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Pier 1 may close 125 stores

Also will cut staff by 10%

Clint Engel -- Furniture Today, February 4, 2009

FORT WORTH, Texas — Pier 1 imports said it may close as many as 125 stores and will shut down its 514,000-square-foot distribution center in St. Charles, Ill., as part of a cost-cutting effort.

The long-struggling home furnishings retailer also said it will cut 10% of its full-time positions in the distribution center, home office and field administration areas, but did not disclose the number of people who will be let go.

Pier 1 said it has hired DJM Realty to help in negotiations with landlords for rent reductions. It said that if the negotiations are not successful it "may lead to execution of early termination agreements for up to 125 underperforming store locations."

The Fort Worth-based company expects to incur costs of about $5 million for severance, outplacement and other charges related to the cost-cutting moves. It characterized the actions as a "plan to meet the challenges of the current environment and to position itself for optimum performance in a post-recession economy."

Pier 1 had just over 1,100 stores at the end of its fiscal third quarter ended Nov. 29. For the period, the retailer lost $36.9 million (compared with a $10 million loss for the same period a year ago) and same-store sales dropped 17.8%.

The company's stock has been hammered this year, too. It closed at 35 cents a share Tuesday and has been trading for under $1 since mid November.

Pier 1 was notified by the New York Stock Exchanges that it was not in compliance with listing requirements since its share price had fallen under $1 and said it "intends to cure the deficiency" within the required six months.

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