The year did not end well for home furnishing retailer Pier 1 Imports (NYSE:PIR). In November, it posted a miserable same-store sales decline of 15.3%, along with a 14.7% drop in overall sales. Unfortunately, the misery continued into December; same-store sales dropped 10.7%, while overall sales declined 10.9% to $242.5 million.
Pier 1's management has been trying to reverse the problems with more aggressive marketing online and in its catalog, and greater experimentation with its merchandise mix. However, consumers are simply not responding. If anything, it seems Pier 1's core customer base is moving toward competitors such as Target (NYSE:TGT), Wal-Mart (NYSE:WMT), and Bed Bath & Beyond (NASDAQ:BBBY).
In light of the sales plunge, it's no surprise that Pier 1 eliminated its dividend last October. For the first nine months of 2006, the company generated negative cash flows from operations of $84 million; Pier 1 currently has $172 million in the bank.
Back in May, Pier 1 retained JPMorgan Chase (NYSE:JPM) to explore "strategic alternatives," which is often a prelude to a sale. However, if the company continues to deteriorate -- as it has for the past couple of years -- it could be difficult to find any interested buyers.
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Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 758 out of 17,523 in CAPS. Bed Bath & Beyond is also a Stock Advisor selection, while JPMorgan Chase is an Income Investor pick. The Fool has a disclosure policy.
