(Bloomberg)—Pier 1 Imports Inc. shares plunged close to 40% a day after the home-furnishings retailer reported more falling sales, plans to trim staff and close hundreds of stores.
The company has also drafted a bankruptcy plan and canceled some orders, according to people with knowledge of the matter. Late on Monday, Pier 1 reported a wider third-quarter loss and about an 11% decline in comparable sales, a key measure for retailers.
The stock tumbled to as low as $3.16 before paring much of the decline. As of 12:46 p.m. in New York, shares were down 9%.
The Fort Worth, Texas-based company has posted multiple quarters of declining sales and losses as competition intensified and shoppers defected to e-commerce players. Pier 1 on Monday said lower sales were due to fewer customer visits to its stores and that its third-quarter loss increased to $59 million from $50 million.
“The broader challenge that’s plagued the entire industry is that foot traffic has slowed,” Bloomberg Intelligence analyst Poonam Goyal said. “Pier 1 sold furniture, but also smaller home items. Some of those items are impulse purchases and if consumers aren’t in the stores, they don’t make additional purchases.”
Along with the bankruptcy plan, the retailer last month made a presentation to creditors that envisioned a smaller company with about $900 million in annual sales, according to the people with knowledge of the matter. It’s also canceling some orders and has held talks with current lenders about providing Chapter 11 financing.
In a filing Monday, the company said it expanded its board with the appointment of two directors, both with restructuring experience. Pamela Corrie, a restructuring attorney, has served as a managing director at Carl Marks Advisors since February 2018, while Steven Panagos was vice chairman of the recapitalization and restructuring group at Moelis & Co. from April 2009 to June 2018. Both were consultants to the Pier 1 board prior to their appointments, according to the filing.
Pier 1’s term loan due in 2021 stood at around 27 cents on the dollar with no market trades on Monday, according to people familiar with the pricing. The price signals that creditors expect to take heavy losses if the company files for court protection.
--With assistance from Katherine Doherty.
To contact the reporters on this story: Olivia Rockeman in New York at [email protected];
Jonathan Roeder in Chicago at [email protected].
To contact the editor responsible for this story: Sally Bakewell at [email protected]
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