Reuters: Pier 1 takes further steps to manage debt
Pier 1 Imports has hired Kirkland & Ellis among other attorneys and consultants to help with debt restructuring, which would entail negotiating with creditors, Reuters reported on Thursday. The home furnishings retailer is also huddling with investment bankers, according to unnamed sources in the report.
The retailer's lenders have organized in light of its concerning "credit metrics," according to a February Debtwire report emailed to Retail Dive. Late last year, Pier 1 tapped Credit Suisse, "to explore strategic alternatives," and AlixPartners, "for operational assistance," Debtwire also said.
The recent moves are further indication of how troubled the turnaround is at the company, which faces stock market delisting as of January. Pier 1 didn't immediately return Retail Dive's request for comment.
As it mulls its financial options, Pier 1 is also evaluating its store fleet, though executives have said that conversion in stores is healthy once shoppers enter them. The retailer shuttered 24 stores last year, when its troubles helped land it on Retail Dive's list of possible bankruptcies.
Getting shoppers in is proving to be a difficult task, and the retailer's challenges have only grown as its competition redoubled. Walmart and Target have moved assertively to take on Amazon (which has both expanded and refined its furniture and home decor offering) and Wayfair (which has added design services and a membership tier). The mass merchants have sharpened their furniture and home goods merchandising, adding new lines and easing online shopping and fulfillment of bulky orders.
Pier 1 reported a third quarter net sales decline of 11.9% year over year as store comps tumbled 10.5%, even with a benefit of about 600 basis points thanks to a shift of holiday days into the calendar. Around that time the company announced that board member Cheryl Bachelder would take over for CEO Alasdair James, who arrived in 2017 in what, at the time, seemed like a smoothly planned transition.
Aside from its long-term debt, which stands at about $200 million as of December, Pier 1's finances are in good order, and that may preclude a bankruptcy filing, per Reuters. But its turnaround will continue to be a tall order if it can't spark sales, according to a December note from Moody's Investors Service analysts. "While Pier 1 has adequate near-term liquidity, including no maturities until 2021 and ample revolver capacity, the third quarter declines reflects continuing challenges in executing its turnaround strategy — particularly in a strong consumer spending cycle," Moody's Senior Analyst Raya Sokolyanska said in comments emailed to Retail Dive.
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