Pier 1 Imports
Pier 1 Imports (PIR): Troubled retailer. Very cheap on the basis of price to sales and price to book. This company had been earning a good return on capital for some time. However, a decline in same store sales has done great damage to its ability to earn a good return on capital. The amount of truly free cash flow Pier 1 generates has declined in each of the last few years. If Pier 1 remains viable, it will reward investors who buy now. However, if sales continue to decline, there is a real risk of insolvency due to the high fixed costs associated with each store. This is no truer for Pier 1 than it is for any retailer, but considering Pier 1’s declining sales it is a fact of far more immediate concern in this case.
The Motley Fool’s four best articles on Pier 1 are:
June 2nd, 2005’s “A Pier over Troubled Waters”
December 2nd, 2005’s “Pier 1’s Positive Performance”
December 14th, 2005’s “Foolish Forecast: Pier 1 Overloaded”
December 15th, 2005’s “A Lonely Walk Down Pier 1”