Pier 1 Imports

Well, things are not looking good for Pier 1 imports. If you're not familiar, it's a fairly unique store. They have those signature blue rectangular signs on their storefronts that you've probably seen because they've typically had around 1,000 locations spread across the United States and Canada. They claim to have them in every major metropolitan area in the US, so there's Inside, they sell furniture and what they call decorative accessories, meaning rugs, mirrors, pillows, lamps, vases, candles, things along those lines that you could use to decorate your home. As of 2019, 67% of their sales came from decorative accessories and the rest was furniture. Let me tell you what's been going on with them, and I think you'll agree that things are not looking good. Here's the big news, they filed their 10Q, their third quarter report, on January 6, 2020, and along with it announced their plans to close almost 450 stores, which is just about half of them. And if you look deeper into the reports, it becomes clear why they're doing it. Looking at their sales, well, they've taken a turn in the wrong direction, with 2019 being the worst of it. That 2019 figure represents their last full year, which ended in March of 2019. Their new quarterly report represents the next 9 months that followed. It's hard to make direct comparisons just yet, but based on the first 3-4ths of the year, it's looking And that's in just about every category I'm about to show you, so keep that in mind. Their net income, it's been declining since 2012, falling into the negative in 2019, and again, it's just getting worse. Comparable store sales, it tells a similar story and continues to get worse. Here's a ratio that I really It compares their debt to their equity. Higher n It's been on their eyes, but in 2019, spiked up to an unacceptable level. And they've currently actually dipped into negative equity, which means that their debt is too out of control for this ratio to even make sense. There's also the statement on their Tanki report, basically saying that they may not be able to continue operating Their stock was trading at over $400 a few years earlier. Today it's less than five, which is significantly worse than the rest of the market. And Moody's has downgraded their credit rating because they no longer feel that they'll be able to honor these debts. Their outlook used to be stable, and now they say it's negative. So Pure One Imports response is to close all these stores, scale them down, and try to at least limit the money that they're losing. But it'still not looking There's these lease agreements, but there's one debt that'specifically concerning right now. In April of 2014, reflected in 2015 in this graph, they entered into a $190 million loan that's due in April of 2021. Looking at everything we just saw, I'm going to go ahead and say that they probably won't be able to pay it off by then, nor are they going to refinance it. So unless something big happens, I would expect this to force them into bankruptcy. All right, you get the picture. Now I want to talk about how this company grew so large. Now I can tell you the biggest reason behind their success. They started by using this model in the 1950s and they still use it today. They take advantage of. . . Yes, doesn't get you nearly as much. It's almost always Asian countries. That's where they import most of their merchandise from. I don'think I have to explain the advantages of obtaining inventory at a lower cost, but it does allow bills. So I'm going to do my best to sort of piece it all together into a version that I believe to be the most lodged amthor. In the late 1950s, he ran this furniture business with his family in San Francisco called Cost Plus. The name reflected how they were using these exchange rates. They would sell their furniture for what it cost plus 10%. Cost Plus. They specialized in selling imported retan from some financial trouble, and that's where the second stage begins. Charles Tandy. This name you may recognize because he has a proven history of taking a small, struggling business and completely transforming it. For example, he started by taking over his family'small leather business and turning it into, well, a much-called radio shack and turned it into something big. Here he was focused on Cost Plus because he saw some potential in the strategy. The fact that they needed money provided a way for him to get involved. He provided a loan to them and eventually was able to work out a deal that said that he would have full rights to open any new Cost Plus locations. So that's what he did. By 1966, he owned and operated 16 of them with William and Thor retaining the ownership of that original location, which brings us to the third stage. This was 1966, and Charles Tandy had bought Radio Shack in 1962. You can imagine that this was a busy time for him and his company. I think he felt Radio Shack was the better investment because that's where he started focusing all his time and money. That's I hope that was all clear because I have one more layer. This deal transferred ownership of every Cost Plus store with the exception of the original, which remained with William and Thor. Now, as soon as Luther Henderson and the rest of the investors gained ownership, they changed the name from Cost Plus to Pure One Imports. That way the name better reflected this and it better separated them from that single original Cost Plus. Then that Cost Plus later turned into the Cost Plus World Market that you may know today, currently owned by Bed Bath and Beyond. Ugh, that was a lot. But back to Pure One Imports. They continued expanding from there. By the end of the 1960s, they had almost tripled their store count to 42. Then in 1970, they became a public company which provided them with a bunch of money that they used to continue expanding. By the end of the 1970s, they had grown to 300 locations. And by the end of the 1980s, they had grown to 550 locations. They were able to tune in to what the customers wanted, which helped them grow loyalty. They were providing everyone with this unique selection of imported items that you simply could not find anywhere else. This is big. In 1988, they introduced the Pure One Preferred Customer Card, basically the Pure One Credit Card, and that helped increase their revenue. In one year, they had 120,000 card holders, and by 1994, had sales of 100 million just from the card. It was also in the 90s when they made a big deal in Sears, in Mexico. So that's an overview of how they became the large international company that we all know today, and I think that leads us back to their recent decline. I have a few potential reasons for it. The biggest one would have to be increased competition and the way they responded to it. In 2005, they started getting it from all angles. I guess the world finally started recognizing the demand for this sort of stuff, because all these stores similar to theirs started popping up and growing, and then discount stores They were sharing the market in ways that they never had to before. One of the ways they responded