Home furnishing products retailer Pier 1 Imports Inc. (PIR), pre-announcing its second-quarter results on Wednesday, reported a decline in same-store sales. Pier 1 expects to report its second-quarter earnings on September 18. Following the news, the company's stock is currently trading down by nearly 13% on the New York Stock Exchange.
The Fort Worth, Texas-based company reported that second-quarter comparable store sales are approximately down 1.7%. This is in line with the previous guidance provided on June 19 of slightly negative to modestly positive comparable store sales. The company noted that comparable store sales gained from traffic being slightly positive and an increase in conversion rate, offset by a decrease in average ticket.
The company expects merchandise margins to be about 49.3%, which is below its June 19 projection of at or above first-quarter's 51.3%. According to the company, margins came below expectations due to the deeper markdowns needed to clear out garden accessories and outdoor furniture.
Further, earnings before interest, taxes, depreciation and amortization, or EBITDA, prior to special charges are estimated to decline to $15 million to $17 million. Analysts, on average, polled by First Call/Thomson Financial expect the company to report a loss of $0.13 per share for the second quarter, on revenues of 329.71 million.
Alex Smith, chief executive officer of Pier 1, stated, "In spite of the challenges of the current retail environment, our turnaround plan remains on track. As we look ahead to the more important third and fourth quarters, we will continue to focus on generating profitable sales, and returning our company to profitability and beyond."
On June 19, Pier 1, which was planning for a hostile takeover of Cost Plus Inc. (CPWM), had reported a narrower first-quarter loss, helped partially by cost controls initiatives. First quarter net loss narrowed to $32.8 million or $0.37 per share from $56.4 million or $0.64 per share a year ago. However, Pier 1's loss came in wider than the Street view of $0.15 loss per share.
Further on June 24, Pier 1 withdrew its June 9 all-stock proposal to acquire Cost Plus, since it felt that acquiring a majority interest in Cost Plus at a price that did not make sense for its shareholders was unlikely.
PIR is currently trading on the NYSE at $3.98, down $0.57, or 12.53%, with a volume of 589,763 shares.
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