US home furnishings retailer Pier 1 Imports will close all 67 of its Canadian stores as the company restructures in the United States. Pier 1 is filing for voluntary Chapter 11 bankruptcy in the US to facilitate a sale process which will allow the company to operate with a smaller footprint in the US while expanding its ecommerce business south of the border.
In connection with its plans to close all its stores in Canada, Pier 1 is also commencing proceedings in Canada, according to a statement.
Many of Pier 1’s stores and online platform will continue to operate in the US. As part of the restructuring, Pier 1 has received a commitment of approximately $256 million in debtor-in-possession financing from Bank of America N.A., Wells Fargo National Association, and Pathlight Capital LP. Following court approval, the company says that it expects this financing, together with cash flows from operations, to provide ample liquidity to support continued operations and the sale process through the Chapter 11 process.
The company said that it filed customary first day motions that, once approved by the court, will allow Pier 1 to transition its business into Chapter 11, including granting authority to pay wages and benefits and honour customer commitments in the ordinary course of business. The company will also continue to pay vendors and suppliers in the ordinary course for all goods and services provided on or after the Chapter 11 filing date in the US.
Pier 1 says that it intends to conduct a court-supervised sale process and complete the sale through its Chapter 11 plan. The company said in a statement that it expects that the deadline to submit qualified binding bids will be on March 23, 2020, subject to procedures to be approved by the court.
Robert Riesbeck, Pier 1’s Chief Executive Officer and Chief Financial Officer, said, “In recent months, we have 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. We are moving ahead in this process with the support of our lenders and are pleased with the initial interest as we engage in discussions with potential buyers.”
Pier 1 has been struggling for years with its stock having gone from US$300 a share in 2015 to about US$3.56 on Friday of last week. The retailer’s sales fell 13% to US$358 million in its most recent quarter that ended November 30, 2019. Pier 1 reported a net loss of US$59 million for the quarter as the retailer continued to struggle to draw customers to its network of stores. Efforts were put in place to better organize cluttered stores while attempting to draw-in a younger consumer demographic while also growing online sales.
Retail Insider recently reported that it had counted more than 700 store locations that would be closing in Canada between January 1 and the end of March of this year. Pier 1 is another addition to the list. Pier 1 stores in Canada are located in standalone boxes, power centres, strip centres and in some shopping centre properties, which will require landlords to repurpose vacated spaces.