Pier 1 Imports filed for bankruptcy Monday (Warning: source paywalled; alternative source), “a victim of changing consumer tastes and an unforgiving retail environment,” reports The Wall Street Journal. “Unlike many other retailers that have sought bankruptcy in recent years, the publicly traded Pier 1 — with assets of $426.6 million and listed total debt of $258.3 million — isn’t weighed down with debt from an ill-timed leveraged buyout. Rather the company’s struggles can be traced to increasing competition from online players, mass merchants and off-price retailers, such as Wayfair, TJX, HomeGoods, Bed Bath & Beyond, Cost Plus World Market and Amazon.” From the report: Those rivals have increasingly moved into selling home furnishings and merchandise that were once virtually the exclusive domain of Pier 1, according to Hart Posen, a professor of management at the University of Wisconsin. “You’d see something in someone’s house — a wicker-rattan chair or an elephant-themed umbrella holder — and know it came from Pier 1,” Mr. Posen said. “You could buy it at Pier 1 or nowhere, but that’s just not the case anymore.”
The emergence of online operators such as Wayfair have rendered the backdrop for traditional chains all the more difficult, according to Oppenheimer & Co. analyst Brian Nagel. But there were also missteps that led Pier 1 to bankruptcy. The company was late to embrace e-commerce and was forced to build an online business from virtually nothing, said Mr. Nagel. Along the way, it had to absorb the costs of building distribution centers and other infrastructure, while also adjusting to the tighter margins from online sales. “When the company finally made its move online, it did so in a way that cannibalized the volumes and profitability of its physical stores,” said Mr. Nagel. The Fort Worth, Texas-based company tried to revitalize the business with a program dubbed “Pier 1 2021: A New Day,” but that effort failed.
“The bankruptcy filing comes after the chain made it through the critical holiday shopping season,” adds The Wall Street Journal. “In early January, Pier 1 said it planned to close nearly half of its nearly 940 stores and a number of distribution centers. It had already hired a liquidation company to help close the locations. Pier 1 said it intends to use the bankruptcy process to complete closure of some 450 stores, including closing all of its locations in Canada.”