Pier 1 pounded by downgrade, CEO exit

Shares of Pier 1 Imports fell 12% Thursday morning after the retailer's stock was downgraded over performance concerns and its CEO's impending departure.

Credit Suisse analyst Seth Sigman lowered Pier 1's rating from Neutral to Underperform based on the retailer's expected weaker sales in the second quarter of 2016 (ending Aug. 27) and its "continued underperformance relative to the industry," he said in a note out Thursday. "The risk of more aggressive promotional activity to improve sales which could derail the margin improvement story, and management uncertainty with CEO Alex Smith's expected departure."

The retailer announced Wednesday that Smith, Pier 1's CEO and President since 2007, would step down Dec. 31.

Pier 1 shares (PIR) were down Thursday, after closing Wednesday up 3.2% at $4.80.

In a preliminary sales and earnings report that Pier 1 also issued Wednesday, the company said its net sales for the second quarter fell about 6.7% compared to the same period in 2015. Wall Street had expected revenue of $4.5.4 million, a decline of about 6%, according to analysts polled by S&P Global Market Intelligence.

The Fort Worth, Tex.-headquartered company operates 953 stores in the U.S and 79 stores in Canada.

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