Pier 1 Imports saw its stock tumble more than 10 percent Thursday morning after the retailer reported a smaller-than-expected loss but revenue that fell short of expectations.
Like many other retailers, Pier 1 has been struggling to adapt as more shoppers opt to ring up purchases online in place of shopping at brick-and-mortar locations. Some other companies in the home-furnishing space include TJX — which owns the HomeGoods brand — Bed Bath & Beyond and Williams-Sonoma.
"Whilst we've shown operational improvement for several consecutive quarters, there is still much to be done to build the business to its full potential," Pier 1 CEO Alasdair James said in a statement.
"Looking ahead, we will be focused on uncovering additional opportunities to leverage these assets to broaden our customer reach, enhance our competitiveness and drive growth."
After market close on Wednesday, Pier 1 reported an adjusted loss of 4 cents per share for its first quarter, beating analysts' estimate by a penny, according to Thomson Reuters.
Sales for the period came in at $409.5 million, falling short of a Thomson Reuters forecast for $421 million in revenue.
Pier 1's quarterly comparable sales — a metric closely watched by Wall Street for retail stocks — declined 0.2 percent from one year ago. This, as the company also trimmed its physical store fleet by 1 percent during the period.
The company added that its e-commerce division represented approximately 24 percent of net sales in the first quarter, compared to 19 percent of net sales in the year prior.
"With 11 fewer stores than this time last year, it is hardly surprising that Pier 1's total sales have shrunk," GlobalData Retail Managing Director Neil Saunders said in a statement. "In our view, this is an acceptable price to pay as the company rationalizes its store fleet to maximize productivity and profitability."
But there has been little evidence to show that Pier 1's remaining stores can deliver growth, Saunders added.
"[G]iven that the company has also increased marketing spend, pushed its loyalty scheme, and improved the layout, it is disappointing that physical stores have not made more of a contribution."
Pier 1's new CEO, James, was formerly the president of Kmart and began his role with the Fort Worth-based home furnishings retailer on May 1.
"The new CEO is taking a hard look at the business and looking to be more efficient and reduce costs throughout the firm," Jefferies analyst Daniel Binder wrote in a note to clients Wednesday. "There is much work to be done and with [management] sparse on details and a strategic plan announcement not expected until November."
With Thursday's losses, Pier 1's stock has fallen about 12.5 percent over the last 12 months and is down more than 40 percent in 2017 — what's been a tough start to the year for many retailers.
PIR 12-month performance
Source: FactSet