Pier 1 Downgraded On Concerns That Disappointing Spring Sales Will Pressure Profit

Pier 1 Imports shares was downgraded by Wedbush Securities Monday on concerns that merchandise gross profit will continue to be pressured. Analyst Seth Basham cut his rating to neutral, after raising to outperform less than two months ago, and slashed his stock price target to $12 from $16. "After completing additional store checks, our view on [Pier 1] has materially shifted," Basham wrote in a note to clients. He said despite plans to the contrary, Pier 1 resorted to "%-off-the-entire-store" promotions to drive sales, particularly towards the end of the quarter ended in May, despite what he believes was a decent spring selling season for the industry. Basham believes that indicates Pier 1 may be the "odd man out," as consumers shop more online, and find similar merchandise at similar or lower prices elsewhere. The stock, which was up 1.4% in premarket trade, has tumbled 17% year to date through Friday, while the SPDR S&P Retail ETF has edged up 1.9% and the S&P 500 has gained 2.4%.