Pier 1 FY 4Q16 Earnings Call Notes

Alexander Smith

Increased promotional activity is clearly here to stay

“Increased competitive activity, especially from on and offline deep discounters has altered the home furnishings playing field considerably. That said, specialty home furnishing is still a higher margin business, part of a large and fragmented industry, and there is ample room for many of us to succeed. There is certainly room for vibrant and successful Pier 1 Imports.

It’s clear to us that the high level of promotional activity we’ve been witnessing across the retail spectrum for some time now is here to stay. It’s regrettable that the industry has done it to itself. We will continue to engage and remain competitive.”

Use of data and advanced analytics are changing the company for the better

“I’m very excited to see how our use of data and advanced analytics are changing the company for the better on many fronts. They will help to find cost efficiencies across the organization and help make us better decisions around promotional activity, media spend and real estate. Our use of data is expanding our understanding of how customers behave in the omni-channel world, so we can talk to her the right way and drive our attention and frequency rates even higher beyond the all-time highs we achieved in fiscal 2016.”

Investors have been focused on how retail profitability is being pressured by costs of running omnichannel

“There has been much discussion in the investor community about how retail profitability is being pressured by the costs of running omni-channel businesses and the intense pressure on pricing. Whilst in the short-term there is obviously [truth to these twin thoughts], there has not been as much discussion about how retail companies are responding.”

The promotional environment is just becoming the standard retail environment

“We all talk about the promotional environment, at some point we’re going to have to just all stop talking about it because it’s just going to be the retail environment and it will have our own sort of cadences of promotions to gain or maintain our market share. So I don’t think that it’s changing very rapidly compared to what we have seen.”

Jeffrey Boyer

Operational issues will abate beginning with FY 2Q17

“We’re very pleased with the improvements we’ve made within our distribution centers and anticipate the inventory cost and recognition effects our fiscal 2016 operational issues will abate beginning with the second quarter of fiscal 2017.”