Pier 1 1Q14 Earnings Call Notes

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A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Ready to deliver a great holiday quarter, but weather threw things off

“sales and earnings in the holiday quarter were pressured by the significant weather disruption”

“I’ve always said that at Pier 1 Imports we know how to do a holiday well and I can tell you with absolute certainty that we were prepared to deliver another great holiday season. If not on A+++, our holiday execution was certainly a strong A. The quarter was disappointing for all of us at Pier 1 Imports and for our investors as well.”

Lots of potential in ecommerce

“e-Commerce business reached 4% of total sales for the year. It’s growing rapidly and yet there is so much untapped potential for us. Traffic to our Web site continues to grow and presently stands at close to 2 million visitors a week. That’s nearly double, what it was just one year-ago. But our conversion rates although much improved, are still very modest so our upside is huge.”

Not concerned about where customers choose to shop online vs. store

“We are becoming less and less concerned about where a sale originates, we let our customers choose. Our single focus is to ensure that our customer has an extraordinary experience regardless of how she shops with us.”

2.5 million card holders

“we acquired a record number of new Rewards credit card holders in fiscal 2014, bringing the total number of cardholders to 2.5 million.”

Pushing out revenue targets and lowering profitability bar

“Under the plan we’ve previously expected to reach $225 of sales per retail square foot and operating margins of 12% by the end of this year, which is our fiscal 2015. We push those targets back by one-year and established new goal of $225 in sales productivity and 11% to 11.5% in operating margin by the end of fiscal 2016.’

Calendar shift really affected a lot of retailers

“Fourth quarter comparable store sales declined 4.6% on the 13-week basis. After adjusting for the calendar shift comparable store sales for the 13-week ended March 1, 2014 increased 60 basis points versus the 13-week ended March 2, 2013.”

Expect ecommerce business to double

“we expect our e-Comm business to at least double this year.”

Apparently people like to buy rugs and curtains online

“our rug department and our curtain department where the percent of e-Comm business is significantly higher than the percent of store business.”

Explanation for why they’re moving out the three year plan

“I think it’s really just a rebasing of the numbers Alan, there’s nothing sinister in it. There’s no, frankly deep thought in it, it’s just we ended last year where we ended it and so we just thought it’s prudent to just move them out to you. But I wouldn’t sort of read anything of great significance into that. We just wanted to make sure we dated everybody on our three year plan.”

Weather impacted 75% of trading days in the quarter

“75% of our quarter for trading days were impacted in some way.”

Strategies for improving online conversion rate

“some of it is about improvements to the size in terms of, additional functionality, and just a better user experience, so that’s the piece of it. Some of it is going to come from additional SKUs, that’s the piece of it. Some of it’s going to come from the great work that the stores are doing in terms of creating online orders through the cash wrap PC, that’s the piece of it.”

Reasons for lowering margin target on the three year plan

“The fixed SG&A expenses they’re up more than what we had thought just because of the additional headcount. But the biggest impact is really the depreciation and that’s coming through with the capital expenditures that we spent over the last couple of years that’s $75 million to $80 million.”

A lot of new customers from online source

“if you look at our online business in totality, the biggest percentage of our online business is coming from customers who only are shopping us online as far as we know. I mean you know to the 100% match back. So the answer is yes, a lot of new customers.”