Pier 1 to Shut More Stores, Cut Debt in Expanded Turnaround
Pier 1 to Shut More Stores, Cut Debt in Expanded Turnaround Plan
(Bloomberg) -- Pier 1 Imports Inc. is planning a significant increase in store closings as the distressed home-furnishings chain seeks to cut costs and turn around operations.
The company expects to announce the new round of shutdowns when it reports results for its third fiscal quarter next week, according to people with knowledge of the plan. The company aims to restructure out of court, in part by closing stores and using the savings to boost liquidity, said the people.
Filing for bankruptcy is an option under consideration if Pier 1 falls short of its goals, said the people, who asked not to be identified because the process isn’t public yet. The company also expects to disclose cuts in its debt load, listed at more than $300 million in its previous quarterly report.
Representatives for Fort Worth, Texas-based Pier 1 declined to comment. The shares fell more than 5%.
Pier 1 posted eight straight quarters of declining sales and six consecutive quarterly losses as shoppers defected to new e-commerce players like Wayfair Inc. and conventional giants like Walmart Inc. that have expanded in the category. Turnaround executive Robert Riesbeck took over as chief executive officer in November, almost a year after Pier 1 replaced a previous CEO and said it would explore strategic alternatives.
The company is working with a team of advisers to restructure operations, including Kirkland & Ellis LLP, AlixPartners LLP and Guggenheim Partners LLC. Representatives from those firms declined to comment.
Pier 1 lost $199 million in its last fiscal year on $1.55 billion in sales. During its September earnings call, the company said it would close about 70 stores in fiscal 2020, and that the number likely would increase as talks with landlords progressed. Pier 1 had more than 950 outlets in the U.S. and Canada as of Nov. 4, with 4,000 employees as of March 2019.
Shares of the company fell 37 cents to $6.23 Friday, down from $31 last February. Pier 1’s term loan due 2021 was quoted around 26 cents on the dollar, a sign that creditors expect to take heavy losses if the company files for court protection.
The retailer doesn’t own a lot of property, with Pier 1 leasing its corporate headquarters, stores and almost all of its distribution and fulfillment centers, according to its annual regulatory filing.
--With assistance from Eliza Ronalds-Hannon, Lisa Wolfson and Shannon D. Harrington.
To contact the reporters on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net;Katherine Doherty in New York at kdoherty23@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Dawn McCarty
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