Pier 1 offloads debt, updates financial picture

-- Home Textiles Today, 3/23/2009 10:46:00 AM

Fort Worth, Texas – Moving to stabilize its financial profile, home furnishings specialty retailer Pier 1 Imports said it: will sell $79 million of its debt to a subsidiary; will close fewer stores but save $5 million in rent; had cut nearly $100 million from year-end merchandise inventory.

In the same filing with the SEC last Friday, Pier 1 also released preliminary, un-audited fourth quarter and full year results. The company’s fiscal year ended February 28, and it normally would report these results in April. As it has been warned of possible delisting of its shares by the New York Stock Exchange, Pier 1 is looking to meet that challenge with aggressive measures.

The retailer showed a Q4 net loss of $29.4 million or 33 cents per share – down from a net profit of $13.7 million or 16 cents EPS one year ago – as sales plunged 10.8% to $389.2 million and comps dropped 9.7%.

Full year results showed a loss of $129.2 million of $1.45 per share, broadened from $96.0 million or $1.09 in the prior year, on sales of $1.32 billion, down 12.6% from year-ago sales of $1.51 billion.

Pier 1 said a foreign subsidiary of the company – Pier International Limited, a Hong Kong private limited company – “entered into agreements purchasing $79 million of the company’s outstanding 6.375% convertible senior notes due 2036” for the price of $27 million, which includes accrued interest.

The 1,092-store Pier 1 said it now plans to close “no more than 80 locations” rather than the full 125 it was reviewing, and said liquidation of inventory in the terminated stores will offset some of the roughly $4 million in closure charges for the first 16 stores it will shutter. Beyond that, Pier 1 said it “has achieved approximately $5 million in rental savings” for fiscal 2010, the current year.

Pier 1 said it cut year-end inventory to $316 million from $412 million one year ago, a 23% reduction.