I feel like searching for a BHA meeting (Buyers-and-Holders Anonymous) to say this. My name is Jason, and since September 2003, at $19, I've been holding -- and even buying -- shares of Pier 1 Imports (NYSE:PIR). At first, I felt like a genius, because the stock quickly leapt to more than $26 per share. However, like biting into one of those pieces of chocolate with the weird raspberry filling, what was initially good gave way to an icky aftertaste. One quarter after another, the company reported slowing sales and an ever-more-dismal earnings outlook. The stock now sits at a four-year low of $9.

Meanwhile, I believed Pier 1 was just having a difficult time finding its popular niche as home decorating styles changed. Fierce competition from smaller and faster-growing chains like Linens 'n Things (NYSE:LIN), Bed Bath & Beyond (NASDAQ:BBBY), Cost Plus (NASDAQ:CPWM), and Target (NYSE:TGT) was also taking its toll.

It makes perfect sense to sell
I admit that it's as difficult to make a case for buying Pier 1 shares as it is easy to make the argument for selling them last year. In fact, there's been no shortage of fellow Fool analysts sharing their pessimistic views about Pier 1's future. They all have valid reasoning: Overall sales and same-store sales are declining, inventories are rising, and management won't even comment on the sales guidance for December.

Somewhere along the way, Pier 1 lost the distinctiveness that attracted spending customers in droves. However, even in the face of the third quarter's 6.5% decline in same-store sales, current trailing-12-months earnings dipping into the red by $0.12 per share, four pessimistic Foolish analysts, and one Warren Buffett, you may think I've fallen off my wicker rocker for suggesting to you that this is the time to buy.

But it would be too easy to convince you
Why now? First of all, Pier 1's customers are impressively loyal, considering they obviously have not found much over the last 18 to 24 months worth spending money on -- at least not before it goes on sale. When I check the parking lots of Pier 1 stores, the cars are there. When I talk to customers, they still like the company. Seth Jayson recently noted that Pier 1 fails his disappearance test -- that many folks wouldn't miss the retail chain if it disappeared tomorrow -- but I disagree. Here's a company that owns an established presence in the minds of customers across the country -- something relative newbies like Linens 'n Things, Cost Plus, and even Target do not have. When Pier 1 gets the right stuff on the selling floor, it won't stay there long.

Secondly, Pier 1 is finally addressing much-needed changes in merchandise. While we won't know for some time how customers will react to the spring's more modern styles, I appreciate management's willingness to take a calculated risk. The important thing is that big changes are being made, and the company isn't just standing still hoping its fortunes magically turn around.

I see many similarities between the Pier 1 Imports of today and the McDonald's (NYSE:MCD) of three years ago. For years, the executive management of McDonald's was all over the map trying to boost U.S. sales while ignoring the basics that made the company famous: speed, cleanliness, accuracy, and value. Nobody cared about the Arch Deluxe, because you would most likely stand in line for 15 minutes, open your bag to find the wrong meal inside, and step into a restroom that looked like it hadn't seen a mop in three days. However, management continued experimenting until sales -- and the depressed stock price -- finally awakened them to the reality that the future of any company, even McDonald's, is not guaranteed.

Likewise, Pier 1 tried hiring Thom Filicia for television spots, shifting advertising expenditures away from television and newspaper inserts to catalogs, and providing additional training to employees -- all in vain. While I wouldn't consider any of these efforts mistakes, they failed to address the core of Pier 1's problem: merchandise.

Pier 1's got a game plan
After listening to the third-quarter conference call, I'm convinced that this is exactly the problem Pier 1 is tackling. CEO Marvin Girouard and Chief Financial Officer Charles Turner provided refreshingly frank commentary on the company's recent failures, including Target's successful drive into Pier 1's niche.

I appreciate a management team that will admit its mistakes, such as taking a market position for granted and failing to quickly adapt to changing furnishing and decorating styles. In addition, they specify a plan for getting back on track, which begins with a modernized product line with simpler styles that will move the brand away from wicker and bamboo.

Meanwhile, stock keeping units, or SKUs, will drop about 15%. This will improve Pier 1's ability to maintain its relevance as styles continue to change, while making the stores a quicker place to shop: Customers usually don't have an hour to kill looking for something that catches their eye, as they did a couple decades ago.

And thirdly, on Dec. 16, Wedbush Morgan downgraded Pier 1 shares to sell from hold. Of all the bullish indicators, my favorite is when Wall Street analysts turn bearish. Sometimes they call it right, but I enjoy being a contrarian investor too much to agree with them this time. Meanwhile, there's that 4.5% yield, which is even better than high-interest money market accounts like ING Direct are paying. With a declining cash position, generating positive free cash flow will be vital to maintaining the dividend.

Granted, nothing is guaranteed for Pier 1's future. The modernized product line may turn out to be a dud, but I like the odds in the price range Mr. Market is asking now.

For Takes on Pier 1:

Want to chat about the company's prospects and industry? Check out the discussion boards on Fool.com.

Bed Bath & Beyond is a Motley Fool Stock Advisor recommendation. For more stock-picking advice from David and Tom Gardner, click here.

Fool contributor Jason Ramage looks forward to hearing your feedback. He owns shares of Pier 1 Imports and Bed Bath & Beyond. The Motley Fool has a disclosure policy.