ROANOKE TIMES
Copyright (c) 1995, Roanoke Times
DATE: Friday, December 29, 1995 TAG: 9512290088
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: The New York Times
THE PROFITS ARE FINE, even exemplary, analysts say. The problem is, stockholders haven't gotten to share them.
The $20 million loss disclosed by the retailer Pier 1 Imports was the latest in a string of financial events that have damaged the company's credibility, several institutional shareholders said Thursday.
Before Pier 1's announcement Tuesday that ``inappropriate trades'' by an outside financial consultant would result in the hefty loss, the company had created anger and disgust with an announcement earlier this year that it would take a $14 million pretax charge to unload its holdings in Sunbelt Nursery, the shareholders said.
Shareholders disliked that holding because it had nothing to do with the company's core business.
Some investors were already miffed that, in 1993, the company invested $3 million in a limited partnership managed by Whiffletree Corp., which is run by Steven Berman, the brother of a Pier 1 board member, Martin Berman.
Further, since 1989, the company has been the owner of a one-eighth interest in a Cessna jet with Berman Industries, a company owned by Martin Berman.
``I would say that our message to Pier 1 is to run this business for the benefit of the shareholders, not the benefit for the Berman family,'' said Michael Jamison, the managing director of Brandywine Asset Management, one of the retailer's largest institutional shareholders.
The dominant complaint seems to be that the company has failed to bring in big returns for shareholders even though it has been one of the few retailers to chalk up impressive sales in recent quarters.
``On one hand, they've done a good job at building a business and market niche in a difficult retail environment,'' Jamison said.
``On the other hand, the chairman has done a good job of helping out himself in ways that are not good from a shareholder's perspective, and if he didn't do these things, he would have a lot more credibility with shareholders.''
Clark Johnson, chief executive of Pier 1, has told his staff that he is the only one to speak for the company, but he did not return phone calls Thursday.
In an environment that has been extremely chilly for most retailers, particularly apparel sellers, Pier 1, based in Fort Worth, Texas, is enjoying growth.
Its same-store sales - generally considered to be the best measure of how a company is faring - were up 8.5 percent for the third quarter, and analysts expect its Christmas sales will be impressive. Its merchandise - big wicker chairs, candles and imported furnishings for the home - is gaining increased popularity among consumers.
But Pier 1's stock has failed to perform accordingly, hovering for most of the decade between $7 and $11, and analysts and other retail experts attribute the weakness largely to the way the company has invested its money.
Mark Boyar, the president of Mark Boyar & Co., an investment advisory group with holdings in Pier 1, said in an interview earlier this week that he had spoken with the company's management before the announcement to express his displeasure with the way it manages its funds, and said that he would push other shareholders to take action.
Action would include ``pressing the board to think about getting rid of two of its members, starting with the top one,'' he said. He was referring to the chief executive, Johnson.
LENGTH: Medium: 68 linesby CNB