Shares of Pier 1 Imports Inc. (OTC:PIRR.Q) were down 20.7% as of 12:15 p.m EDT Thursday after the home-goods retailer announced mixed fiscal fourth-quarter 2018 results and a disappointing outlook.
On the former, Pier 1's quarterly revenue declined 3.1% year over year to $512.2 million -- and this despite an extra week in the quarter as compared to the same year-ago period. On a comparable 13-week basis, Pier 1's comparable sales declined 7.5%. That translated to adjusted earnings of $16.6 million, or $0.21 per share.
Analysts on average were expecting lower adjusted earnings of $0.19 per share on higher revenue of $537.6 million.
Pier 1 Imports CEO Alasdair James stated that the company's financial performance "underscores the urgent need for change" -- something the company hopes it can address through a new three-year strategic plan. But that will also mean forsaking some near-term profits in order to follow through with that plan.
We are confident in the potential of the business to respond and have already begun implementing new initiatives across sourcing, supply chain, stores, merchandising marketing and promotions. These investments will pressure profitability in the near-term, bringing us to an expected net loss for the full year in fiscal 2019, but are expected to drive sales growth and profitability in fiscal 2020 and 2021 and are necessary to help us return the business to a sustainable growth trajectory.
In the meantime, Pier 1 Imports expects comparable sales will decline in the range of 8% to 7% in the current quarter, which will translate to a GAAP net loss of $0.41 to $0.37 per share. For the full year of fiscal 2019, Pier 1 expects comparable sales to improve to growth of 1.5% to 2.5%, which should result in a loss per share in the range of $0.36 to $0.17.
By the end of fiscal 2021 -- and assuming all goes well as Pier 1 implements its new strategic plan -- the company also told investors that it's targeting sustainable net sales growth in the range of 4% to 6%, EBITDA margin of 6% to 8%, and earnings per share of $0.60 to $0.70.
But success is hardly guaranteed. So even though our market is a forward-looking machine, it's hard to blame investors for taking a step back from Pier 1 Imports stock today given the near-term pain it's about to endure.