Net sales fell by 15.5% to $314.3 million. Comparable sales decreased by 13.5% due to lower average customer spend, which is primarily attributable to changes in the company’s merchandise mix, as well as decreased store traffic. The company operated 967 stores at the end of the first quarter, a decrease of 30 from last year.
The company’s sales and margins remained under pressure as expected in the first quarter and anticipate this to continue through the second quarter. This reflected the company’s decision to take aggressive clearance actions to move through lower-priced, lower-margin goods and ensure providing customers with a strong, on-brand style statement for fall.
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For the first quarter, the gross margin fell to 25.1% from 32.3% in the prior-year quarter. This decline reflects increased promotional and clearance activity in merchandise, as well as 270 basis points of deleveraging on occupancy costs.
The company remained on track to achieve the previously outlined benefits of $100 million to $110 million this year and now expects the substantial majority of those benefits to be realized through cost reductions. The expense savings the company plans to realize in the second half of fiscal 2020 are expected to be absorbed by lower gross margins rather than driving the full year net income and EBITDA recapture it previously outlined.
As implementing fiscal 2020 action plan, the company is incorporating learnings and addressing business trends in real-time. The company believes its initiatives and liquidity will give it sufficient runway to achieve fiscal 2020 goals.
Shares of Pier 1 Imports ended Wednesday’s regular session up 1.39% at $8.78 on the NYSE. Following the earnings release, the stock dropped over 12% in the after-market session.
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