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Highlights And Lowlights From Pier 1 Imports' Q3

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Highlights And Lowlights From Pier 1 Imports' Q3

Pier 1 Imports Inc (NYSE: PIR) reported Wednesday a top and bottom-line miss in its third quarter earnings report along with a disappointing fourth quarter and full year fiscal 2018 guidance.

The Analyst

KeyBanc Capital Markets' Bradley Thomas maintains a Sector Weight rating on Pier 1 Imports' stock with no assigned price target.

The Thesis

Pier 1 Imports not only reported an EPS miss but negative comps and "substantial" gross margin erosion, Thomas said in a note. The 0.7 percent comp decrease in the quarter was in-line with management's forecast of down 2 percent and marks a deceleration on a one-year, but also an acceleration on a two- and three-year basis.

Management cited heavier than usual promotional activity in October but improved sales in November, the analyst said. This was followed by a poor performance in the first two weeks of December where trends dropped "considerably."

On the positive front, the company did show it's making progress in inventory control and management completed a strategic review of its brands and business. Details of the findings will shared with investors in early 2018 but it appears that management is "focused on opportunities to broaden the appeal of the brand, maximize the role of stores and eCommerce, and substantially improve operating margins."

Bottom line, investors may have reason to be "hopeful" that sales trends will improve in the future but this doesn't erase ongoing concerns over growing competitive pressures from both traditional rivals and e-commerce players.

Price Action

Shares of Pier 1 Imports were trading lower by more than 29 percent at $4.10.

Related Links:

Wage Pressures And Holiday Comps In The Retail Sector

Pier 1's E-Commerce Channel Is Cannabalizing Stores

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

Latest Ratings for PIR

DateFirmActionFromTo
Oct 2018CitigroupMaintainsNeutralNeutral
Sep 2018Credit SuisseTerminatesUnderperformUnderperform
Sep 2018UBSMaintainsSellSell

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