HALISTER1: Pier 1 Gives No Reason to Cheer the Holiday Season: Street Wrap

Pier 1 Gives No Reason to Cheer the Holiday Season: Street Wrap

(Bloomberg) -- Pier 1 Imports tumbled as much as 10 percent on what looks like a bleak future. The company dropped FY guidance in yesterday’s post-market earnings as it attempts to address stiff online competition and the impact of recent hurricanes. The revised guidance has analysts dimming their view of the home furnishings retailer as it enters an all-too-important holiday sales season on shaky ground. LOOP CAPITAL (Anthony Chukumba)
  • Near-term visibility is weak given management must create a turnaround plan sans a CFO
  • Projects profitability still being squeezed by competition
  • Sees high marketing costs to re-brand and lower margins from higher fulfillment costs associated with more online sales
  • Lowers to hold from buy; slashes PT in half to $4
MORGAN STANLEY (Simeon Gutman)
  • Competition both in-store and online may lower same-store sales and margins
  • Sees PIR struggling to find differentiation, pressuring operating margins
  • Notes difficulties with in-store vs online trend; projects slight 3Q normalization if PIR cycles its free shipping promo
  • Maintains at underweight; lowers PT to $4.60 from $5
BTIG (Alan Rifkin)
  • Guides lower on cautious view of home furnishing sector; high- exposure to online
  • Concern over online profitability given high fulfillment costs
  • Sees physical store contributions falling "materially," against management views
  • Maintains at sell; maintains PT of $4.50
CREDIT SUISSE (Seth Sigman)
  • Wary of beginning the holiday season on "weaker foot;" may trigger discounting, hurting margins
  • Says 2Q was a "non-event" quarter; displayed PIR’s difficulties balancing sales and profits
  • Notes 16% decline for comps in 3Q given hurricane- related impact
  • Maintains at underweight; lowers PT to $3.50 from $4
DATA
  • Shares closed up 3.2% yesterday before dropping 11% post-market following the earnings report
  • PIR leads the Russell 2000 Specialty Retail Index (RGUDSSRV) lower as the worst-performer of the 38-member group
  • NOTE: PIR no buys, 11 holds, 5 sells; avg PT $4.33: Bloomberg data
To contact the reporter on this story: Kristy Westgard in New York at kwestgard1@bloomberg.net To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net Christiana Sciaudone

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
PIR US (Pier 1 Imports Inc)

People
Alan M Rifkin (BTIG LLC)
Anthony Chukumba (Loop Capital Markets LLC)
Seth Sigman (Credit Suisse Holdings USA Inc)
Simeon Gutman (Morgan Stanley)

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