In a statement attached to third-quarter financial results, US home décor and accessories retailer Pier 1 Imports on Monday, January 6, revealed that it will reduce the number of its 936 stores by nearly half in a bid to control expenses.
“In order to better align its business with the current operating environment, Pier 1 intends to reduce its store footprint by up to 450 locations. To reflect the revised store footprint, the company also plans to close certain distribution centers and reduce its corporate expenses,” the statement read.
“This includes a reduction in corporate headcount,” it continued
Since the third quarter of financial year 2019, the company has reduced its locations by 45 and, up to November 30, 2019, operated 942 stores.
Pier 1 shared that it has contracted the services of a third-party liquidator to help manage the closure of its outlets. In addition, on January 6, 2020, the company received permission from its lenders, with whom it has revolving credit facilities, to reduce its footprint.
“Although decisions that impact our associates are never easy, reducing the number of our brick-and-mortar locations is a necessary business decision,” the statement quotes Pier 1’s Chief Executive Officer and Chief Financial Officer Robert Riesbeck.
“Fiscal third-quarter sales and margins remained under pressure as we completed our efforts to clear out non-go-forward merchandise,” the CEO also said.
As a result, Pier 1 reported a 13.3 per cent contraction in third-quarter sales, moving from US$413.2 million as at December 1, 2018, to US$358.4 million on November 30, 2019. For the nine-month period, net sales fell by 14.3 per cent to US$977.3 million, when compared US$1.1 billion recorded in the last financial year.
In line with sales, gross profit for the period stood at US$110.3, or 15.5 per cent less than US$130.5 million posted in financial. As a percentage of sales, gross profit margin fell by one per cent.
“Although decisions that impact our associates are never easy, reducing the number of our brick-and-mortar locations is a necessary business decision.”— Pier 1’s Chief Executive Officer and Chief Financial Officer Robert Riesbeck
According to Pier 1, “The year-over-year decline in gross margin rate primarily reflects increased promotional and clearance activity, as well as 190 basis points deleverage in store occupancy costs due to lower sales.”
Further, the company reported a net loss of US$59.0 million for third-quarter 2020, with cash and cash equivalents ending at US$11.1 million.
For the nine months ending November 30, 2019, net loss totalled US$241.2 million, increasing from US$130 million in the year prior.
Notwithstanding, Pier 1 expects an improvement in results for the fourth-quarter 2020.
“Looking ahead, we believe that we will deliver improved financial results over time as we realise the benefits of our business transformation and cost-reduction initiatives. To further advance our progress, we are announcing additional actions today that will enable us to move forward with an appropriately sized store footprint and operating structure as an omni-channel retailer, and better position Pier 1 to meet our customers where they shop,” Riesbeck shared.