(Bloomberg) — Pier 1 Imports Inc. shares tumbled as much as 24% after reporting a seventh straight quarter of declining sales as its interim chief tries to make its turnaround plan work.
Same-store sales, an important measure for retailers, fell 13.5% in the first quarter. Results were dragged down by “aggressive clearance actions to move through lower-priced, lower-margin goods,” Interim Chief Executive Officer Cheryl Bachelder said.
Bachelder had laid out her plan to revive the struggling retailer in April, including store closures and cost cuts. Investors got their first glimpse into how the plan’s working on Wednesday, with the company saying it’s still on track with the savings it laid out last quarter and that it’s learning “in real-time.”On the company’s earnings call, management said Pier 1 would close about 57 stores this fiscal year. That’s higher than the 45 it had announced earlier this spring. Pier 1 had said in April it would recapture about $30 million to $40 million of net income and $45 million to $55 million of EBITDA in fiscal year 2020 — that’s no longer the case. “The expense savings we plan to realize in the second half of fiscal 2020 are expected to be absorbed by reduced gross margins” instead, the CEO said Wednesday.One big question investors may still have is the home goods store’s liquidity position. S&P Global Ratings said in April it was concerned the company isn’t discussing any debt exchange and cited what it called an increasing “potential for a bankruptcy filing or debt restructuring.” The company has said that its turnaround plan “will provide sufficient liquidity“ for a rebound.
Pier 1 shares fell to as low as $6.70 as on Thursday. The retailer announced a reverse stock split this month, allowing it to regain compliance with the NYSE minimum share price and continue to be listed.
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(adds share trading and bullet point on store closures.)
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