Shares of Pier 1 Imports (NYSE: PIR) tumbled more than 8% on Monday after Morgan Keegan analyst Laura Champine downgraded the stock to Underperform from Market Perform. She wrote in a note: "We are skeptical about Pier 1's ability to drive traffic without discounting, and our recent checks at Pier 1 suggest that the company is still using aggressive promotions to clear inventory ... If the company is being forced by a weakening consumer to stray from its plan of reducing store-wide markdowns, the margin impact could be extremely detrimental to earning."
Pier 1's struggles have been well-documented. The company is attempting a dramatic turnaround under the leadership of a new CEO after years of underperformance and tough competition from lower cost providers of similar products like Target (NYSE: TGT) and Wal-Mart (NYSE: WMT).
Turnarounds are always tough; most of them have a way of not really turning around at all. A weak economy and cautious consumer spending could be enough to make a very tough turnaround nearly impossible.
It appears that more than a few investors are betting this turnaround will end badly -- roughly 20% of the float is short.
Pier 1 slides on downgrade -- more trouble to come?
Posted Feb 5th 2008 11:47AM by Zac Bissonnette
Filed under: Analyst reports, Analyst upgrades and downgrades
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Reader Comments (Page 1 of 1)
2-14-2008 @ 11:39AM
krsten said...
If you are Canadian do not buy from Pier 1, you are being charged double the price for merchandise. Our Canadian Dollar is very close to the American Dollar. This is ridiculous. DO NOT BUY FROM PIER 1. TOTAL RIP OFF. I called customer service and they said they do control prices in Canada, funny how the price on the merchandise has the american price and the canadian. Must be the head office that does this. Buy Canadian!!!!