Market Overview

Promos Put Pier 1 Imports' Q1 In Question For Deutsche Bank

Promos Put Pier 1 Imports' Q1 In Question For Deutsche Bank
Related PIR
8 Stocks Moving In Wednesday's After-Hours Session
Earnings Scheduled For April 18, 2018
Pier 1 Imports' PIR) CEO Alasdair James on Q4 2018 Results - Earnings Call Transcript (Seeking Alpha)

Pier 1 Imports Inc (NYSE: PIR), expected to post quarterly results Wednesday, has been recently drowning its customers with nearly daily promotional emails, an analyst said Monday.

"The question is whether these promos are part of an offensive strategy, or reactionary to the current sales environment," said Deutsche Bank's Adam Sindler, who maintained a Hold rating and $12 target on the retailer.

Pier 1 is off about 20 percent year-to-date and traded recently at $12.28, up $0.08.

Bricks Vs. Clicks

The Fort Worth, Texas-based company said in April it will close 100 of its roughly 1,1000 stores within three years, with some of resulting lost sales recaptured through the web.

However, Sindler said merchandise margins for Pier 1,
even excluding shipping, began to fall once its web sales picked up.

Related Link: Credit Suisse Discusses Home Furnishings Stocks

That's because very high margin impulse sales that
take place in the stores adjacent to the registers can't be replicated via online sales, Sindler said.

Moreover, an important part of Pier 1's web strategy relies on "buy online, pick up in store," according to Sindler, who said the shuttered stores will thus also cut into online revenue.

Low Expectations Doesn't Equal A Shoe-In

Despite low expectations for Pier 1, Sindler said he's cautious, given increasing competition from the likes of TJX Companies Inc (NYSE: TJX)'s expanding chain of Home Goods stores.

Sindler also cited Pier 1's recent strategy shift from "going all out on e-commerce revenue growth to a greater focus
on profitability."

Analysts on average maintain a Hold rating and $14.73 target on Pier 1.

Image Credit: By Anthony92931 (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Latest Ratings for PIR

Dec 2017Gordon HaskettDowngradesHoldSell
Oct 2017Morgan StanleyMaintainsUnderweight
Sep 2017Credit SuisseMaintainsUnderperform

View More Analyst Ratings for PIR
View the Latest Analyst Ratings

Posted-In: Adam Sindler Deutsche Bank Home GoodsAnalyst Color Technicals Previews Analyst Ratings Trading Ideas


Related Articles (PIR + TJX)

View Comments and Join the Discussion!