The current analyst consensus for Pier 1 Imports (PIR) calls for the stock to trade at $30 per share within five years. Based on the current price of $8 per share, you might think that sounds like an attractive investment to consider.
I think the analysts are wrong.
This is a company that, absent a corporate buyout, will eventually be destined for bankruptcy based on fundamental changes in the business model since 2004.
For most of the company’s existence, it was a lucrative investment. It sood niche furniture, lamps, wood accessories, vases, and other bourgeoisie furnishings at 15% profit margins. For people that wanted to be stuff brand new, and wanted something nicer than the Wal-Mart or Target variety brand, it had a captive audience.
And the investment returns showed how much can be made by selling highly profitable items to the same small niche over and over again. If … Read the rest of this article!