We have seen many giant retailers succumb to the pressures of an ever-changing retail landscape. The traditional retail business model is all but obsolete. The latest hobbling giant is Pier 1 Imports. While they have not filed for bankruptcy, they have tapped into some resources which are indicative of debt restructuring.
Pier 1 Imports has been a major player in the home furnishing industry for years. The first store opened in San Mateo, California in 1962. The retail chain took off and became a publicly traded company on the New York Stock Exchange in 1972. By 1985, they had 265 stores worldwide.
In the last 6 years, Pier 1 has lost 97% of its market share. Companies like Amazon, eBay, and Walmart have taken over the retail industry leaving traditional stores in the rear-view mirror. However, Pier 1 has a top of the line website. The online experience is only part of the problem. The real issue is that online retailers set the pace for trend changes. As we have seen so often in the last 5 years, many retail chains do not have the infrastructure to adapt to these trend changes.
It is a bad sign when multiple executives are replaced in two months. That is exactly what happened in late 2018. CEO Alasdair James stepped down and CIO Bhargav Shah was terminated. Board member Cheryl Batchelder stepped in as interim CEO. Ms. Batchelder has had success in situations like the one Pier 1 is in.
How Bad is Pier 1’s Financial State?
Well, the board of the company called the 3rd quarter of fiscal year 2019 a “dumpster fire”. Their operating income went from $13.4 million in 2017 to -$28.9 million in 2018. According to cnbc.com, as of December 2018, Pier 1 has $200 million in long-term debt which is over two times the size of their market capitalization ($90 million). This debt comes due in 2021.
Is Bankruptcy Inevitable?
Well, no. Pier 1 Imports is headed in the wrong direction, but as of December 2018, they had $71 million in cash and up to $400 million in available credit. They have time to right the ship. They have brought in a team of experts to examine debt restructuring opportunities. With 2 years to design a plan and execute it, they have a good shot at avoiding a bankruptcy filing.
If you or your business are having trouble paying the bills, you need help. You do not have to wait until everything is falling apart to design and execute a debt plan. If you feel like you need the assistance of a licensed and skilled attorney in Florida, Elias Dsouza can help. He has been assisting individuals and businesses to manage their debt issues for over 15 years. Contact Elias today for a free consultation.