Pier 1 Imports Inc. shares tumbled 12 percent after the home-furnishings chain slashed its profit forecast, blaming a buildup of inventory and heavy reliance on discounts.
The company now expects earnings of 56 cents to 64 cents a share this year, down from a previous forecast of as much as 87 cents, according to a statement on Thursday. Pier 1’s second-quarter profit and sales also missed analysts’ estimates.
Chief Executive Officer Alex Smith is working to eliminate a glut
of products. He’s revamping the leadership team to improve an outdated supply chain and seeking ways to cut costs. Comparable-store sales only grew 2.5 percent last quarter, missing the average estimate for a 4.5 percent gain.
“We are disappointed with our second-quarter sales and earnings results,” he said in the statement. “Operating with elevated inventories has been a challenge.”
The stock fell to $7.61 at the close of trading in New York on Friday, the biggest decline since February. Even before the latest tumble, the shares were down 44 percent this year.