Pier 1 to shut up to nearly half of its stores, raises going concern doubts
(Reuters) – Home decor and furniture retailer Pier 1 Imports Inc (PIR.N) said on Monday it plans to close up to almost half of its stores, cut jobs and warned about its ability to continue as a going concern in a tough retail environment.
FILE PHOTO: The Pier 1 Imports store is seen in Broomfield, Colorado September 17, 2014. REUTERS/Rick Wilking
The company is the latest retailer struggling in a market dominated by e-commerce giant Amazon.com Inc (AMZN.O) and other retail stalwarts like Walmart Inc (WMT.N) as more consumers shift to online shopping and look for the latest trends.
The retailer’s shares, which were trading around $500 in 2013, plunged to about $5 late last year. They were down nearly 5% in extended trading.
Pier 1 has drafted a bankruptcy proposal and made a presentation to creditors last month, with a plan to create a smaller post-bankruptcy company with about $900 million in annual sales, a person familiar with the matter said on Monday.
The company also held discussions with lenders about potentially providing financing that would help the retailer continue operating while under bankruptcy protection, the person said. The retailer was not immediately available for a comment.
The Fort Worth, Texas-based company said its third-quarter loss widened from year earlier as discounts on older merchandise put pressure on margins. Its quarterly comparable sales fell 11.4% due a late Thanksgiving holiday in 2019. (bit.ly/37KFyuu)
To arrest mounting losses, Pier 1 now plans to close up to 450 stores, shut some distribution centers and reduce headcount. The company did not specify how many jobs would be cut.
The retailer operated 942 stores in the United States and Canada, as of Nov. 30, 2019, according to its latest quarterly filing.
“Although decisions that impact our associates are never easy, reducing the number of our brick-and-mortar locations is a necessary business decision,” Chief Executive Officer Robert Riesbeck said.
However, Moody’s analyst Raya Sokolyanska said the company’s latest plan will likely be insufficient to turn around the business in time to address its looming debt maturities, making restructuring or bankruptcy highly likely scenarios.
The company was saddled with long-term debt of $258.3 million at the end of the third quarter.
Reporting by Nivedita Balu in Bengaluru and Mike Spector in New York; Editing by Shounak Dasgupta and Aditya Soni