When shoppers fish for home decor, Pier 1 wants to be sure they catch something. The company sells more than 6,000 items (imported from more than 50 countries) through more than 1,070 Pier 1 Imports stores across North America. Its stores offer a wide selection of indoor and outdoor furniture, lamps, vases, baskets, ceramics, dinnerware, candles, and other decorative accessories. Pier 1 To-Go allows shoppers to order and reserve items online for pick up and payment in its stores. In addition, the company supplies merchandise to more than 55 stores in Mexico owned by Grupo Sanborns. After a rough patch in the 2000s, Pier 1 appears to have gotten its house in order.
Texas-based Pier 1 Imports operates about 990 stores in 49 US states and another 80 locations across Canada. The company supplies merchandise and licenses its name to in-store departments at 47 Sears stores in Mexico and one in El Salvador.
Sales and Marketing
The company's spending on advertising has increased with its improved financial performance. Pier 1 spent $76.1 million on advertising in fiscal 2014, versus $71.2 million and $62.4 million in 2013 and 2012, respectively.
After a prolonged stretch of declining sales and stubborn unprofitability, Pier 1 Imports has returned to growth mode. Indeed, sales increased 4% in fiscal 2014 (ended February), to $1.77 billion (a total last seen eight years ago). And while net income fell 17% year over year, to $107.5 million, the retailer logged its fifth consecutive year solidly in the black. Same-store sales were up 2% in fiscal 2014, after rising by 7% and 9% in 2013 and 2012, respectively. Sales per square foot (an important metric for Pier 1, which is emphasizing quality over quantity in its retail operations) increased to $202 in fiscal 2014 versus $198 the prior year (and $184 in 2012).
Cash flow from operations grew by $35.2 million in fiscal 2014 versus 2013, to $159.2 million, driven by the timing of payments, partially offset by an increase in inventory.
Pier 1's improved performance follows the downsizing of its store and distribution networks. Looking to the future, the retailer in 2012 unveiled a three-year plan to drive sales and profitability. It has achieved its goal of boosting sales per retail square foot to $200 (up from $184 in 2012) and achieving operating margins of at 10%. Indeed, the company now expects to reach $225 of sales per retail square foot and operating margins of 11% to 11.5% by the end of fiscal 2016.
Through 2014 the company plans to invest $200 million from operational cash flow to fund upgrades in existing stores (such as the installation of new lighting and air conditioning equipment) and to open new locations. Pier 1's brick-and-mortar expansion plans will add 50 outlets to its store count (through about 80 openings and 30 closures). Pier 1 aims to launch Pier 1 To- You, a fully functional e-commerce site -- where shoppers can pay for merchandise online and have it delivered -- in summer 2012. (The company has set of goal of online sales contributing at least 10% of total revenues by 2017.) Merchandising played a key role in the company's return to profitability and will continue to do so. The stores have been emphasizing a less cluttered look with more contemporary pieces; the firm has cleaned house of exotic furniture and funky tchotchkes. The merchandising shift sets Pier 1 apart from big-box competitors -- including discounters Target and Wal-Mart-- moving in on its market for trendy, inexpensive merchandise.