Pier 1 Imports, Family Dollar, L Brands Lower Forecasts on Grim Holiday Sales

It turns out that rampant holiday promotions and round-the-clock store hours still didn't save retailers from disappointing year-end sales. Companies such as L Brands (NYSE: LB), which owns Victoria's Secret and Bath & Body Works, Pier 1 Imports (NYSE: PIR) and Family Dollar (NYSE: FDO) today cut profit forecasts after reporting grim December sales and sliding profit margins.

L Brands said in a statement today that it would be reducing its Q4 forecast after holiday promotions led to lower merchandise margins during the holiday season. Fourth-quarter profit is expected to come in around $1.60 a share, down from a previous forecast of at least $1.67 a share and much lower than analysts' projection of $1.79, on average. The company said that comparable store sales at the retailer's Victoria's Secret brand rose 3 percent in December, trailing analysts' 4.4 percent average.

Pier 1 Imports seemed to be the most devastated of them all, as the chain cut its full-year earnings guidance due to much lower-than-anticipated December sales.

"We're extremely disappointed that December sales results came in well below our expectations, especially considering our holiday selling season kicked off with a record post-Thanksgiving weekend," said CEO Alex W. Smith in a statement.

Pier 1 Imports now expects to post full-year earnings of $1.07 to $1.12 a share, down from its prior guidance of $1.21 to $1.27 a share. Total sales growth is expected to be in the mid- to high-single digit range.

Family Dollar executives also experienced tough times in November and December. The company reported today that sales in December at stores open a year or more fell 3 percent, and that the company offered more discounts than it had planned to lure customers. Those extra bargains hurt the retailer, leading the chain to lower earnings expectations for the second quarter of fiscal 2014 and the full year.

"While we have made meaningful progress to improve our execution, our financial performance has not met our expectations," said Family Dollar CEO Howard Levine in a statement. "We have a great business model and ample growth opportunity, and I know we can do better."

Family Dollar's net income for the first quarter declined to $78.03 million or $0.68 per share from $80.28 million or $0.69 per share in the prior-year period. The company's comparable store sales for the quarter decreased 2.8 percent as a result of decreased customer transactions and a slight decrease in the average customer transaction value. Looking ahead, Family Dollar forecasts earnings in a range of $0.85 to $0.95 per share and comparable store sales to decline in a low-single-digit range. Analysts had expected the company to earn $1.22 per share for the quarter.

For more see:
-This L Brands press release
-This Family Dollar press release
-This Pier 1 Imports press release 

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