What: Shares of Pier 1 Imports (NYSE:PIR) dropped 32.2% in the month of September, according to S&P Capital IQ data, after the specialty retailer announced disappointing quarterly results. Combined with the effects of an earlier painful guidance reduction in February, Pier 1 stock now finds itself down more than 50% so far in 2015, badly underperforming the broader market:

PIR Chart

PIR data by YCharts.

So what: In its most-recent quarter, Pier 1 saw revenue climb a modest 2.7% year over year, to $430 million, helped, in part, by comparable-store sales growth of 2.5%. Meanwhile, net income plunged 65%, to $3.2 million, or $0.04 per share. Analysts, for their part, were expecting much higher net income of $0.07 per share on revenue of $435 million.

Pier 1 CEO Alex Smith admitted disappointment in the results, as margins were hurt by a combination of increased promotions and clearance activity, as well as inventory issues within Pier 1's distribution network -- inventories rose faster than revenue at 3.9%, to $533.6 million.  Pier 1 also reduced guidance, once again, calling for comps in the low single-digit range (compared to 3% to 5% previously), and earnings per share of $0.56 to $0.64 (compared to $0.83 to $0.87 before). 

Now what: Nonetheless, Smith remained optimistic that Pier 1 was taking the appropriate steps to bring inventory back in line with revenue growth, and should end this fiscal year with "levels down meaningfully." With two quarters to go in this fiscal year, however, Pier 1 has plenty of work to do before its business is truly back in line.

Pier 1 stock has arguably priced in these concerns, as shares trade at a seemingly cheap 11 times trailing 12-month earnings. But given Pier 1's recent habit of lowering already-reduced expectations, I think it's fair to say it trades at that price for a reason. Until Pier 1 Imports can show tangible, sustained progress putting its operations back on track, I'm content watching the stock from the sidelines.