Pier 1 has ended its fiscal year with a very dismal set of numbers. In spite of the additional week of trade in the quarter, total sales fell by 3.1%. While some of this is down to the ongoing store closure program, the fact that comparable sales dropped by a more dramatic 7.5% reveals a worrying deterioration in underlying trade. Meanwhile, on the bottom line, net income continues to plummet, dipping by almost 44% over the prior year.

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The homewares and furniture markets both performed well over this period, as did many of Pier 1’s rivals. As such, the fault for all of this falls squarely on the shoulders of Pier 1. And despite a long period of decline, the company has not yet taken the right actions to correct performance.

The poor numbers at physical stores can be partly explained by the continued surge in online, where sales rose by 21% this quarter. Pier 1 has, for some time, pursued an omnichannel strategy which means that some of the sales made through its e-commerce division are supported by customer visits to shops. However, when overall sales are in freefall and when profitability is weakening, it is clear that this strategy is not paying dividends. In our view, unless Pier 1 can drive store performance it will continue to fail.

In our view, there are two main reasons for the current…