Pier 1 on Monday announced it is looking to reduce its corporate expenses, which includes "a reduction in corporate headcount." The retailer also announced it will close up to 450 locations, nearly half of its 942 stores, and "certain distribution centers," according to a company press release. Pier 1 said it has enlisted a third-party liquidator to assist in the process.
Pier 1 is reportedly cutting its headquarters staff by about 40%, or 300 people, and is canceling orders, according to a Bloomberg report citing unnamed sources. The company has also drafted a bankruptcy plan, per the report. Pier 1 did not immediately respond to Retail Dive's request for comment on this report.
"Although decisions that impact our associates are never easy, reducing the number of our brick-and-mortar locations is a necessary business decision," CEO and CFO Robert Riesbeck said in a statement.
While Pier 1 plans to close nearly half of its stores and make cuts, it may not prove to be enough for the struggling home goods retailer.
Pier 1 on Monday reported net sales fell 13.3% to $358.4 million from $413.2 million in the year-ago period, marking nine consecutive quarters of declines in that measure. Comparable sales in the quarter fell 11.4%. Pier 1's loss continued to widen in the third quarter to $59 million from $50.4 million a year ago, and gross profit was $110.3 million, while its gross margin was 30.8%. The company's available assets continues to dwindle and now stands at about $11 million.
In a document filed with the Securities and Exchange Commission on Monday, Pier 1 expressed doubts about its ability to successfully address its financial challenges and continue operating as a "going concern."
"Fiscal third quarter sales and margins remained under pressure as we completed our efforts to clear out non-go-forward merchandise," Riesbeck said in a statement. "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."
According to Bloomberg, Pier 1 laid out a plan to creditors in December that envisioned a smaller company post bankruptcy, which would notch about $900 million in annual sales. In fiscal 2019, the company reported annual sales of $1.6 billion.
Riesbeck, who has experience leading other distressed retailers through bankruptcy like FullBeauty and HHGregg, was appointed to the chief executive position in November.
Continued troubles helped land Pier 1 on Retail Dive's most recent list of potential bankruptcies. The home goods retailer spent most of 2019 in turmoil: S&P Global Ratings in April 2019 downgraded the retailer's issuer credit rating from CCC+ to CCC-, in addition to downgrading the issue-level rating on its senior secured term loan. And in December, Pier 1 brought on financial adviser Guggenheim, according to a Debtwire report citing unnamed sources.
"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," Raya Sokolyanska, Moody's vice president and senior analyst, said in a client note emailed to Retail Dive. "Increasing competition in the sector from online players, mass merchants and off-price retailers is compounding Pier 1's already challenging turnaround."