Pier 1 blows away its e-commerce targets for Q1
June 19, 2014 02:51 PM
Less than two years after resuming online sales, Pier 1 Imports executives say they are “delighted” by the results in the first quarter of the company’s fiscal 2015 year and raising their e-commerce goals.
Pier 1 expects to bring in more than $200 million in e-commerce revenue during this fiscal year, and $400 million next year, president and CEO Alex Smith told analysts on an earnings call today. E-commerce now represents 9% of total sales. The company previously projecting generating 10% of sales from e-commerce by the end of next year, so Pier 1 is essentially a year ahead in meeting its online goals.
“We are delighted in the dramatic increase in e-commerce, which is being embraced by old and new customers,” he said. “When we planned fiscal 2015, we did not expect our customers to engage with Pier1.com with such enthusiasm.”
Pier 1, a housewares and home furnishings retailer that at one point ranked as No. 298 among the Internet Retailer Top 500, stopped selling online in 2007, blaming weak results and other restructuring priorities. Pier 1, reintroduced e-commerce in August 2012 under the direction of a new CEO.
For the fiscal quarter ended May 31, 2014, Pier 1 reported:
- Total sales of $419.1 million, a 6.1% increase compared with $394.9 million the first quarter of the prior year.
- E-commerce sales comprised 9% of total sales. That would indicate Pier 1 brought in an estimated $37.7 million in online sales during the quarter.
- Comparable-store sales, which include e-commerce, increased 6.3%.
- Net income was $15.1 million, down from $20.3 million in Q1 2014.
- Capital expenditures totaled $15.3 million—primarily investments in new store openings; existing store improvements; a build-out of the company’s new e-commerce fulfillment center in Columbus, OH; and enhancements to its e-commerce platform.
Pier 1 attributes much of the growth in its web sales to its strategy that links stores to its e-commerce site. “Our stores continue to serve as an important and productive gateway to Pier1.com, with approximately one-quarter of our online transactions originating at the store and one-third of orders placed at home being picked up in-store,” Smith said.
Store shoppers can place online orders for out-of-stock items or online-only products at in-store kiosks. The merchant is also planning to put tablets in the hands of store clerks in the coming months, though it did not specify when.
While Pier 1 executives says its stores play a key role in driving online sales, pure store sales fell short of expectations during the quarter, given steady or declining traffic, and increased promotional activity. “Store sales and profitability were disappointing,” Smith said. “We’re seeing a sea change in customer behavior.”
Smith told analysts that any future increases in store sales will likely come from an uptick in conversion or average order value, as opposed to increased foot traffic in stores.
He also said Pier 1 is evaluating how many bricks-and-mortar stores it should have. “You can be sure that as we look at the strength of our online business, we are thinking how many stores we need to go with it,” Smith said. “We’re looking at quality, not quantity. We are really looking at each individual market.”