It really takes some digging to uncover any good news from yesterday's third-quarter earnings release from Pier 1 (NYSE:PIR). About the best thing that can be said is that the struggling home furnishings retailer posted quarterly earnings that met expectations at $0.22. Of course, that's only after guidance had been decreased not once but twice over the past two months. That bottom-line total represents a 37% drop from the $0.35 that was earned a year ago and is a far cry from previous guidance of $0.28 to $0.35 per share.

Earlier this month, Pier 1 cautioned that its third-quarter outlook was looking even dimmer than it had feared, citing the impact of sluggish traffic and flat average tickets. At the same time, the company announced that November same-store sales had dropped 9.1%, far steeper than analyst projections of a 5.2% decline. Fortunately, Pier 1 wasn't stuck in the basement alone all month, as rival Bombay (NYSE:BBA) reported a 13% drop in monthly comps, making Pier 1 look downright strong by comparison.

After crawling to the third-quarter finish line in November, Pier 1 managed to grow revenues only a slim 1.1% for the quarter to $487.7 million, with same-store sales dropping 6.3%. Net income plummeted 39% to $19.5 million. Worse still, there are no signs of the long-awaited light at the end of the tunnel, as management slashed fourth-quarter guidance by about a dime to $0.52 to $0.62. Naturally, Wall Street cheered the dreary news (which was expected to be even worse) and drove the shares nearly 7% higher yesterday on unusually high volume.

It can be easy to beat up on Pier 1 for failing to stanch the bloodletting that has seemingly been relentless this year, but no one in this group has escaped unscathed. Times have been just as bleak, for example, at Bombay. Tuesday Morning (NASDAQ:TUES) was slammed earlier this week for slashing its fourth-quarter outlook. The culprit? Poor sales in the home decorative category. The more upscale Cost Plus (NASDAQ:CPWM) recently reported that its third-quarter earnings had fallen 57%. Even Williams-Sonoma (NYSE:WSM) was forced to trim its fourth-quarter outlook.

The good news with a downtrodden turnaround play like Pier 1 is that investors have grown accustomed to expecting poor results. The bad news is that the company has complied, churning them out month after month. Neither of Pier 1's last two marketing campaigns, featuring Kirstie Alley, or Thom Filicia of Queer Eye for the Straight Guy, has resonated with consumers.

Eventually, once a more favorable economic tailwind blows in, the home furnishings sector should rebound. Furthermore, the company has an ambitious new ad campaign slated for next spring, and is finally forecasting positive comps ahead. They say it's always darkest just before dawn -- Pier 1 is anxiously awaiting the sunrise of a new day.

Is Pier 1 primed for a turnaround, or will it continue to sink lower? Discuss that and more with other Fools on the Pier 1 discussion board.

Fool contributor Nathan Slaughter owns none of the companies mentioned.