Pier 1 Imports Inc. (NYSE: PIR), the home furnishings company, plans to close 50% of its stores. In addition, Pier 1 has drafted and submitted Chapter 11 bankruptcy plans to creditors, likely accounting for the company's massive store closing initiative and layoff plan to come.
Half of Pier 1's stores amounts to roughly 450 locations. Since Pier 1 employs around 4,000 workers, bankruptcy and downsizing means that thousands of jobs are on the line.
CEO Robert Riesbeck released a statement acknowledging the impact the store closings will have on his company's employees while standing firm that the decision remains what's best for Pier 1. Riesbeck replaced Cheryl Bachelder as CEO in November 2019.
"Although decisions that impact our associates are never easy, reducing the number of our brick-and-mortar locations is a necessary business decision," said Riesbeck.
In fact, Pier 1 hasn't been performing well for some time, a trend that seems to be due in part to other home goods stores outplaying Pier 1 with lower prices and more desirable items.
Over the past year, the company's stock has fallen nearly 75%, so much that Pier 1 is currently valued at $15 million.
Competitors who stand to benefit from Pier 1's losses include Walmart (NYSE: WMT), Target (NYSE: TGT), Wayfair Inc. (NYSE: W), Amazon (NASDAQ: AMZN), and HomeGoods, which is a subsidiary of TJX Companies (NYSE: TJX).
Besides keeping prices competitive and stocking attractive store items, location matters. And according to Tesley Advisory Group, a research firm, 35% of Target stores and nearly 60% of HomeGoods stores are located within three miles of a Pier 1.
"Fiscal third quarter sales and margins remained under pressure," explained CEO Robert Riesbeck. "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."
Pier 1's sales have been declining for nine consecutive quarters.