The market isn't buying into the house party at Pier 1 Imports (OTC:PIRR.Q). Shares of the home-furnishings retailer stumbled two weeks ago after posting disappointing quarterly results, only to take another hit -- down 11.4% -- last week.
The latest dagger came on Friday, when Credit Suisse analyst Seth Sigman slashed his price target from $6.50 to $4. He feels that this is rough environment for Pier 1 in particular and any bricks-and-mortar chain trying to sell home decor and furnishings at full price in general. The internet is making it too easy to shop around for better prices on comparable home solutions. Off-price channels are popping up online and offline. Sigman is sticking to his bearish underperform rating on the stock.
Pier 1 kicked off fiscal 2018 in ho-hum fashion. Net sales clocked in at $409.5 million in its fiscal first quarter, below the $418.4 million as store closures and essentially flat comps weighed on the top line. Analysts were holding out for slight growth. Pier 1 managed to post a narrowing quarterly deficit, but that wasn't much of a consolation to Wall Street pros concerned about the concept's long-term viability.
Johnson Rice downgraded the stock from accumulate to hold. Jefferies analyst Daniel Binder at Jefferies lowered his price target from $7.25 to $5.90. He's sticking to his hold rating, concerned that the stock will be marching in place through the next few months until its new CEO -- former Kmart president Alasdair James -- lays out his turnaround plan for the meandering retailer.
Anthony Chukumba at Loop Capital stuck to his buy rating on the stock, but lowered his price goal from $12 to $10. He feels that the weakness in the first quarter and its uninspiring outlook for the current quarter is being driven primarily by weakness in outdoor furniture, a product category that isn't essential during the second half of the fiscal year when weather isn't conducive to outdoor living.
Pier 1 lowered its growth outlook for all of fiscal 2018. It sees revenue growth of 1.5% to 2.5% with same-store sales checking in with 1% to 2% growth. It was previously targeting 2% to 3% top-line growth for the year.
The stock's been volatile since bottoming out at $0.10 eight years ago. Pier 1 shares would go on to peak in the low $20s, only to plummet by nearly 80% since topping out. James has only been at the helm for a couple of months, and his strategic plan that will be unveiled later this year will go a long way in dictating if Pier 1 stock bounces back.