Pier 1 Imports has filed bankruptcy to facilitate a sale of the home furnishings company after nine consecutive quarters of revenue declines.
The Chapter 11 filing on Monday came three months after Robert Riesbeck was appointed Pier 1’s CEO after serving as its finance chief since July. The move had triggered speculation that a bankruptcy filing was looming.
In January, Pier 1 announced it would close half its stores as it reported a 13.3% drop in net sales and an 11.4% decline in same-store sales.
Riesbeck said Monday that the company had “taken significant steps forward in our business transformation and cost-reduction initiatives. We have worked to establish an appropriately sized and profitable store footprint, operating structure and merchandise assortment that will enable Pier 1 to better serve our customers across store and online channels.”
“Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company,” he added.
Pier 1 said it had received a commitment of approximately $256 million in debtor-in-possession financing from lenders to keep it operating during the Chapter 11 process.
As CNBC reports, the bankruptcy announcement “was far from unexpected following sales declines for nine consecutive quarters and outsized debt load.” Pier 1 had a long-term debt load of of $258.3 million at the end of the third quarter.
The company, which was once a home-furnishings giant with more than 1,000 stores, has struggled with “changing consumer tastes and an unforgiving retail environment,” according to The Wall Street Journal.
The sale process would be supervised by the bankruptcy court, with potential bidders coming from the private-equity sector, which, Forbes noted, “has a penchant for buying distressed retailers.” Recent acquisitions have included Toys R Us, Mattress Firm, and Staples.
But Forbes said the prospects for Pier 1 look “rather dismal,” adding that “it now appears that Pier 1 Imports will be headed to the retail salvage yard — broken down for parts.”