Without a doubt, Pier 1 (NYSE:PIR) is struggling right now. Quarterly results released this morning were dreadful, and the stock is once more approaching its 52-week lows. Does this represent a buying opportunity for patient investors?

Let's first take a look at second-quarter results. Total sales fell 12.5%, while same-store sales fell a scary 14.8%. The company posted a GAAP net loss of $0.84 per share, or an adjusted loss of $0.34 per share. Management admitted that it was disappointed at such a large loss, and that sales weren't enough to cover fixed costs. However you slice it, conditions look grim for the home furnishings retailer.

The quarterly press release also mentioned that the "critical fall and holiday selling seasons" are fast approaching, which will make or break the year for Pier 1. As with any embattled retailer, management is working furiously to find a product mix and floor layout to drive customer traffic to its stores. Investors may be right to wonder whether another failed Christmas could ruin the company for good.

Right now, consumers are clearly finding other places to shop besides Pier 1. Furniture makes up about 40% of total company sales, and the market appears to be moving upscale, benefiting Restoration Hardware (NASDAQ:RSTO) -- which just reported a rare profit for this time of year -- Williams-Sonoma (NYSE:WSM) and its Pottery Barn stores, and Crate & Barrel. These concepts are offering trendier, more stylish furniture at affordable prices, and for now, the mix is working.

Pier 1 is also getting squeezed in lower-end furniture and accessories. Target's (NYSE:TGT) Global Bazaar line, which resembles Pier 1 offerings at arguably lower prices, appears successful. Even Wal-Mart (NYSE:WMT) is looking to add more fashionable home offerings.

In other words, it's hard to tell whether Pier 1 is just experiencing short-term problems from a bad merchandise mix and advertising campaign, or whether it'll join Toys "R" Us in the ranks of companies priced into obscurity by big-box retailers. The company's cash burn is also worrisome, with Pier 1 devouring nearly $100 million in cash this quarter, and losing nearly the same amount in total cash for the six-month period ended in August. In the same period last year, total cash fell by $157 million.

As it burns cash, Pier 1 is also trying to raise more of it. Last year, it issued debt of $165 million, and it recently sold off its credit card business to JPMorgan Chase (NYSE:JPM) for approximately $155 million. I haven't read any rumblings about liquidity concerns at the company, but if sales continue to plummet, Pier 1 will obviously soon have more to worry about than just anemic revenue trends. I also haven't seen any speculation regarding a cut or elimination in the dividend payment, which is now roughly 6%. If Pier 1 does cut dividends, it could signal the company's belief that its sales problems are more than temporary.

I can't find much positive to say about Pier 1 right now. Its beaten-up stock is trading for a low enterprise value-to-sales ratio of 0.31, and it current dividend yield is high (but uncertain). If things do recover, the stock will likely follow, but unless you have unique foresight regarding the busy holiday shopping season, your best bet may simply be to avoid Pier 1 for the rest of 2006.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to e-mail him with feedback or to further discuss any companies mentioned. The Fool has an ironclad disclosure policy.