Pier 1 Imports Cuts Q2 Forecast, CEO Alex Smith Resigns; Stock Dips

(RTTNews) - Shares of Pier 1 Imports (PIR) declined around 9 percent in the extended trading on Wednesday after the home furnishings retailer said it now expects loss in its second quarter, compared to previous view between loss and breakeven. The company also announced the planned departure of its Chief Executive Officer Alex Smith.

In its second quarter, net sales decreased approximately 6.7% compared to the same period a year ago. E-Commerce sales represented approximately 20% of net sales. Company comparable sales, which include e-Commerce, decreased approximately 4.3%.

For the quarter, the company now expects loss per share to be in the range of $0.06 to $0.05, excluding one-time items, if any, related to the departure of CEO.

The company previously expected to report loss of $0.06 per share to breakeven.

On average, 18 analysts polled by Thomson Reuters expect loss of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Smith said, "Although ongoing store traffic challenges impacted our top line results, we were able to drive year-over-year improvement in our merchandise margin rate through a more balanced promotional strategy and improved operational execution in our distribution centers. We continue to focus on closely managing inventories and ended the quarter with inventory levels down approximately 10% from a year ago."

Separately, the company announced that the Board has mutually agreed with Smith that he will step down as President, CEO and a member of the Board of Directors, effective December 31, 2016. The Board is executing its existing succession planning process and is working with Korn Ferry to conduct a search for a new CEO.

Chairman Terry London said that the CEO led a remarkable turnaround of the business from 2009 to 2013, creating one of the most profitable specialty stores in the sector.

Pier 1 shares gained 3.23 percent on Wednesday to settle at $4.80. Following the news, stock fell 9.38 percent in the after hours trading to $4.35.