Shares of Pier 1 Imports (OTC:PIRR.Q) were sliding on fears that the struggling home-goods retailer could go bankrupt after the company said it would close about half of its stores earlier in the week. Shares were down 17.5% today as of 12:44 p.m. EST, which follows a 17% drop on Monday and another 9% slide yesterday.
On Monday, the company said that it would close 450 stores and reported comparable sales down 11.4% in the third quarter, which ended on November 30, as well as a loss of $14.15 per share.
Since then, fears have mounted that the company will be forced to declare bankruptcy, as the stock has been in free fall for a while and was forced to do a reverse split earlier this year to stay in compliance with NYSE standards. It also plans to lay off staff at its corporate headquarters.
According to Bloomberg, the company has held talks with lenders for Chapter 11 bankruptcy financing that would allow the company to restructure and retain a smaller retail footprint. The company also added two new directors to its board with restructuring experience this week and brought in CEO Robert Riesbeck in November, who also has experience managing companies through bankruptcy.
Pier 1 stock has lost 98% over the last three years as the once-viable home-goods chain appears to have become the latest victim of the retail apocalypse. As of Nov. 30, the company had just $11.1 million in cash and cash equivalents but $158.5 million available for borrowing under its revolving credit facility. Nonetheless, its term loan due in 2021 is trading at just $0.27 on the dollar, indicating the market believes a default is probable.
At this point, it appears to be too late for Pier 1 to make the structural changes it needs without a bankruptcy filing, as it has $258.2 million in long-term debt. Expect the stock to continue to slump toward bankruptcy.