Pier 1 shareholders urge cost-cutting measures
Letter suggests company close as many as 300 poorly performing stores
By Clint Engel -- Furniture Today, April 30, 2007
Fort Worth, Texas — A group of investors holding a 5.5% stake in Pier 1 Imports is urging the retailer to pick up the pace in its cost-cutting and restructuring moves, suggesting it close as many as 300 poorly performing stores and lease out at least one-third of its corporate headquarters.
Pier 1 "has reacted at a glacial pace to the intensified competitive landscape that has developed in the U.S. home furnishing retail industry over the past five to 10 years," wrote Joshua Hertz, portfolio manager representing investors Elliot Associates L.P. and Elliott International L.P., in a letter to Pier 1's Board that also was filed with the Securities and Exchange Commission.
The retailer had 1,257 stores as of March. "Elliott believes it should close 250 to 300 underperforming stores as quickly as possible, returning Pier 1's store count to no more than 1,000 stores," Hertz wrote.
The April 9 letter went on to urge Pier 1 to cut its selling, general and administrative expenses to "right size" operations to the current level of business. It said the retailer spent about $100 million on a new 460,000-square-foot headquarters here, and should lease out at least a third of the building because it's more space than the company needs.
Earlier, Pier 1 had announced it was cutting its work force by about 175 positions in a cost-saving move. It said it will take a $5 million charge in its first quarter, but expects annualized savings of about $17 million.
The Elliott letter called the move "a first step in the right direction, however, much more needs to be done."
In an earnings conference call last week, Pier 1 executives did not mention the letter..
