Pier 1: Importing Profits

08/25/2014 7:00 am EST


David Fried

Editor, The Buyback Letter

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Pier 1 Imports (PIR) is an importer of global decorative home furnishings and gifts. It sells through retail stores as well as through its e-commerce site Pier1.com.

It's considered a good turnaround story—it was trading at $0.11 back in 2008, and the company has climbed back up to consistently growing revenues.

Sales have been up every year for the last five years, with a cumulative growth rate of 37%. Going forward, Pier 1 plans on continuing its new policy of net store openings.

After having closed stores for a number of years, it opened six in fiscal 2012, opened ten last year, and plans to open another ten this year. Analysts also praise Pier 1 since it has a strong assortment of unique merchandise.

First quarter results showed weak earnings, but analysts note it is a company with under-appreciated long-term prospects. It has an increased emphasis on e-commerce that should raise brand awareness and yield higher sales.

The company is increasing the number of SKUs online (stock-keeping units), focusing more attention on online initiatives, using e-commerce stats to stock its stores, since research shows customers visit the Web site before driving to the store.

In addition, some 25% of e-commerce transactions were generated from brick and mortar store locations and 30% of online orders were picked up in stores.

The company is also actively relocating stores to better locations, and has refurbished more than half of its locations. PIR has reduced shares outstanding by 11.76% in the past 12 months.

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