Debtwire: Pier 1 hires financial advisers

Dive Brief:

Pier 1 has brought on financial adviser, Guggenheim, according to a Debtwire report citing unnamed sources. Neither Pier 1 nor Guggenheim immediately responded to Retail Dive's requests for comment.
Investors have been "on edge" regarding Pier 1's ability to repay its debt, according to the Debtwire report. In its most recent quarter ended Aug. 31, the retailer had $258.9 million in long-term debt.
Prior to bringing on Guggenheim, the retailer brought on AlixPartners for operational assistance and CreditSuisse to explore strategic alternatives, according to the report.

Dive Insight:

With available cash dwindling, the possibility of a turnaround at Pier 1 is in question, even with fresh reports that the home goods retailer has brought on yet another set of financial advisers.

In its most recent quarter, the distressed retailer reported net sales declines of 14.3% to $304.6 million, a comp sales drop of 12.6% (its eighth consecutive quarter of declines on that measure), and a net loss that nearly doubled to $100.6 million compared with the prior year. The company also said that it had $10 million in cash, compared to $117 million in the year-ago period.

At the same time, then-interim CEO Cheryl Bachelder announced Pier 1 would close 70 stores by the end of the fiscal year, but she noted that she expected that number to increase — up to 140 locations or 15% of its total store fleet. The troubles helped land the home goods retailer on Retail Dive's list of potential bankruptcies.

Pier 1 has been in financial turmoil for most of 2019. S&P in April downgraded the retailer's issuer credit rating from CCC+ to CCC-, noting that it does "not see a path for Pier 1 to return to profitability in the coming six months to one year, even when factoring in the full impact of planned performance improvements."

The company in June completed a reverse stock split in an effort to meet minimum trading requirements from the New York Stock Exchange and keep itself from being delisted. In August, the distressed retailer received another notification from the NYSE that it was not in compliance with the stock exchange's minimum listing requirements, raising the specter of another possible delisting. Though the retailer's plan to regain standard listing compliance has since been approved by the NYSE, poor earnings results don't suggest Pier 1's financial woes are behind it.

Pier 1 last month named Robert Riesbeck to be CEO after a nearly year-long search. Bachelder had been serving in the interim following Alasdair James' departure in December 2018. Riesbeck has a finance background and experience with turnaround situations.