First Starbucks backed off closing some stores and now Pier 1 is doing the same. The home decor company lowered its number of store closings in its 2009 fiscal year to 50 down from its original plan to close 125. It has closed 31 to date and will close 19 next January and February. (Our previous number had been 80, in part because we’re going by the calendar year. I’ve adjusted the math below to reflect 31 closures in 2009.)
That came as part of the firm’s second quarter results, where it also reported a smaller loss than the same quarter of last year. It also beat analyst estimates.
The home decor company lost $15.8 million, or 17 cents per share, for the period ended Aug. 29 compared with a loss of $30.2 million, or 34 cents per share, a year earlier.
Analysts predicted a loss of 22 cents per share, according to a Thomson Reuters poll. Analysts’ estimates generally exclude one-time items.
Operating costs and expenses declined to $302 million from $348.9 million, while inventories were $43 million less than a year ago.
Sales fell 11 percent to $286.7 million from $320.5 million, but beat Wall Street’s estimate of $281.9 million.
Sales at stores open at least a year, known as same-store sales, dropped 7.6 percent in the quarter due to declining traffic.
Same-store sales are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.
Pier 1 had 1,061 North American stores at quarter’s end. It plans to close about 50 stores during the fiscal year, down from its initial estimate of 125 closings. The company has shuttered 31 stores for the year to date and anticipates closing another 19 locations in January and February.
Howard Davidowitz Doesn’t Pull His Punches
by David Bodamer September 17th, 2009
Check out this clip from Bloomberg from Tuesday. Howard Davidowitz makes economist Christopher Rupkey look a bit silly. The debate took place in the wake of the Commerce Department’s report that retail sales were up 2.7 percent in August–the best monthly number in about three years. The “Cash for Clunkers” program boosted auto sales. But even if you strip out auto sales, retail sales were up 1.1 percent.
Davidowitz goes on a rant calling the figures “imbecilic” and argues the Commerce Department sales figures shouldn’t be viewed as a sign of recovery. For one thing, he points out that almost every major retailer and every department store chain is still reporting monthly same-store sales declines. Davidowitz also points out that the government’s figures include things like health care spending and prescription drugs, which really shouldn’t be taken as a sign of a rebound in consumer spending. That gels with what I’ve heard consistently within the industry–that the same-store sales numbers, while they have their own faults, are a better metric to track than the monthly Commerce Department figure.
In a similar vein, economist Dean Baker pointed out another factor. He wrote, “If gas sales are taken out of the picture, then the increase in August was just half as large. If we look over the last two months, the rise in non-auto sales, excluding gas, has been less than 0.2 percent.”
Rupkey’s response to Davidowitz is also a bit weak. He hedges by saying that’s he’s not an expert in retail metrics and that he is “only a simple economist.” He also acknowledges that there is often a disconnect between chain store sales and the Commerce Department’s figure, but then concludes, “as an economist I can say that the consumer is back because that is what the economic data shows.”
It’s really an eye opener. Faced with an argument and supporting data Rupkey demurs and essentially says that if this number indicates a recovery, then there’s a recovery–any contravening evidence by damned.
For other recent video clips, check the Retail Traffic VideoWire.
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