Continue Reading Below
Shares of Pier 1 Imports (NYSE: PIR) were tumbling Thursday after the home-furnishings retailer released an underwhelming third-quarter earnings report, missing earnings estimates and lowering its guidance for the year.
As of 11:05 a.m. EST, the stock was down 30.9%.
Comparable sales, which include e-commerce, slipped 0.7% in the period, though management said hurricanes cost it 100 basis points in the key metric. Overall revenue was down 1.4% to $469.2 million, a reflection of the decline in comps and a handful of store closures, but that figure still beat analyst expectations at $466.3 million.
However, gross margin in the period fell 360 basis points to 37.7%, which the company blamed on "heightened promotional activity," and as a result, earnings per share declined from an adjusted total of $0.22 a year ago to just $0.09, which missed estimates at $0.12.
Continue Reading Below
CEO Alasdair James noted the impact of hurricanes and promotional activity in October and November, but also said, "We saw improved sales over November, including a solid Black Friday weekend," but "overall trends dropped considerably during the first two weeks of December."
Like most retailers, Pier 1 sees sales spike during the holiday season so the weak performance thus far in December was a warning sign for investors. Even worse, the company slashed its full-year adjusted earnings per share guidance from $0.38-$0.48 to $0.17-$0.25. It also called for comparable sales to fall 1.5% to 3.5% in the current quarter -- a sign that the recent headwinds will persist.
While management said it had just completed a strategic review of the business and was working on a three-year plan to "transform the business," it's not surprising to see the stock crashing after the company chopped its earnings guidance for the year in half.
10 stocks we like better than Pier 1 Imports
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Pier 1 Imports wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of December 4, 2017