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Pier 1 Imports announced on Monday that it plans to close up to 450 stores, an unspecified number of distribution centers while cutting the numbers of people who work at the retailer’s corporate headquarters.
The chain comes off a third-quarter where same-store sales fell 11.4 percent. Pier 1 pointed to lower traffic and fewer shopping days during the recent holiday season as factors in its results. The retailer also announced that its gross profit of 30.8 percent fell from 31.6 percent the previous year as a result of increased promotions and clearance sales.
Robert Reisbeck, who was named CEO of Pier 1 in November in addition to his CFO duties, said that the company had accomplished its goal of clearing out “non-go-forward merchandise” during the most recent quarter.
“Looking ahead, we believe that we will deliver improved financial results over time as we realize the benefits of our business transformation and cost-reduction initiatives,” said Mr. Reisbeck.
Not all are as confident about the chain’s prospects, which has posted declining sales in eight consecutive quarters.
“As Pier 1’s losses deepen, the planned large-scale store closures and cost cuts will likely be insufficient to turn around the business in time to address the company’s looming debt maturities, making restructuring or bankruptcy highly likely scenarios,” said Raya Sokolyanska, VP-senior analyst for Moody’s, in an email to RetailWire. “Increasing competition in the sector from online players, mass merchants and off-price retailers are compounding Pier 1’s already challenging turnaround.”
Cutting its debt load is a major concern for Pier 1. The chain, Fortune reports, is currently carrying over $300 million in debt and is working with outside firms including Kirkland & Ellis, AlixPartners and Guggenheim Partners to restructure its business and perhaps pursue bankruptcy.
Unlike Bed Bath & Beyond, which earlier this week announced a $250 million sale-leaseback deal with Oak Street Real Estate Capital, Pier 1 does not own much of its property.
- Pier 1 Imports, Inc. Reports Third Quarter Fiscal 2020 Financial Results and Provides Business Update – Pier 1 Imports, Inc.
- Pier 1 will close up to 450 stores – CNN
- Pier 1 to Close More Stores After 8 Straight Quarters of Declining Sales – Bloomberg/Fortune
- Retailer Pier 1 taps debt restructuring lawyers - Reuters
- Bed Bath & Beyond shares jump on real estate deal that gives the retailer $250 million – CNBC