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Pier One Imports (PIR) soars… but can it last?

Today's Financial News - Posted March 23, 2009

Pier 1 Imports, Inc. (PIR) went into the stratosphere today. What’s behind the rise… and can it last?

by J. Christoph Amberger

Baltimore—TFN: The share price of Pier 1 Imports, Inc. (NYSE:PIR) soared over 190% today.

A year ago, at $8.25, that would’ve been some money in real terms. Today, it meant a rise from 16 cents on Friday to 47 cents. Good money if you were still in the stock… or had bought last week. (Then again, only insiders may have had a reason to buy then!)

Not all that good news if you bought a year ago and just did the math on how many days like today you’d need to reduce your loss to just 50%.

The rise today was powered by news that Pier 1 is closing less stores than originally predicted: In February, 125 stores were on the chopping block, now it’s “just” 80.

The other bit of good news: The company’s Third World suppliers are in dire straights and ready to charge less for the merchandize.

Some good news indeed. (Don’t let the Fair Trade folks hear about that!)

But is it for real?

Let’s review: PIR needs to double its share price from today’s hight to maintain its NYSE listing. The retail environment still looks terrible: Few people are buying and looking to furnish new houses with a handwoven wicker Azteca Settee for just $349.95 or the ceramic and iron Mosaic “Hot $ Wow” Bistro patio table for $299.95.

Same-store sales are down almost 10% in the last quarter. Profit margins have shriveled thanks to forced discounting required to keep up with the going-out-of-business sales of competitors and a rush of buyers to discount stores.

I look at today’s rise as a short-term upward breakout that is entirely mood-driven.

Look for the next market drop to reduce the share price back below $0.30. That drop could come as early as Thursday this week!


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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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