Pier 1 on Wednesday reported second quarter net sales fell 14.3% year over year to $304.6 million. Comparable sales dropped 12.6%, according to a company press release.
Net loss nearly doubled from the year-ago period to $100.6 million, while gross profit as a percentage of sales shrunk to 16.7% from 26.3% last year. Selling, general and administrative expenses were $131.9 million, or 43.3% of net sales, from $143.1 million, or 40.3% of net sales in the year-ago period.
On an earnings call with analysts interim CEO Cheryl Bachelder announced the company has decided to close 70 stores in the fiscal year, but expects that number will increase.
Though the home goods retailer missed analysts expectations on revenue by $10.6 million and posted a widening loss, Bachelder noted the results were "expected."
"The clearance activity was the primary driver of our net loss this quarter, but it paved the way for fresh, on-trend assortments in our stores," she said on the call, according to a Seeking Alpha transcript. Bachelder said she remains hopeful that the company's merchandising and marketing initiatives will lead to comp sales gains visible in the fourth quarter. CFO Bob Riesbeck, who was just appointed to the role in July, said inventories totaled $329 million, down 15% — or $58 million — from last year, due in part to the success of the retailer's clearance strategy.
Resetting its stores by moving through less desirable items and adding in new fall goods has resonated well with customers, Bachelder added. "We've seen customers coming in with catalogues in hand that are dogeared looking for specific items, and it's been a while since we've seen that at Pier 1," she said.
However, the distressed retailer's turnaround efforts still face a long road ahead. Store closures could reach more than 140 locations — or 15% of its total portfolio "if we are unable to achieve our performance goals, sales targets, and reductions in occupancy and other costs," Bachelder said.
In June the company completed a reverse stock split in an effort to meet minimum share price requirements and prevent itself from being delisted from the New York Stock Exchange. However, that effort failed to have a lasting impact. The company in August received a notification from the NYSE that it was not in compliance with the market's continued-listing criteria and again faced possible delisting.