Pier 1 Imports (PIRRQ) will release its quarterly report on Thursday, and investors who've watched the stock decline lately have to be frustrated with the company, given the health of the housing market and its impact on home-goods retailers. With Pier 1 earnings expected to grow, however, shareholders hope that its coming report will lead to a turnaround for the retailer.

Pier 1 has made an impressive long-term turnaround, once again becoming a relevant player in its niche of offering quirky imported home furnishings and gifts. But, as interest rates start to rise, will Pier 1 suffer the same fate as some other housing plays lately? Let's take an early look at what's been happening with Pier 1 over the past quarter, and what we're likely to see in its report.

Stats on Pier 1

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$404.64 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

When will Pier 1 earnings really start taking off?
In recent months, analysts haven't been excited about the prospects for Pier 1 earnings, having cut $0.02 per share from their August-quarter estimates, and knocking $0.01 per share from their full-year fiscal 2014 views. The stock has also languished, falling 6% since mid-June.

Pier 1 came into the quarter on a fairly impressive note, with a May-quarter report that one might have expected to generate substantial enthusiasm. Net income rose 14%, with revenue jumping more than 9% on a 5.9% increase in same-store sales. Better margins also helped the company's profitability, and Pier 1 boosted its earnings guidance by $0.01 per share for the remainder of the fiscal year, with growth in comps expected to remain in the mid-single digits.

One big way in which Pier 1 has stood out from broader-line home furnishing giant Bed Bath & Beyond (BBBY) is by emphasizing its online e-commerce website. Pier 1 has already seen e-commerce represent a growing part of its business, and with strategies to offer in-store pick-up and point-of-sales systems, the retailer clearly sees the potential from a greater online presence, and has been quicker to take advantage than Bed Bath & Beyond.

Pier 1 has also benefited from luxury shoppers being more willing to spend substantial amounts on its goods. Like Pier 1, Williams-Sonoma (WSM 0.03%) has seen greater first-time home sales and the move-up market for higher-quality homes take off lately, with correspondingly positive impacts on its sales. For Pier 1, perhaps the biggest surprise is the fact that furniture represents a large part of its business, with about 40% of overall sales coming from its furniture offerings.

Yet, Pier 1 has to be careful, given the hype that the sector has received. Rival Restoration Hardware (RH 1.40%) saw shares drop substantially after its own most recent quarterly report, as higher costs from follow-on share offerings and stock awards to its top executive overwhelmed the positives of 26% growth in same-store sales and operating income that grew by more than half. Pier 1's stock isn't quite as frothy, but it, too, could be vulnerable if it disappoints.

In the Pier 1 earnings report, watch to make sure the retailer is taking full advantage of its financially healthier customer base. As long as long-term profit growth potential remains for the stock, Pier 1 should continue to attract positive attention from shoppers and investors alike.

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