Pier 1 Imports has decided to wind-down retail operations "as soon as reasonably possible," after being hindered by COVID-19 and unable to find a buyer.
The home goods retailer filed for bankruptcy protection in February, around a month after it announced it would close up to 450 stores, almost half of its store base.
Now the retailer has filed a motion seeking court approval to begin an orderly wind-down as soon as possible after its 541 Pier 1 stores are able to reopen following closures during the COVID-19 pandemic. As part of the wind-down, Pier 1 intends to sell its inventory and remaining assets, including its intellectual property and e-commerce business, through the court-supervised process. Its debtor-in-possession lenders have agreed to allow the company to overdraw its DIP facility by roughly $40 million to support its efforts to liquidate.
In November, Pier 1 brought on Robert Riesbeck as its new CEO, who had served as Pier 1’s CFO since July 2019. He replaced Cheryl Bachelder, who served as interim CEO since December 2018.
“We deeply value our associates, customers, business partners and the communities in which we operate, and this is not the outcome we expected or hoped to achieve,” said Riesbeck. “This decision follows months of working to identify a buyer who would continue to operate our business going forward. Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down.”
Sales in Pier 1’s most recent quarter, which ended Nov. 30, fell 13% to $358 million, while comparable sales decreased 11.4%. The company also reported a net loss of $59 million for the quarter.
The retailer said due to the combination of a challenging retail environment and the new reality and uncertainty of a post-COVID world, the company and its advisors determined that a wind-down is the best way to maximize its assets.
Pier 1 intends to initiate store closing efforts and liquidation sales once store locations can reopen, in compliance with COVID-19 guidelines from local government and health officials. The company is continuing to serve customers through Pier1.com, and orders are being processed and filled.
Pier 1 has proposed July 1, 2020 as the asset bid deadline, July 8, 2020 as the auction date and July 15, 2020 as the sale hearing date.
Kirkland & Ellis LLP and Osler, Hoskin & Harcourt LLP are serving as legal advisors to Pier 1 in the U.S. and Canada, respectively. AlixPartners LLP is serving as the company’s restructuring advisor and Guggenheim Securities, LLC is serving as the company’s investment banker.