Pier 1 Imports Inc (NYSE:PIR)

Pier 1 Imports Inc (NYSE:PIR)

PIR: MCAP: $360m Share: $4.26 Debt: $202m EV: ~$560 Dividend: ~6%

One operating segment in the US. ~950 stores, with 106 in California; ~80 in Texas, ~50 NY. ~80 stores in Canada. E-Commerce represented about 20% of net sales in the q2. Taking into account e-Commerce orders placed in or picked-up in-store, about 90% of the Firm’s q2 fiscal 2017 net sales directly touched a store.

DECORATIVE ACCESSORIES 65% including decorative accents, rugs, wall decorations, pillows, bedding, lamps, vases, dried and artificial flowers, baskets, ceramics, candles, fragrance, etc.

FURNITURE 35% including furniture and furniture cushions to be used in living, dining, office, kitchen and bedroom areas, sunrooms and patios.

OUTDOOR (part of Furniture segment) Tiny selection of outdoor furniture.

Operating Cash Flow: ~$131 Capital expenditure: ~$71m FCF: ~$60m 2017 Operating Cash: $? Cap Ex: $45m ($30m less than average)

PIR

PIR ~One operating segment in the US. Problems -Retailers in the US are getting crushed, less traffic -Competing with online websites that discount heavily -Amazon, etc -PIR has only 1%-2% of a highly fragmented market.

Stocks with Free Catalyst

CEO Before PIR, Mr. Smith was president of TJX Companies, Inc., Age: 63 Before PIR, Mr. Smith was president of TJX Companies, Inc., & development of the TK Maxx stores in Great Britain…

Insider Ownership

Insider Ownership -No new insider purchases BUT collectively they own ~5.6%, around $26m If share price goes to ~$7.70 in the next year they would exercise their option it would be worth north of $8.8m.

Incentive compensation: -Adjusted EBITDA adjusted for certain recurring noncash items and unusual or non-recurring items -Total Share Holder Return (TSR) Example: Mr. Smith informed the board of his intent to not accept an equity award in fiscal 2017. The board concurred with Mr. Smith’s decision. Mr. Smith’s base salary did not increase for fiscal 2017.

Areas of improvement: Loyalty card (collect data on individual customers) Segmented marketing with the view to go to personalised marking and offers Free delivery Improving website “The stores feel more streamlined and our associates love the cohesive presentation and our customers are finding it easier to shop and see clearly our beautiful exclusive Pier 1 Imports products.”

13D

13D Alden Global Capital acquires 9.5%

Poison pill

Poison pill It allows management to stay put as Activists shares get diluted Investors have to buy more shares just to stay even Basically, stops a take-overs

5yr average of $1.8B mcap vs ~$400m

Fair Value: -$9-10 per share -$1B market cap