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Pier 1 brings home 46% growth in full-year online sales

April 15, 2016 09:05 AM
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New capabilities that connect its e-commerce site and stores helped Pier 1 Imports Inc. survive stormy seas in its most recent fiscal year.

“2016 marked our first year as a fully capable omnichannel retailer,” Pier 1 president and CEO Alexander Smith told analysts this week. “Without doubt, it was a tough year, ending a tough transformation process, but we have emerged stronger with a clear view of the future.”

Online sales grew to 16% of revenue during the retailer’s fiscal year, which ended Feb. 27, up from 11% the prior year. Based on total revenue of $1.8922 billion in its recently concluded 2016 fiscal year, an increase of 0.4% from $1.8846 billion the prior year, Internet Retailer calculates Pier 1’s online sales grew 46% to nearly $303 million from just over $207 million.

Among the cross-channel services Pier 1 has implemented are buy online, pick up in store and ordering in store from web inventory. While e-commerce accounted for 16% of revenue, “well over 90% of our revenues touch a store in one way or another,” chief financial officer Jeffrey Tower told analysts, according to a transcript from SeekingAlpha. As an example, he said that consumers picked up a third of their online orders in Pier 1 stores in the most recent quarter.

Smith said aggressive discounting by competitors, both online and offline, made the past year difficult. He said Pier 1 would respond with stepped-up marketing.

“We are significantly increasing our spend in fiscal 2017,” Smith said. “This will allow us to reincorporate television into our media plan, without going backwards on our successful digital and print activity.”
He said the retailer also will begin offering a gift registry this year. “This will initially be rolled out online only with functionality coming to the stores at a later date,” Smith said.

More investments are needed for Pier 1 and other store-based home furnishings retailers to gain more market share online, wrote analyst Seth Sigman of investment firm Credit Suisse in a note to investors Thursday. “The home furnishings retailers in our coverage have been losing share in the brick-and-mortar channel and have not been capturing enough share online,” Sigman said. “We ultimately believe that more investments will be needed to reverse that trend.”

According to the newly released Internet Retailer 2016 Top 500 Guide, the 41 retailers of housewares and home furnishings ranked in the Top 500 increased their online sales 22.4% in 2015, while total retail sales in the category grew only 5.6%, according to the U.S. Commerce Department.

Much of that gain came from web-only retailer Wayfair LLC, No. 24 in the Top 500, which increased its online sales by 85.2% in 2015 over the prior year. Wayfair’s strong growth helped earn it nominations in three of the 13 categories in the annual Internet Retailer Excellence Awards: growth, marketing and Internet Retailer of the Year. The awards will be handed out June 8 at a banquet at the Internet Retailer Conference & Exhibition in Chicago.

Pier 1, which only resumed selling online in 2012 after a five-year hiatus, won the Comeback of the Year award last year at the inaugural Internet Retailer Excellence Awards event at IRCE. Pier 1 is No. 124 in the latest edition of the Top 500.

For fiscal 2016 ended Feb. 27, Pier 1 reported:

  • Comparable-store growth of 0.4%, but 1.7% when excluding currency fluctuations, including the strengthening of the dollar against other currencies.
  • Net income of $39.6 million, down from $75.2 million in the prior year.

For its fiscal fourth quarter ended Feb. 27, Pier 1 reported:

  • Net sales of $542.3 million, down 2.3% from $555.0 million in the same period a year earlier.
  • E-commerce penetration of 15% in the recent quarter, versus 12.6% penetration a year earlier, and 16% growth in online sales. That suggests e-commerce grew to just over $81 million in the quarter from $70 million a year earlier.
  • Net income of $18.7 million, down from $33.1 million.
 

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