Pier 1 Imports has been one of the few home furnishings stores that has failed to cash in on the much-publicized “nesting” trend
Shares of Pier 1 Imports plunged yesterday, after the home furnishings chain unleashed a flood of alarming news.
The stock lost a third of its value, falling 2 to 5 – a new 52-week low.
The Texas-based retailer said July sales slumped 10 percent from the year before; second-quarter profits would not meet Wall Street’s expectations; a long-planned acquisition had been called off, and the company’s chief financial officer had resigned.
The retailer released a statement late Wednesday, detailing the bad news.
Company officials did not return phone calls yesterday.
Wall Street analysts said they weren’t sure which was the most disturbing part, but the unexpected departure of CFO Steve Mangum ranked high on their lists.
The sudden exit of a CFO is often an indicator of serious financial trouble.
Pier 1’s statement said he had left “to pursue other interests” and would be succeeded by Senior Vice President Charles Turner.
“There’s a big hole now,” said Blackford Securities Analyst Jason Klein. “I think he had a lot more to do with business decisions than most CFO’s, so that worried me a bit.”
Ralph Jean of First Union Capital Markets cut his rating on Pier 1 Imports to a “hold” from a “buy” after hearing that the acquisition was off.
“We think the core business is mature,” he said.
“Pier 1 was aiming for a Gap/Old Navy approach, looking for a higher end home furnishings store. I don’t know why they couldn’t close the deal.”
Jean speculated that Pier 1 had been negotiating with Z Gallerie, a Los-Angeles based chain.
Z Gallerie officials could not be reached for comment.
Pier 1 Imports has been one of the few home furnishings stores that has failed to cash in on the much-publicized “nesting” trend and the resulting boom in accessories and furniture for the home.
Originally a lower-priced store, the chain has been searching for direction, trying to boost sales.
Until recently, management had been increasing prices and quality, hoping to siphon customers from Pottery Barn and Crate & Barrel.
But the strategy didn’t seem to be working, the stock drifted down steadily, and the retailer rolled back its prices again this summer.
Pier 1 Imports stock has lost nearly 60 percent of its value since last August 5, when it was trading at 149 16.
“They might have turned their core customers off when they upped prices, and now they’re having trouble getting them back, said Blackford Securities’ Jason Klein.
Pier 1 Imports has 5 stores in New York City. Three are in Manhattan; and there is one each in Staten Island and Queens.