Pier 1 sees sales, earnings fall in the first quarter
Despite a long-heralded turnaround effort, home decor retailer Pier 1 Imports still saw weakness in the first quarter amid further difficulty in the furnishings sector and weakness in overall consumer spending.
The retailer posted a $32.8 million loss, still not as deep as the $56.4 million loss recorded in the same period last year. Sales fell 13 percent to $310 million from $356.4 million in the year-ago period. Comparable-store sales fell 5.4 percent.
Alex Smith, president and CEO of Pier 1, said the company closed out its “Modern Craftsman” line, leading to a lower profit margin on a large number of clearance items. The company also sold its headquarters during the quarter to help shore up funds as part of a turnaround strategy.
Smith said the company held back on marketing spending in the first half of the year, with plans to go forward with a more aggressive marketing strategy in the second half.
“While there is work yet to be done, we are well positioned and will remain focused on generating profitable sales,” Smith said.
Pier 1 most recently made an offer to buy Cost Plus, a competitor with a home decor retail presence under the World Market banner. Cost Plus’ board rejected the proposal, and Pier 1 has vowed to take the bid directly to shareholders.
Hardware stores roam in greener pastures
There’s no doubt that “green” is red hot. In the last year, Ace, True Value and Do it Best have all introduced their own green programs — called Helpful Earth Choices, Greener Options and enviroLINK, respectively — and Orgill, the Memphis, Tenn.-based distributor, recently kicked off a green program that concentrates on energy efficiency, water conservation, waste reduction, recycling and sustainable forestry.
Many co-op members and independent hardware stores are picking up on this trend, carrying more sustainable products and, in some cases, creating separate green departments. “The majority of members definitely see that the green trend must be taken seriously,” said Jennifer Zerwer, merchandising communications specialist for True Value, whose program offers 2,200-plus products. “There is more of a consumer driven desire for products that are kinder to the earth and result in less of a negative impact.”
Bob Taylor, president and CEO of Do it Best, agrees that green is no longer a passing fad but that many consumers are adopting it as part of their lifestyle. “Our enviroLINK is just a way of highlighting that idea at retail, especially in areas like electrical and cleaning products,” he said. “If the products can work as well and be better for the environment, the demand will grow.”
Allendale True Value in Allendale, Mich., kicked off its green program in April to coincide with Earth Week, sponsoring in-store presentations in hazardous waste, rain gardens, green fertilizing and gardening, green cleaning, compact fluorescent lighting and geothermal energy. Allendale now stocks almost 900 green products — calling them out with Greener Options signage and shelf tags — and is partnering with the West Michigan Environmental Action Council to bring green living awareness to area residents.
“A lot of people are curious about the full impact of using these products,” said Craig Emenaker, the store’s marketing/web development coordinator. “It’s tough to say how many people fully get into green products, but we’re going to continue to carry them and do an even bigger event during Earth Week next year.”
Ben F. Wilson III, owner of Wilson True Value Hardware in Kingsville, Texas, was impressed with True Value’s green program when he saw it at the spring market in Orlando in March. He now has a Greener Options endcap with 25 to 30 products like cleansers, fertilizer and insecticides, as well as a large selection of CFLs in his lighting department. In addition, Wilson sells Greener Options reusable bags to his customers for a nominal fee and gives them 25 cents off their order if they bring them back in.
“For a long time, I’ve carried push mowers, can crushers and other products that would be considered green, but this put it under the Greener Options banner,” he said. “We recognize this is a direction we want to go in and have even put on the marquee in the front: ‘We are a destination for green products through Greener Options.’ ”
Wilson also sends out e-mails to about 600 of his True Value Rewards customers to alert them to specials on these products. As for customer reaction to the green category? “At this point, we do have some who are cognizant of eco products, but we still have to lead a lot of people to water on these products.”
Wagner Hardware, a Do it Best store located near Rice University in Houston, has also embraced the green concept. About six months ago, the 70-year-old store partnered with a Houston real estate broker to set up a “green living” section within its store.
Called “New Living: Healthy Home Essentials,” this department — which takes up about a quarter of the 4,000-square-foot store — features everything from no-VOC paint to all-wool carpeting to a complete line of household cleaning products. Also included are IceStone countertops, which are made from recycled glass and concrete, bamboo flooring, organic cotton bedding and a variety of lawn care products. The products come from Do it Best’s enviroLINK program as well as other sources.
“We get new merchandise in every week, and people come from all over because there’s no place like this in Houston,” said store owner Nancy Wagner Abernathy. “We’re just a basic hardware store, so it’s a good fit. It adds to our appeal.”
Ex-Sears CEO takes top spot at sandwich chain
Aylwin B. Lewis, former CEO of Sears Holdings, will take on the role of president and CEO of Potbelly Sandwich Works, a nationwide chain of sandwich restaurants.
Lewis has an extensive background in the food service business. Prior to his role at Sears, he served as president and chief multi-branding and operating officer of Yum Brands, parent of Kentucky Fried Chicken, Taco Bell and Pizza Hut. He also formerly served as chief operating officer of Pizza Hut, and he currently is a member of the board of directors for Walt Disney.
Lewis left Sears Holdings in February amid tumult at the retailer, which still is seeking a new CEO. W. Bruce Johnson has been serving as interim CEO of Sears Holdings since that time.
Most recently, Hoffman Estates, Ill.-based Sears swung to a net loss of $56 million in the first quarter, compared with net earnings of $223 million in the first quarter last year.
Sales for the quarter fell 5.3 percent to $11.07 billion from $11.7 billion in the same period last year.