Shares rose 48 cents, or 8.9 percent, to $5.90 during afternoon trading, after rising 13 percent on Tuesday. The stock has traded between $4.41 and $9.06 during the past 52 weeks.

On Tuesday, Bernstein analyst Colin McGranahan said chief executive Alex Smith's turnaround efforts have been "impressive and illustrate a strong turn in execution."

Smith has rolled out a number of initiatives aimed at improving operational efficiencies and the supply chain and investing in effective marketing, the analyst noted.

McGranahan said he estimates cost reductions are occurring at a $130 million annual rate, near the $150 million annual rate targeted for the end of the year.

"We think the expense side of the turnaround demonstrates aggressive and successful execution," McGranahan wrote.

Improving merchandising is also key for Pier 1's turnaround, McGranahan wrote. He said it is difficult to point to concrete evidence the retailer is improving, but added early results in some seasonal categories are "encouraging."

He also said Smith seems to be shifting merchandise back toward decorative accessories categories, which will help make Pier 1 more competitive.

"Pier 1's turnaround remains in early stages, but progress on the expense side has already been substantial, while early signs on the merchandising side are encouraging," McGranahan wrote.

He reaffirmed his "Buy" rating and $10 price target.