Pier 1 Tumbles as Retailer Plans More Store Closures, Cost Cuts

(Bloomberg) -- Pier 1 Imports Inc. announced a plan to cut costs at the chain, which is under siege from newer online rivals. The company also announced an interim chief financial officer from AlixPartners LLP, a company known for its turnaround and restructuring practice.

• Part of Pier 1’s “action plan’’ announced Wednesday includes generating cost savings and benefits of as much as $110 million in fiscal 2020 “by resetting its gross margin and cost structure.’’ The company is considering closing as many as 45 stores where leases are expiring in the current fiscal year, and this could reach as many as 15 percent of total locations if performance goals aren’t met.

Key Insights

• Pier 1 has been working on a comeback plan for months. In December, it ousted its then chief and ripped up the turnaround script he’d put in place the previous April. Cheryl Bachelder -- who previously revamped Popeyes Louisiana Kitchen -- has been leading the company since on an interim basis. Bloomberg News reported last month that the retailer has been working with strategic advisers from AlixPartners and law firm Kirkland & Ellis LLP.
• The retailer named Deborah Rieger-Paganis, managing director at AlixPartners, as interim chief financial officer. One of her goals will be “instilling financial discipline,’’ she said in a statement. She replaces Nancy Walsh, who departed the company.
• In the meantime, performance is further deteriorating. The retailer’s same-store sales fell 13.7 percent in the quarter that included Christmas -- traditionally the retailer’s strongest period. The drop was deeper than previous quarters’ declines.

Market Reaction

• Shares fell as much as 22 percent after the close of regular trading in New York. They’d already doubled year to date, but could still be in danger of being taken off the New York Stock Exchange if they spend much more time below the $1 mark.
• Read the company statement here.

To contact the reporters on this story: Anne Riley Moffat in New York at ariley17@bloomberg.net;Jordyn Holman in New York at jholman19@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Jonathan Roeder

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