-week period ending Jan. 4 rose 1.3%, but that includes an adjustment to account for an extra week in the calendar in the prior year.

Before that adjustment, comparable store sales for fiscal December 2014 slumped 5.7% versus 8.2% for the five-week fiscal period ended December 29, 2012.

Fourth quarter retail earnings have fallen 5.3% for the 62 retailers that had reported as of Thursday morning. Excluding Wal-Mart (WMT), earnings were down 4.3%, according to Retail Metrics. The 62 retailers account for roughly 51% of the Retail Metrics Earnings Index.

"At the start of November retail industry analysts were looking for the 122 U.S. retailers in our Retail Metrics Earnings Index to generate earnings growth of 4.5%," Ken Perkins, president of Retail Metrics writes in a Thursday note. "This would have been roughly in line with mid-single digit earnings gains racked up by retailers in the first three quarters of 2013. However, a shortened holiday season, heavy price competition and promotions, adverse weather, fewer mall trips, a channel shift in spending to more online, and increased spending on big ticket purchases took their toll on retailers and expectations have plummeted. Forecasts have come down 1060 basis points in the last three months which represent a much steeper downward revision to expectations than we normally see."

Smith played up that the retailer's '1 Pier 1' strategy - its so-called omnichannel strategy - continues to gain traction, noting that while store traffic was tough in the quarter, Pier1.com outperformed expectations.

Online sales in the quarter reached 5% of total sales and 4% for the fiscal year. The company says it is on track to see online sales contributing 10% of total sales by the end of 2016.

He also said that the company is entering fiscal 2015 in a "clean inventory position."

"We have a compelling assortment of spring merchandise in store and online and the initial customer response has been extremely positive," Smith said.

Pier 1 remains "confident in our long-term outlook - in fact, strategically, we are in better shape than ever," Smith said. "We have a clear vision of how '1 Pier 1' will evolve, as well as a highly talented team of executives and associates who are executing at every level. Additionally, we have the balance sheet to support our growth plans and also allow us to return value to our shareholders. We look forward to updating you on spring selling trends on our year-end earnings call in April, at which time we'll also introduce our financial guidance for fiscal 2015."

--Written by Laurie Kulikowski in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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