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What happened

Shares of home-furnishing retailer Pier 1 Imports (NYSE:PIR) were soaring today after the company posted a blowout third-quarter earnings report last night. As of 11:49 a.m. EST, the stock was up 35.3%.

So what

The long-struggling retailer seems to be finally turning the corner as adjusted earnings per share improved from $0.13 a year ago to $0.22, well ahead of expectations at $0.12. 

Overall revenue ticked down 0.4%, to $475.4 million, but comparable sales increased 1.8% in the period as the company shut down about 3% of its store base over the past year. Analysts had expected revenue at $467.6 million.

E-commerce sales jumped 28% in the quarter and now make up 20% of overall revenue, a strong sign as the online channel becomes an increasingly important part of retail. Gross margin also increased 280 basis points, to 41.3%, rounding off a strong quarter.

Outgoing CEO Alex Smith said, "Sales trends rebounded in the second half of November, following the election," and expressed confidence about the holiday season and the company's long-term position. The company had already updated its third-quarter guidance in mid-November to say results would come in at the high end of the previously stated range, so today's report was a pleasant surprise for investors.

Now what

Because of the departure of Smith, who is retiring at the end of the year, Pier 1 said that it had appointed Board Chairman Terry London to be interim CEO, starting Jan. 1. The company is continuing to work with Korn Ferry on finding a permanent chief executive. 

Management also lifted its guidance for the fourth quarter and full year, calling for comparable sales to remain close to flat in the current quarter, and adjusted earnings per share to come between $0.28 and $0.32, better than estimates at $0.27.

The retailer's shares are still off sharply from their 2013 peak, but there were a number of signs in the quarter that point to a recovering business. Keep an eye on the CEO search, as well as fiscal 2018 guidance, as the next leader will be key in determining whether the company can continue its comeback.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.