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Pier 1 Imports Inc. shares sank 23.6% in Tuesday trading after the home-décor retailer announced it would shutter up to 450 stores, while Moody’s thinks a bankruptcy could be on the way.
Pier 1 PIR, -5.39% said it had a third-quarter net loss of $14.15 per share, same-store sales fell 11.4%, and sales were down 13.3% to $358.4 million. The company said it had 936 stores.
In addition to the store-count reduction, Pier 1 plans to lay off workers. The struggling retailer has hired a third-party liquidator to help with the store closures.
“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 Robert Riesbeck, who serves as both Pier 1’s chief executive and chief financial officer.
Moody’s isn’t so sure.
“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, a Moody’s vice president. “Increasing competition in the sector from online players, mass merchants and off-price retailers is compounding Pier 1’s already challenging turnaround.”
Riesbeck was named CEO in November. He has experience working with companies that have filed for bankruptcy including plus-size retailer FullBeauty and consumer-electronics chain HHGregg.
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Like many other areas of retail, the home category has been disrupted by a shift to e-commerce, with competition from the likes of Amazon.com Inc. AMZN, -0.15% having an impact.
Another home retailer, At Home Inc. HOME, -0.55% , also had what Wells Fargo analysts called in a Tuesday note “a year to forget” in 2019 after “a series of execution missteps, tariff-driven pressures, and a negative inflection in comps and margins.”
At Home shares are down 75% over the past year.
Pier 1 has been in steady decline for some time, announcing in June 2019 that it would close a total of 57 stores. At that time, KeyBanc Capital Markets said the downward trajectory of the company put it at risk for liquidation.
Pier 1 stock has tumbled 64.5% over the last 12 months, while the benchmark S&P 500 index SPX, -0.21% has gained 27% in that period.
