Fool Plate Special: Pier 1 Takes a Long Walk

An Investment Opinion

Pier 1 Takes a Long Walk

By Rick Aristotle Munarriz (TMF Edible)
September 14, 1999

Pier 1 (NYSE: PIR), purveyor of imported home furnishings and -- for the last year at least -- pessimism, announced quarterly earnings this morning. While sales rose 4% for the retailer, earnings fell by 32%. The $0.12 a share showing was a penny shy of analyst estimates.

It's been a long walk unless you were short Pier since the shares peaked at $20 last year. Back then the company had come off a strong FY98. Same-store sales for the year ending in February were an amazing 15.6%. Plunging interest rates had fueled a real estate and refinancing boom. New homes, or old homes with cheaper mortgages, longed to be stocked with Pier 1 merchandise.

Tastes change. Greenspan flinches.

Today the company is battling lower comps. Six months into the fiscal year finds the sales at comparable stores off by 1.2%. While that figure has been propped up by a 4% gain for the month of August, investors have been avoiding the stock like termite-infested rattan.

This morning, as news of Hurricane Floyd nearing the country's Southeastern coastline finds patrons flocking to Home Depot (NYSE: HD) for plywood, it's clear how diverse the fortunes have become for companies that were once the big retail winners when the housing market ran hot.

What will the future stock for Pier 1? Will wickerwork work? Earning projections have been marked down this summer and, after today's shortfall, that trend should continue. As the company attempts to address recent margin erosion, shoppers might want to load up on pewter candleholders. It's easier to carry a torch that way.