Pier 1 Sinks Further

I wonder why anyone's surprised. Today Pier 1 (NYSE: PIR  ) announced yet another sales slowdown, warning the Street to expect sales and earnings for Q2 that will be below previous guidance. Comparable-store sales for August are going to be down 13% to 15%, they say, yielding an 8% to 9% drop for the whole quarter. That, in turn, will bring a loss of $0.12 to $0.14 per share.

The stock dropped a modest 6% today. That's less than I expected, given that this is yet another confirmation of my belief that Pier 1 is in big trouble. Perhaps it's still buoyed by the oft-repeated reassurance that value investors are buying into the as-yet-unseen Pier 1 turnaround story. After all, the headlines have been saying stuff like "Buffett's buying Pier 1," although all it really means is that someone at Berkshire (NYSE: BRKa  ) (NYSE: BRKb  ) has been buying Pier 1.

Honestly, my first thought was that it might be the janitor, but then I realized that's unfair to janitors. A janitor would probably know better.

He would realize that the stuff you used to only find at Pier 1 can now be found just about anywhere -- Target (NYSE: TGT  ) , Cost Plus' (Nasdaq: CPWM  ) World Market, Bed Bath & Beyond (Nasdaq: BBBY  ) , or Williams-Sonoma's (NYSE: WSM  ) Pottery Barn.

He might ask himself, as I have, whether the world would really care if Pier 1 disappeared forever, vanishing along with spokes-personalities Kirstie "Fat Actress" Alley and Thom "My 15 Minutes Are Up" Filicia.

Being a regular Joe who doesn't like to keep his cash tied up in unmoved goods on some storeroom shelf, he would likely take a bleak view of inventory turns that have been steadily declining for the past three years while inventory growth has outpaced sales growth. And finally, he might bypass the decent-looking balance sheet to see that free cash flow has never really been all that great.

Although my accomplished comrade in dumpster-diving, Philip Durell, has suggested that his Motley Fool Inside Value newsletter subscribers keep Pier 1 on their watch lists, that's as much energy as I'd spend on it. This thing just keeps sinking, and I'm not sure it will get above water any time soon.

For related Foolishness:

• Maybe you should get off the dock and take hold of the world.
• Was Pier 1 really getting out of the water last fall?
• What does Berkshire see in Pier 1?

Seth Jayson hasn't set foot in a Pier 1 store for at least a decade. At the time of publication, he had positions in no company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.