Home-furnishings retailer Pier 1 Imports Inc. (PIR) on Tuesday said quarterly profit fell more than 40 percent as sluggish sales and heavy discounts to lure shoppers took their toll.

The retailer, whose stock was buoyed recently by news that billionaire investor Warren Buffett (search) had acquired a sizable stake in the company, also forecast earnings for the remainder of the year that are generally in line with Wall Street's estimates.

For the fiscal second quarter ended Aug. 28., Pier 1 posted a profit of $10.4 million, or 12 cents a share, down from $18.4 million, or 20 cents a share, a year earlier.

In August, the company, which runs about 1,100 stores, had lowered its outlook for the quarter to between 10 cents and 12 cents a share, citing "inconsistent" customer traffic in July. Analysts adjusted their average estimate to 11 cents, according to Reuters Estimates (search).

Total sales in the quarter rose 5.7 percent to $452.3 million. Sales at stores open at least a year, a key measure of retail performance, declined 3 percent.

For the third quarter, Pier 1 forecast a profit of 28 cents to 35 cents per share. It said same-store sales should range from a 4 percent drop to flat compared with a year ago.

It expects fourth-quarter earnings of 52 cents to 62 cents per share. Same-store sales are seen ranging from a 5 percent decline to a 1 percent rise.

The earnings forecasts for the third and fourth quarters are generally in line with Wall Street estimates of 31 cents per share in the third quarter and 58 cents per share in the fourth, according to Reuters Estimates.

Pier 1 said its current merchandising, marketing and store initiatives have begun to take effect, which should lead to improved sales and profits in the second half of this year.

The company, which severed ties with its advertising agency in June, added that it would name a replacement agency in early October.

Pier 1 also said it was taking a close look at costs, particularly marketing expenses, and its advertising strategy would primarily include newspaper inserts, magazines, direct marketing and online advertising. The retailer has run several television advertising campaigns recently, with mixed results.