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Bear of the Day: Pier One Imports (PIR)

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Founded in 1962 and headquartered in Fort Worth, Texas, Pier One Imports (PIR - Free Report) is a retailer of home furnishings and decorations. Their products include decorative home furnishings, dining, kitchen goods, bath, bedding accessories, and specialty items.

Shares Plunge After Weak Results

The retailer reported weak results for its third quarter ended November 25, 2017. Net sales decreased 1.4% to $469.2 million while comparable sales decreased 0.7%. Hurricanes in Texas and Florida also impacted results.

Earnings per share of $0.09 fell significantly short of the Zacks Consensus Estimate of $0.12. The stock plunged about 30% after the report.

“Our third quarter financial performance was impacted by the hurricanes in Texas and Florida, as well as deeper than expected promotional activity in October and November We saw improved sales in November, including a solid Black Friday weekend, driven by our strong promotional message. However, overall trends dropped considerably during the first two weeks of December,” said the CEO.

The management reduced its full year adjusted earnings per share (non-GAAP) guidance to $0.17 --$0.25 versus prior guidance of $0.38 -- $0.48, “reflecting the current tone and volatility of the business in the first two weeks of December.”

Falling Estimates

Analysts have slashed their estimates for the company after weak results and guidance.  Zacks Consensus Estimates for the current and next fiscal year have fallen to $0.24 per share and $0.23 per share from $0.43 and $0.44 respectively, before the results.

Bottom Line

The stock has fallen to a Zacks Rank #5 (Strong Sell) after weak results. While some of their initiatives in the areas of cost cutting and boosting online sales were effective in the recent past, weak holiday sales have made the outlook cloudy.

The stock lost more than 50% of its value during 2017 but a rebound does not appear likely in view of sliding estimates. Investors should avoid the stock for the time being.

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