Novice Investing - Pier One Navigates Rough Sea Well

Date: Tuesday 13th 2008f May 2008 07:28:23 AM

Pier One Navigates Rough Sea Well - 01/13/2008

By: Novice Investing Staff

With housing in a slump, you would be hard pressed to find any retailer that does well. From Home Depot (HD), Loews (LOW) to teen retailers (BEBE), all have seen their stocks trading at 52 week low or more. There is one stock that caught our attzention as other retailers weakened. The name is Pier One Imports Inc. (PIR). This past week, the retailer announced 1.3% rise in December same store sales, which is quite inspiring. The reason is if you go back three years, Pier One had always announced negative same store sales. The fact that it can achieved a positive same store sales when everyone else.

Pier One's turnaround had been long overdue. Back in 2005, Pier One had $ 170 Million in positive net cash. Three years of losses later, Pier One net cash has dwindled to negative $ 17 Million. Losses for both years totalled $ 269 Million and Pier One experiences negative $ 169 Million of cash flow from operation. While it is too early to pronounce Pier One's turnaround is a success, these past two months the company has reversed its two year negative same store sales albeit slowly.

On the other hand, investors should not get too excited about Pier One's same store sales reversal. Having been a slump for the past three years, Pier One's same store sales comparison is easier. We should wait at least wait for another quarter of solid result before making any decision regarding Pier One. Regardless, most retail sectors are not doing well at the moment. Thus, even if Pier One shows marked improvement in the coming month, its share price may come under pressure due to general economic condition as investors' appetite towards retailers are waning.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Pier One Imports Inc. (PIR) or any other securities.

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