Notwithstanding the disappointing fiscal year first-quarter results and weak second-quarter guidance released by Pier 1 Imports Inc (NYSE:PIR), Loop Capital Markets maintained its Buy rating on the stock.

Analyst Anthony Chukumba attributed the Buy rating to the fact that the weak results were primarily due to underperformance in one product category, namely outdoor furniture. Additionally, the analyst indicated the company is much less dependent on furniture sales in the second half than in the first half.

The analyst also said he's encouraged to hear of CEO Alaisdair James' plans to take a holistic look at the entire company, including refining the company's positioning, improving customer segmentation, communicating company's vision and values to consumers in a better way and developing a more comprehensive omni-channel marketing campaign.

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Q1 Print

Recapping the first quarter results, Loop noted that the company reported better-than-expected results. Net sales fell 2.1 percent on the back of a 0.2 percent drop in comps. The revenue miss was due to disappointing sales of outdoor furniture, which suffered due to weak value proposition.

Delving on other items, the firm noted that operating margin expanded 130 basis points, as gross margin expanded 140 basis points to 37 percent. The firm also noted that the company reiterated its 2017 EPS guidance but issued below-consensus second quarter loss per share estimate.

Loop Capital lowered the price target for shares of Pier 1 from $12 to $10, citing reduced near-term earnings visibility.