After reporting a third-quarter loss of $50.3 million, Pier 1 Imports Inc. announced that the current CEO has stepped down. The company immediately announced the appointment of Cheryl A. Bachelder, a member of the company’s Board of Directors and a former CEO of Popeye’s, as interim CEO. Bachelder succeeds Alasdair B. James, who has stepped down from the company.
Additionally, Pier 1 announced the following actions to enhance shareholder value and position the company for long-term growth and profitability:
The company said it will narrow its strategic focus and hone execution to provide the distinctive Pier 1 style and value proposition desired by customers. The company’s newly appointed chief customer officer, Donna Colaco, will lead the effort.
The company also said it is implementing a more rigorous cost reduction program expected to generate annualized expense savings beginning in fiscal 2020.
The company will continue to manage day-to-day execution with the added resources of an internationally recognized consulting firm.
Pier 1’s Board has initiated a process to evaluate a full range of strategic alternatives to enhance shareholder value and has retained Credit Suisse to assist in this effort.
In a conference call with analyst on Dec. 19, Bachelder said the company has the “right building blocks for success.”
Bachelder is a restaurant industry executive with more than 40 years of retail brand building, guest experience, human capital and operations perspective from her recent leadership of a global public company. Bachelder most recently served as chief executive officer of Popeyes Louisiana Kitche, Inc. from 2007 to 2017, a restaurant with more than 2,600 locations worldwide.
“I have first-hand experience in transforming retail brands to bring them back to growth and profitability, and I see a tremendous opportunity to do that here. I also bring together a highly capable and cohesive team that have the experience to act swiftly,” she said in the conference call, according to a transcript from Seeking Alpha.
The Fort Worth-based company separately announced in its third quarter fiscal 2019 earnings release that it has successfully amended its secured revolving credit facility to include a new $50 million first-in, last-out (FILO) tranche with Bank of America and Pathlight Capital that funded December 14, 2018, and plans to reduce its expected capital expenditures for fiscal 2019 from $60 million to $40 million.
As of December 1, 2018, the company has $71 million of cash and cash equivalents and no working capital borrowings outstanding under its $350 million secured revolving credit facility, which was increased to a $400 million facility with the $50 million FILO tranche closed post quarter end.
During the conference call, Bachelder said: “[W]e have proactively expanded our secured revolving credit facility, which will immediately enhance liquidity and create greater financial flexibility. We are also reducing our capital expenditures and implementing a rigorous cost-reduction program to ensure we have an appropriate cost structure for today and well into the future.”
The chairman of the board said they were pleased to have a CEO like Bachelder on board.
“Cheryl brings to Pier 1 a strong track record of leadership, execution and building shareholder value. We are confident that she is the right person to oversee the actions necessary to strengthen the business and place the company on a path to growth as we work to evaluate the most effective avenues to create value for all shareholders,” said Terry E. London, chairman of the Pier 1 Board of Directors. “On behalf of the entire Board, I want to thank Alasdair for his contributions as CEO. We wish him all the best in his future endeavors.”
Pier 1 named James as CEO in April 2017, but the company has yet to regain much traction in the increasingly difficult retail market. James had implemented a marketing plan called “New Day,” but the results did not match expectations.
“Clearly the ‘New Day’ strategic plan did not deliver the desired results fast enough,” said Bachelder. “We will need to promptly narrow our strategic focus and hone our execution in a way that reinvigorates our top-line sales with a distinctive Pier 1 style and value proposition for our customers, while re-engineering our cost structure for sustainable profitability. I look forward to outlining a new action plan in short order.”
Bachelder continued. “We are delighted to have our Chief Customer Officer, Donna Colaco, on board and can already see that her merchandising talent, operating expertise and deep knowledge of our customer will help us reach our goal of accelerating performance and enhancing shareholder value.”
Most recently, Colaco was brand president of White House Black Market, a Chico's FAS Inc. brand. Prior to that, she spent 11 years with AnnTaylor Stores Corp. She joined Pier 1 in November.
Under Bachelder’s leadership, the Popeyes brand had top-tier comparable sales growth, a doubling of restaurant operating profits, a reputation for innovation, and a rapid new unit expansion track record both in the U.S. and internationally. The company was acquired by Restaurant Brands International Inc. in March 2017 for a significant premium. From January 2001 to September 2003, she served as the president and chief concept officer for KFC Corporation in Louisville, Kentucky, where she was directly responsible for the U.S. business. From June 1995 to December 2000, Bachelder served as vice president, marketing and product development for Domino’s Pizza, Inc. She has previously held executive positions with consumer industry companies including RJR Nabisco, Gillette Company and Procter & Gamble.
“I accepted this role as a steward of a great company called Pier 1, which is defined by an iconic brand, dedicated retail store associates, and loyal customers and vendor partners,” said Bachelder. “I am honored to serve in this role as we seek to enhance Pier 1’s value for all of our stakeholders and look forward to working with the board, management team and outside advisors to quickly and decisively take action to put Pier 1 in a stronger position for the future.”
The company reported a fiscal third-quarter loss of $50.4 million, after reporting a profit in the same period a year earlier.
On a per-share basis, the company said it had a loss of 62 cents.
The home decor company posted revenue of $413.2 million in the period.
In the conference call, Bachelder said: “During the quarter, the business experienced similar challenges as we saw in the second quarter. It's become clear that we're not giving our Pier 1 customer the style, the value, the selection that she wants to find in our stores and online. The sector is performing well, so we know the opportunity is there for Pier 1, we just have to capture it.”
In the final minutes of trading on Wednesday, the company's shares hit $1.12. A year ago, they were trading at $4.16.