In what appears to be yet another major retailer feeling the pinch of the economy, Pier 1 announced it would be shutting down even more of its retail locations in 2019. The well-known home goods retailer saw a 16% drop in the value of its stock on Thursday during early trading. The stock drop came as a result of another posting of rather dim earnings.
Sales reports for stores that were open for at least one year were reported to have fallen 13.5% in the first quarter, resulting in the company posting a loss of $81.7 million. This loss is much more significant, and in addition to the loss posted last year, for the same quarter, in the amount of $28 million.
With this news from Wall Street, it is no news that the retail giant is appearing attempting to struggle to keep its head above water. Pier 1 is expecting the second quarter to prove just as rough, if not more so, and in anticipation has started to discount items aggressively and lower prices to move as much inventory as possible.
The home furnishing retailer announced this past week that they were set to close as many as 57 more of its stores in 2019—which is looking to be 12 more than initially planned and indicated. The official spokesman said that the closings are one part of a strategy that is geared towards turning around the brand's revenue.
The list of additional closures and strategy reworking came about due to the ongoing US-China trade war, which in turn resulted in the dismal reports from multiple quarterly earnings. Cheryle Bachelder, the interim CEO at Pier 1, stated: “We’ve been taking actions to reduce our exposure to China since last summer by levering the strength of our global sourcing team.”
Bachelder also said that, due to the tariff increases, the company was reviewing their assortment. As a result, they found that they needed to increase prices in an attempt to offset the additional increases on their side due to the tariffs. Is this approach proves unsuccessful, Bachelder stated that the company may very well need to take further action.
Although Pier 1 has 967 stores that are at this time remaining open, Balcheder cautioned that if the retailer is unable to achieve the goals in performance, along with targeted sales and reduction of additional costs, Pier 1 could very well end up closing up to 15% of its current portfolio.
So, what’s the verdict—you decide.
Will Pier 1 be able to turn around its sales with the new strategy they are putting in place?