Pier 1 Imports, a Fort Worth-based furnishings store, shocked Wall Street after reporting lower than expected fiscal second-quarter earnings this past September. Although the company reported a 7.6 percent increase in total sales, net income took a plunge of nearly 32 percent.

As with all retailers in the home furnishings industry, Pier 1 took a large hit following the housing market crash five years ago, but recently has been performing steadily better quarter to quarter. So, what does this major profit miss in its latest quarter reveal about the company and its future prospects?

For the past 50 years, Pier 1 Imports has prided itself on being North America’s original global specialty importer of unique fashion-forward, decorative home furnishings and gifts. The company imports a broad selection of distinctive merchandise produced and often bought directly from small villages from all over the world. Pier 1’s primary goal is to provide its customers with the best shopping experience possible in house and online, with the addition of a new ecommerce-enabled pier1.com website to better serve customers no matter where they are.

In the latest earnings conference call, Alexander W. Smith, president and chief executive officer commented, “For each of the last 15 quarters we’ve prided ourselves on our ability to deliver consistent short-term results while building out our ‘1 Pier 1’ omni-channel strategy,” which purpose is to provide its customers with consistent brand experience through all available shopping channels, i.e. bricks-and-mortar, internet devices, television and direct mail.

Although the company reported that online business reached a new high of 5 percent of all sales this past quarter, as it continues to make progress with its ‘1 Pier 1’ strategy, in store traffic plunged. The company did not blame the economy as a whole for the decrease in profits, but rather its own execution failures, more specifically major missteps in marketing and product placement in stores, which resulted in lower store traffic.

“In particular, our marketing initiatives did not include appropriate messaging around clearance and promotional activity in our stores, or customer acquisition generally, which contributed to lower than expected store traffic,” Smith stated. “We should also have done a better job of flowing new product to the stores and reflecting those items in the floor set.”

In particular, Pier 1 cut back too much on the kind of promotions that draw shoppers, says Victoriano Nabarro, sales leader at the Preston and Royal store branch in Dallas, “The company did away with a lot of our clearance items, so our usual bargain shoppers weren’t coming in and buying those items.”

Stuart Reid, a financial advisor at Raymond and James, noted, “There are many factors that may contribute to a company reporting lower numbers during certain periods, like marketing strategies, but in this case, I think Pier 1’s numbers also show a great seasonal weakness.”

In unison with Reid’s analysis, Nabarro observed, “This summer, particularly during July and August, our numbers were way down and the store didn’t see as many customers as it normally does. People weren’t buying as many home furnishings and decorations then, but now as we’re gearing up for the fall holidays and Christmas, we’re seeing increased store activity.”

Pier 1 Imports wasted no time addressing its defective marketing strategies, which was one of the main causes of the company’s lower than expected second quarter earnings. The company appointed Eric Hunter as its new executive vice president of marketing, who will be responsible for new marketing efforts. The company believes with creative marketing strategies, clear messaging and added TV advertisements, sales trends are already back on track in September and October with a positive customer response to the new fall merchandise.

Rebranding the existing special request program as Express Request, “will enable us to draw maximum efficiency from our selling square footage as we move towards our $225 per square foot goal and allow us to use our inventory most efficiently” Smith stated.

Next quarter results will determine if the company is indeed able to pull itself back where it needs to be.