These results certainly jive with a housing recovery, jobs recovery, and consumers spending again.
Once you plow through all the PR bullshit and CEO bloviating about the glorious future of on-line sales, you get to the facts. And they paint a disastrous picture.
They also paint a picture of an idiotic greedy CEO playing the Wall Street buyback game.
Here is a link to the press release:
http://www.pier1.com/Press-Releases/ir_press-releases,default,pg.html?nav=left
Here are the disastrous facts:
- Profit plunged by 49% versus last year’s August quarter.
- Profit is down 37% over the first six months.
- Revenue grew by 5.8%, but Inventory grew by 15.5% versus last year.
- Inventory is up 36% in the first six months. This is a disaster in progress.
- The boneheaded CEO of this retailer actually borrowed $198 million to buy back $155 million of stock. The stock is down 10% after hours to a new 52 week low. This idiot was buying back his stock at much higher prices. He deserves a bonus. Maybe he can issue himself some stock.
Day after day retailers report dreadful results, but the government and the MSM continue to lie and spew propaganda about the economic recovery. Results don’t lie, but politicians, bureaucrats, Wall Street shysters, and corporate media pundits do.
Admin keeps posting results for store I generally NEVER visit.
If I did shop at Pier One, I would be embarrassed to admit it.
Pier One was once in fashion back in the 80’s now its just a bunch of overpriced cheap ass crap. The stock buyback game is a symbol of coming demise.
The rampant stock buybacks of the last couple years are going to be fodder for case studies at business schools in years to come. And students are going to be bewildered by this insanely stupid, myopic practice.
“You mean . . business professionals thought it made sense to plow all their profits into debt to buy back shares when they were at an all time high, not a low but a high?”
@Stucky – “Admin keeps posting results for store I generally NEVER visit.
If I did shop at Pier One, I would be embarrassed to admit it.”
I’m not even sure what Pier One sells. I bought some cutesy owl salt shakers from there about 5 years ago (wife loves owls), but I still couldn’t tell you what they sell.
The furniture looks like slightly higher than target quality, but not quite Nebraska Furniture Mart, and nowhere near the quality I can find in smaller family owned shops.
TPC
Shit. They sell shit. About 40% of sales are furniture, 60% knick knacks … dried flowers, candles, pottery, etc.
“Pier 1 prospered during the late 1960s and early 1970s by focusing on the baby boom generation, members of whom were looking for interesting, exotic goods such as love beads, incense, leather sandals, and serapes.”
Started out selling shit … and never stopped.
@TPC,
They still sell owls.
And they’re desperately awaiting a visit from your wife. 😉
@Maddie’s Mom – She still loves owls, however a couple years ago we adopted a very small black cat (5.5 pounds) so now its owls and black cats.
Needless to say she’s a fan of Halloween.
Our cat:
Pier 1 CEO says it has been ‘in the dumb camp’ on discounting
As retailers gear up for the critical holiday selling season, industry watchers ask the same inevitable questions. How promotional will they get this time around? Will discounts actually make a difference to their sales? And at what cost to profit?
They should listen closely to Pier 1 Imports CEO Alex Smith’s sobering remarks. The home-furnishings retailer’s stock slumped as much as 18% in its biggest daily percentage drop in almost five years on Thursday after its fiscal second-quarter profit and sales missed Wall Street expectations. It also cut its full-year outlook. While profit was partly hurt by increased online spending, increased store-wide promotions were the big culprit that hurt margins.
“We’ve been sort of in the dumb camp,” said Smith on a conference call Wednesday night. “We have overreacted in terms of chasing everybody down the plughole in terms of promotional activity. I wish we had not followed the pack.”
Industry-wide retail sales and traffic has slowed since last fall, Smith said Pier 1 began adding discount coupons such as 20% off entire-store purchases the past three quarters, departing from its traditional strategy of promoting by specific products or categories.
“Most retailers, us frankly included, up until today have just got into the habit of assuming that that’s absolutely what you have to do,” Smith said. “And I think we have to break ranks with that piece of group thing. When you look at the impact of the relatively aggressive couponing and you look at the sales wave that it creates in the days that you have the event, and then if you look at the sales hit you take the days after the event when everybody’s got a hangover, it actually doesn’t create very many more sales.”
Indeed, retailers’ much-touted record Black-Friday sales last year didn’t manage to stem the lull in the weeks afterward and holiday sales ended up disappointing.
Retailers worry that cutting promotions brings the fear of losing sales to your next-door rival.
It “could sacrifice sales and market share given the competitive backdrop,” said Morgan Stanley analyst Simeon Gutman.
For now, Smith is betting on not hopping on the band wagon. In the second half of the year, the retailer will reduce store-wide promotions and focus on specific discounts and those targeting its loyalty reward program shoppers.
“When I first started in retail, they used to teach on day one that sales were vanity and profit’s sanity,” he said. “There’s an element of truth to it.”
Pier 1 should have 110% off sales & make it up on volume.