TJX - Pier 1 Imports Goes From Bad to Much Worse
A sales slowdown that began a few years ago left Pier 1 Imports (NYSE: PIR) with little room for error by the beginning of last year. Unfortunately, the home furnishings chain experienced yet another setback in fiscal 2019 (the period that ended in early March). Comp sales plunged 11% and the company posted a net loss of nearly $200 million, after posting a slight profit in fiscal 2018. Pier 1 also burned about $135 million of cash last year, putting stress on its balance sheet.
Pressure from nimbler rivals like TJX Companies' (NYSE: TJX) HomeGoods chain has likely been a major factor in Pier 1 Imports' downward spiral. But while HomeGoods has stumbled a bit this year, Pier 1 has been unable to take advantage. Indeed, its recent earnings report shows that Pier 1 Imports may be beyond saving.
In the first quarter of fiscal 2020, Pier 1 posted another dreadful revenue performance, with net sales down 15.5% to $314.3 million on a 13.5% comp sales decline. Additionally, the company's efforts to clear out unwanted inventory caused gross margin to plummet to 25.1% from 32.3% a year earlier. As a result, Pier 1's net loss widened to $81.7 million (including $19 million of "transformation" costs) from $28.5 million in the prior-year period.