Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
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RET AILING TODA Y On the mend PIER 1 IMPORTS IS STAGING A TURNAROUND AFTER YEARS OF STRUGGLE By Beth Mattson-Teig T Pier 1 staggered under the burden of underperforming stores, made worse by an aggressive but apparently ill-advised expansion that added some 200 stores between 2005 and 2007. "I think that high level of store growth was probably a distraction for them and had negative financial implications," said Matthew Nemer, a senior research analyst at Wells Fargo Securities. The stores' sales average took a hit, dropping from $203 per square foot to $172 per square foot. 32 SCT / APRIL 2012 Then, early in 2007, Pier 1 brought in HE BEATEN, THE BATTERED AND the bruised of this recession are more than a few, but Pier 1 Imports has managed a turnaround in a market that remains challenging to other retailers. And Pier 1's recovery is the more impressive given that the Fort Worth, Texas–based chain was struggling even before the onset of reces- sion. Sales and profits were depressed, and merchandising was strained — even "horrifically bad," as one plainspoken observer put it. A buying team that was stretched thin to begin with made for purchasing deci- sions that lacked variety and originality. "That really turned off a lot of loyal Pier 1 customers," said An- thony Chukumba, an analyst at BB&T; Capital Markets. CEO Alexander W. Smith, a veteran of some 30 years' experience in retail. This included 12 years at TJX Cos., where most recently he was a senior execu- tive vice president and group president. Smith guided Pier 1's return to profitabil- ity and is now at work building on that momentum. The store sales average has improved, to $178 per square foot at the end of the third quarter. Management is set on reaching $200 per square foot within the next two years, plus an operat- ing margin of at least 10 percent. "Even in spite of the recession, they have pulled off a pretty phenomenal turnaround," said Nemer. The chain's same-store sales for the year ended Feb. 25, 2011, rose 9.5 percent year on year, and this was on top of a 10.9 percent same-store sales increase in the previous fiscal year. Pier 1 shut down or sold off noncore concepts, including its 33 Pier 1 Kids stores and the Pier 1 stores in Europe. The company also closed weak stores