Pier 1 shares tumbled on Monday after the troubled retailer announced sales had dropped for a ninth straight quarter and it would close almost half its stores.
For the third quarter, Pier 1’s net sales fell 13.3% to $358.4 million while its loss widened to $59 million, or $14.15 per share, from $50.4 million or $12.49 per share, a year ago, as sales fell 13.3% to $358.4 million. Same-store sales were down 11.4%.
“Fiscal third-quarter sales and margins remained under pressure as we completed our efforts to clear out non-go-forward merchandise,” CEO Robert Riesbeck said in a news release.
The earnings report added fuel to bankruptcy rumors that have been swirling around the company, which said Monday it now plans to close up to 450 stores, shut some distribution centers and reduce headcount to cut costs.
During its September earnings call, the company had said it would close about 70 stores in fiscal 2020. It operated 942 stores in the United States and Canada, as of Nov. 30, 2019.
“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,” Riesbeck said, adding that the additional cost-cutting measures “will enable us to move forward with an appropriately sized store footprint and operating structure as an omnichannel retailer.”
But trading in Pier 1’s stock was halted briefly on Monday after the shares sank 30%. They closed at $5.18, down nearly 17% on the day.
Citing a person familiar with the matter, Reuters reported that Pier 1 has drafted a bankruptcy proposal and made a presentation to creditors last month, with a plan to create a smaller post-bankruptcy company with about $900 million in annual sales.
Moody’s analyst Raya Sokolyanska said the company’s latest plan will likely be insufficient to turn around the business in time to address its looming debt maturities, making restructuring or bankruptcy highly likely scenarios. It has a long-term debt load of of $258.3 million at the end of the third quarter.