Pier 1 is set to shutter nearly half its fleet, the home furnishings firm reported Monday.
The struggling home goods retailer posted third-quarter results Monday documenting an 11.4 percent drop in comparable sales and a net loss of $59.0 million for the three-month period. Pier 1’s business update indicates plans to reduce its store footprint by up to 450 locations, in addition to closing select distribution centers. Many of its stores span about 10,000 square feet.
“To further advance our progress, we are announcing additional actions today that will enable us to move forward with an appropriately sized store footprint and operating structure as an omnichannel retailer, and better position Pier 1 to meet our customers where they shop,” CEO and chief financial officer Robert Riesback said.
While the cost cutting is part of an initiative to reset its gross margin and cost structure, the apparent hope is that the actions would mitigate the existence of “substantial doubt” regarding its ability to continue as a going concern over the next year, the company said in a regulatory filing with the Securities and Exchange Commission. Pier 1’s operating loss for the first nine months widened to $241.2 million from a net loss of $130.0 million in the same 2018 period, the filing shows.
Last year, the chain said it could close up to 145 doors and potentially more, depending on the outcome of landlord talks. Pier 1 would be left with 486 stores in operation if 450 stores close. Credit ratings firms have warned in the past year that the retailer could be a bankruptcy candidate. Bankruptcy rumors at the start of 2020 continue to plague the retailer, and it reportedly has been working on a draft plan of what the company could look like post bankruptcy.
The new year will see many more big box doors go dark.
A number of announced store closures in 2019 are taking place this year. Fifty-one Sears stores and 45 Kmart locations are slated to go dark in the next month or two, leaving a total of just 182 stores in operation. At the time the $11 billion merger of Kmart and Sears, Roebuck & Co. was completed in 2005, the company generated total revenue of $55 billion with nearly 3,500 retail stores encompassing 2,350 full-line and off-mall stores and 1,100 specialty retail doors.
Forever 21, which remains in the throes of bankruptcy, initially said when it filed in September that it would close 178 doors. Last October, the number was lowered to 111 U.S. stores, but more locations could be added in the coming months following a review of holiday sales.
Bed Bath & Beyond last April said it planned to shutter up to 60 doors, and now 40 of those locations are expected to close by March of this year. The balance of the store cuts will come from the retailer’s other nameplates, BuyBuyBaby and Cost Plus World Market. As some of the core Bed Bath & Beyond locations span more than 80,000 square feet, the move to close doors is part of the retailer’s initiative to better align its store fleet with the preference of shoppers to buy online.
Finding growth in its business-to-business services operation, Office Depot in November said it would shutter 90 doors this year under its Office Depot and Office Max nameplates. It already closed 55 doors last year.
Big-box retailers are not the only ones who entered 2020 with plans to close stores this year. Other retail chains are also closing stores, many of which disclosed the plans for this year in 2019.
Chico’s FAS Inc. said last year it would close up to 250 doors by 2022. The women’s apparel chain operates more than 1,400 stores throughout the U.S. and Canada under the nameplates Chico’s, White House Black Market and Soma, its intimates brand. The company is moving away from brick-and-mortar, and has partnerships with ShopRunner, QVC and Amazon for its products online, in addition to operating its own websites for its three brands.
CVS Health Corp. cut 46 locations in 2019, and plans to close another 22 this year. The drugstore chain is rationalizing its store-base as it shifts its business model away from brick-and-mortar toward health care services. The emphasis will be on pharmacies and local walk-in services called MinuteClinics that offer tests and other health services, such as flu shots. Even with the closures, company still operates nearly 10,000 locations across the country.
Christopher & Banks said last year it would cut between as many as 40 stores over the next two-and-a-half years. The retailer is also looking to rationalize its store base amid the shift in consumer shopping behavior toward online purchases.
Gap Inc. said last year it plans to cut 230 doors, with many of those stores slated to close this year. By the end of 2020, the company will have shuttered close to half of its Gap brand stores. Other changes are also in store as the chain is also looking at reducing square footage for the remaining brick-and-mortar locations.
Among department stores, Bloomingdale’s is said to be closing one store in Miami, while Lord & Taylor will shutter two doors at Tysons Corner Center in Virginia and at the Palisades Center in West Nyack, N.Y.
Macy’s Inc., which closed nine stores last year, is believed to be closing two stores so far this year, media reports said. The two doors are located in the Northgate Mall in Cincinnati and the other at the RiverGate Mall in Goodlettsville, Tenn. The retailer’s downtown flagship in Seattle is expected to close sometime in March. The company will hold its Investor Day on Feb. 5, when it could divulge an update on its planned store count over the next three to five years.