UPDATE: Pier 1 files for bankruptcy protection, to close 7 Indiana stores

Home goods retailer Pier 1 Imports Inc. said Monday that it has filed for bankruptcy protection.

The Fort Worth, Texas-based company has been struggling with increased competition from budget-friendly online retailers such as Wayfair.

The retailer has two stores in Indianapolis (6810 S. Emerson Ave. and 2902 W. 86th St.) and three in the suburbs (Plainfield, Carmel and Noblesville).

The local stores are not among the locations expected to close, but bankruptcy papers indicate seven stores will be eliminated in Indiana: in Bloomington, Kokomo, Fort Wayne, Merrillville, Valparaiso, Goshen and Warsaw.

Pier 1 said it will pursue a sale, with a March 23 deadline to submit bids. A hearing is scheduled for Tuesday at the U.S. Bankruptcy Court for the Eastern District of Virginia.

In the meantime, Pier 1 said lenders have committed approximately $256 million in debtor-in-possession financing so it can continue its operations during the Chapter 11 proceedings.

“Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company,” Pier 1 CEO and Chief Financial Officer Robert Riesbeck said in a statement.

Riesbeck, who was CEO of former Indianapolis-based appliances HHGregg when it filed for Chapter 11 bankruptcy in 2017, took over the top spot at Pier 1 after joining the company as chief financial officer in July.

Pier 1’s sales fell 13%, to $358 million, in its most recent quarter, which ended Nov. 30. It reported a net loss of $59 million for the quarter as it struggled to draw customers to its stores. Pier 1 has been trying to declutter its stores, improve online sales and draw in younger customers.

Last month, Pier 1 announced it would close 450 stores, including all of its stores in Canada. The company is also closing two distribution centers.

Pier 1’s shares have fallen 45% since the start of the year. They closed at $3.58 per share on Friday.

After leading HHGregg through bankruptcy, Riesbeck joined FullBeauty Brands as CFO in 2018 and helped guide the company through what The Wall Street Journal reported was the fastest Chapter 11 case ever. It filed for bankruptcy on Feb. 3 and emerged on Feb. 7.

Riesbeck previously spent eight years as an executive with private equity firm Sun Capital Partners Inc., including four years as CFO at defunct Indianapolis-based grocery chain Marsh Supermarkets after Sun acquired Marsh in 2006.

Ted Gavin, a retail bankruptcy expert and managing partner of the consulting firm Gavin/Solmonese, said he hasn’t shopped at Pier 1 in more than a decade.

“People have been talking about Pier 1 heading for bankruptcy for a few years now. They’ve closed stores, they’ve struggled to find a steady customer base, they’ve struggled with falling sales,” Gavin said.

Pier 1 was founded in 1962 in California, where it made its name selling incense, beanbag chairs and love beads. The company moved to Texas in 1966 and went public in 1970.

But in recent years, it struggled to draw customers to its often cramped and cluttered stores. The company has been trying to streamline its merchandise, improve online sales and draw in younger customers, but it was an uphill climb. On Monday, Pier 1 was selling a tufted velvet armchair for a sale price of $399 on its web site. Target was offering a similar one for $214.

In its most recent fiscal year, which ended in February 2019, Pier 1 reported sales of $1.55 billion. That was down 18% from 2015. Pier 1’s sales tumbled 13% to $358 million in its most recent quarter, which ended Nov. 30.