Pier 1 Imports (PIR) Stock Continues to Sink on Earnings, Sales Guidance

NEW YORK (TheStreet) --Pier 1 Imports (PIR) stock is retreating by 20.17% to $4.75 on heavy trading volume on Thursday, after the company lowered its fiscal 2015 full year earnings and sales guidance.

After the market close on Wednesday, the home decor retailer reduced its earnings guidance to a range between 42 cents and 46 cents per share for the year, down from the previous outlook of 56 cents to 64 cents per share.

Comparable store sales are expected to be flat for the year, compared with the previous estimate of low single-digit growth.

"We are revising our full-year outlook based on a moderate start to the holiday shopping season and an increasingly competitive promotional environment," CEO Alex Smith said in a statement yesterday.

Additionally, Pier 1 Imports set its fiscal 2015 fourth quarter guidance at 18 cents to 22 cents per share, below estimates of 35 cents per share.

The company has estimated for a 2% to 4% decline in comparable stores sales during the quarter, which will end in February.

Pier 1 Imports stock is trading at more than five times its average volume with 16.5 million shares traded so far today, compared with its average daily volume of 3 million shares.

Insight from TheStreet's Rating Team

The Street's Chris Laudani wrote about Pier 1 Imports latest quarter and lower guidance in a post on Real Money. Here's what he had to say about the company:

Investors in Pier 1 Imports took a long walk off a short pier last night after the company announced a dismal quarter and cut guidance. The stock fell 13% in the after-hours. It shouldn't have been much of a surprise because the stock has already fallen 61% this year. After last night's shellacking, the stock is back to 2009 levels.

Management said sales have been hurt by the decline in the "casual shopper" as well as slow sales in Canada. Pier 1 gets about 8% of revenue from Canada.

Pier 1 really seems to be struggling with relevance. You'd think with a decent housing market in most parts of the country, shoppers would be out decorating their homes with knickknacks. But that doesn't seem to be the case.

You also have wonder about the company's ability to continue to pay dividends and to buy back its stock, which is nearly double the company's cash flow. In just a year, long-term debt has gone from $9.5 million to $205 million.

I would avoid shares of Pier 1 until the management team can stabilize the business. Shares of Pier 1 don't float my boat.

Chris Laudani's "Pier 1 Shares Take a Long Walk Off a Short Pier" was originally published on 12/17/15 on Real Money.

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