Novice Investing - Pier One Turnaround

Date: Thursday 20th 2008f November 2008 04:32:08 PM

Pier One Turnaround - 11/28/2005

By: Novice Investing Staff

Pier One Inc. (PIR) surged on Monday 28th November 2005. The reason is unclear and the only news available was bullish prediction by one brokerage firm about the company's November sales. Still, Shares surged 13.9% due to the speculation. Does it warrant a 13.9% rise on the stock price?

Perhaps. The stock has been beaten badly this year, losing 50 % of its value over the past year. The company performance is not wonderful as well. Same store sales (SSS) has been declining for more than a year now. SSS is the metric for retailers to measure how much sales per store that the company can do. With declining same store sales, the company needs to keep opening new stores to increase revenue. As you know, opening a retail store to increase sales is an expensive preposition.

Now, will November be the turning point for Pier One as the brokerage firm predicted? Perhaps. We have not done any store checks but you can take a glance at Pier One's internet traffic as indications on what is to come. Alexa shows that internet traffic to Pier One website has increased 50 % from 200 to 285 reach per million users within a month. Surfers visit a website for various reasons. Perhaps, Pier One was advertising its products heavily. But, at the very least, it is getting some response from its advertisement. Now, the question is how to convert those visitors into buyers. That, we do not know. We will know it soon enough when retailers report their November sales in early December. You've got one more week to think about it.


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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 Inc. (PIR) or any other securities.

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