Pier 1 Imports (NYSE: PIR) is moving up in the ranks of layoff kings by announcing that it will lay off another 10% of its "full time equivalent positions in its distribution center, home office, and field administration areas."The layoffs could hit stores too. The company disclosed that it is negotiating with landlords in an effort to negotiate lower rent payments to help cope with its tanking sales. In the press release, Pier 1 noted that "The Company has begun negotiating with landlords to achieve rental reductions across the chain. These negotiations may lead to the execution of early termination agreements for up to 125 underperforming store locations, if rental reduction negotiations on those locations prove unsuccessful." That figure represents more than 10% of Pier 1's approximately 1,100 store base.
With Pier 1's stock trading at a market cap of just $30 million and a share price of 33 cents, many investors seem to think this story will end with bankruptcy. The company has boasted that it has strong liquidity in its most recent earnings reports, but continuing sales declines, writeoffs and restructuring expenses could eat into that. Restructuring leases is an important step in turning around the company and the timing is good since if Pier 1 closes stores, landlords will have a hard time finding new tenants.
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