Pier 1 FY 2Q13 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we are very disappointed with the performance of our Pier 1 Imports stores for the quarter, which clearly fell short of everyone’s expectations.”

“Although total sales increased 7.6%, helped by a better-than-anticipated contribution from e-Commerce, comp store sales were lower than we planned at 3.5%. Much of the sales weakness in stores was due to soft traffic in July.”

“We know that we could and should have produced better performance from our Pier 1 Imports stores and believe our less-than-flawless decision-making occurred because we did not strike the right balance between short-term execution and long-term planning.”

“During the second quarter, we opened 8 stores and closed 7, ending the period with 1,066 Pier 1 Imports stores. That includes 985 locations in the U.S. and 81 in Canada, for a total of 8.4 million retail square feet.”

“because our clearance is so low, it does allow us to be somewhat more aggressive in terms of the timing when we take clearance. So what it means is we’re marking down something sooner than we would have done historically”

“if you take the month of July, specifically, we did not have a very strong clearance or sale message, either in our stores or in our marketing. We were still focused on more full-price selling. And with the wonderful benefits of hindsight in the current environment, which is you alluded to is slightly weak, that was the wrong message. And we think that impacted our store traffic. When the customers got to the stores, those who made it across the threshold, I mean, we had really no issues. Our conversion rates were at the levels we expected and our average ticket was at the levels we expected. So it really was a traffic issue, pure and simple.”

“the headcount in the stores, the — that headcount will certainly be up on last year. We’ve got some big numbers to do in the second half. But we have very sophisticated labor modeling programs. And so we constantly look at the number of hours, the number of heads, and we forward model it.”

“we placed our Christmas orders in February, March, and they are all in the distribution centers. We’ve now received somewhere in the region of 98% of our Christmas orders, and they’ll be going out to the stores very soon. Hey, listen, we’re really good at holiday and Christmas. That’s — with all the things that we have to think about and be concerned about, our holiday assortments is pretty low on the list.”

“In terms of the TV spend, don’t forget that we mentioned that we’re going back on network TV, but we’re going to continue to be on cable television as well. So we feel the buy is very efficient and effective, and we’ll go from there. In terms of the amount, I’ll call it 30%, 40% of the spend.”

“Yes, so what happens in the first half of the year, we’re very focused on our outdoor furniture, and it gets a very prominent position in the store. And over the last few years, we have extended that selling season quite considerably, and it’s been hugely successful and hugely profitable. I think, this year, we kind of overdid that. And so what happened is we really just kept the floor looking too similar at the front for too long. We were delivering new products all the way through the season, as we always do, but what we failed to do was to appropriately merchandise it, particularly at the front of the store, and put it exactly in our customers’ line of sight when she came into the store. So that’s really what we meant by all of that. It’s — in the second half, it really isn’t an issue, because the floor set just changes so naturally anyway. We have harvest and Halloween, and then we go into holiday, and then we go into clearance, and then we’re into our early spring set. So we get lots and lots of movement in the second half of the year just because of the way the calendar is.”

“there’s obviously a lot of talk and speculation about the macro and how that’s playing out in traffic and sales. Here’s the thing, Brian, we’ve always taken the view, rightly or wrongly, that we have a small market share in a very fragmented market. Unless things are horrific, as they were 5 years ago, we should be able to do all we need to do to grow our business. So I don’t like to sort of place the blame anywhere else than on our sales other than ourselves but I — we recognize that those thoughts are out there. And yes, we’ve seen some regional variances throughout the quarter and those are very, very noticeable. But if we’d executed 100% flawlessly and we were really confident in everything we’ve done and we’d still had a 3.5% comp, I’d say to you, we did a great job, it’s just the macro. But I can’t say that, so I can’t blame the macro.”