Pier 1 Imports (NYSE: PIR) plans to expand e-commerce this year, quadrupling the number of home goods items offered online and boosting total product assortment across channels by 30 percent. In order to support the added business, the company will build a second fulfillment center by the end of the year.
The online launch comes on the heels of a successful rollout of in-home delivery to the lower 48 states. Now that shoppers are able to order large home furnishings on the company's website, the company wants to make 100 percent of its brick-and-mortar SKUs available online.
Pier 1's online sales were 4 percent of total sales for the recently completed fiscal year, and the retailer is on track to reach its goal of having 10 percent of the business come from e-commerce by the end of fiscal 2016. "It's growing rapidly and yet there is so much untapped potential for us," said Alexander Smith, president and CEO. "Traffic to our Web site continues to grow and presently stands at close to two million visitors a week. That's nearly double what it was just one year-ago. Our conversion rates, although much improved, are still very modest, so our upside is huge."
Pier 1 said that a growing investment online will cater to its e-commerce shoppers who, on average, are more affluent and spend more per purchase. Customers who shop Pier 1 Imports both in-store and online spend nearly four times that of in-store only customers. Online shoppers who are enrolled in the company's rewards program, spend even more.
Once the additional inventory is added to Pier 1's website, the company is confident that e-commerce revenue will match that of its brick-and-mortar operations.
"We can already see that our online business will have to at the very least be as profitable as our stores," Smith said.
With the growth Pier 1 is experiencing online, the company said it will build a new distribution center in close proximity to its current Columbus, Ohio warehouse. The site is expected to be completed by this fall, a full year earlier than originally planned. Pier 1 is also exploring how to utilize its distribution centers for fulfillment of large items as part of its ongoing omnichannel restructuring.
The Fort Worth-based home furnishings retailer also reported its quarterly results. Income for the quarter reached $42.6 million, down from $61.7 million for the comparable period last year. Same-store sales fell 4.6 percent, though they increased 0.6 percent when adjusted to the 13 weeks that ended March 1. For the full year, net income was $107.5 million compared with $129.4 million last year. Pier 1 estimated that a 53rd week in fiscal 2013 contributed $29 million to net sales.
-See this Pier 1 Imports earnings call transcript
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