to it was by putting a full focus on their stores and closing their online operations. It didn't seem too significant at the time, since it only accounted for about 1% of their sales, but we can now see how shutting down their online store in 2007 was not the best idea. It made it very easy for Amazon and all the other online competitors to take their share of the growing market. They did relaunch it in 2012, but that was sort of late and the damage was done. Plus, there's this other similar story. It costs to me It looks It's just the vibe I get from the environment and the type of stuff home buyers. Their stuff isn'the highest quality, but it is fairly cheap and unique, making it attractive to young people without much money to spend decorating their home. Do you see what I'm saying? They have this long history of them very well. The other potential big reason for their decline is all of the clutter. Big. Here, he was focused on Cospluff called Radio Shack and turned it into something big. Here he was focused on Cosplus. He owned and operated 16 of them with William and Thor retaining the ownership of that because he saw some potential in the strategy. The fact that they needed money provided a way for him to get original location, which brings us to the third stage. This was 1966 and Charke get involved. He provided a loan to them and eventually was able to work out a deal that said that he would have. . . You can imagine that this was a busy time for him and his company. I think he felt Radio Shack was the better investment because that's where he started for full rights to open any new Cosplus locations. So that's what he did by 19 focusing all his time and money. That's He owned and operated 16 of them with William and Thor retaining the ownership of that. He owned and operated 16 of them with William and Thor retaining the ownership of that stores led by a man named Luther Henderson who was actually the treasurer for Charles Tain original location, which brings us to the third stage. This was 1966 and Charke and his company. I hope that was all clear because I have one more layer. This was 1966 and Charles Tandy had bought Radio Shack in 1962. You can imagine that this was a busy time for him and his company. I think he felt Radio Shack was the better investment because that's where he started for with William and Thor. Now as soon as he started to open his own Cosplus store, he was able to open his own Cosplus store and he was able to open any new Cosplus stores. So that's what he did by 19 focusing on his own Cosplus store. That's where he started focusing with William and Thor. Now as soon as Luther Henderson and the rest of the investors gained ownership for him and his company, I think he felt Radio Shack was the better investment because that's where he started focusing all his time and money. That's That way the name better reflected the fact that they imported their merchandise and it better separated them from that Singh andes company. I hope that was all clear because I have one more layer. This deal transferred on Andy's company. I hope that was all clear because I have one more layer. Then that Cosplus later turned into the ownership of every Cosplus store with the exception of the original which remainership of every Cosplus store with the exception of the original which remain Cosplus World Market that you may know today currently owned by Bed Bath & Beyond with William Amthor. Now as soon as Luther Henderson and the rest of the investors gained ownership that was a lot but back to pure one imports. They continued expanding from there by the end of the ninth they changed the name from Cosplus to pure one imports. They changed the name from Cosplus to pure one imports. In the 1960s they had almost tripled their store count to 42 and in 1970 they became a puc that way the name better reflected the fact that they imported their merchandise. Public company which provided them with a bunch of money that they used to continue expanding. By the end of the 1970s they had grown to 300 locations and by the end of the 1980s they had grown to 550 locations original Cosplus. Then that Cosplus later turned into the Cochens. They were able to tune in to what the customers wanted which helped them grow loyalty. Cosplus World Market that you may know today currently owned by Bed Bath & Beyond. They're providing everyone with this unique selection of imported items that you simply could not find. That was a lot but back to pure one imports. They continued expanding from there by the end of the ninth anywhere else. This is big in 1988 they introduced the pure one preferred customer. In the 1960s they had almost tripled their store count to 42 and in 1970 they became a pucard basically the pure one credit card and that helped increase their revenue. Public company which provided them with a bunch of money that they used to continue expanding. By the end of the 1970s the public company which provided them with a bunch of money that they used to continue expanding. By the end of the 1970s within one year they had 120,000 card holders and by 1994 they had grown to 300 locations and by the end of the 1980s they had grown to 550 locations. They had grown to 300 locations and by the end of the 1980s they had grown to 550 locations. Had sales of 100 million just from the card. It was also in the 90s when they made a bidgings. They were able to tune in to what the customers wanted which helped them grow loyalty. Push to expand internationally first in Puerto Rico in 1993 and then they had this partnership with a similar chain of stores in the UK called the Pure. They even started opening these store within a stored type thing. They're providing everyone with this unique selection of imported items that you simply could not find. They're providing everyone with this unique selection of imported items that you simply could not find in Sears in Mexico. So that's an overview of how they became the large international and anywhere else. This is a company that we all know today and I think that leads us back to their recent decline. I have a few pet. . . Card basically the pure one credit card and that helped increase their revenue. Card basically the pure one credit card and that helped increase their revenue. Potential reasons for it. The biggest one would have to be increased competition and within one year they had 120,000 card holders and by 1994 the way they responded to it. Around 2005 they started getting it from all angle. Had sales of 100 million just from the card. It was also in the 90s when they made a big head sales of 100 million just from the card. It was also in the 90s when they made a big bulls. I guess the world finally started recognizing the demand for this sort of stuff because all these stores similar pushed to expand internationally first in Puerto Rico in 1993 and then they had this partnership with it. They started popping up and growing and then discount stores The similar started opening these store within a store type thing. One of the ways they responded to it was by putting a full focus on their storeings in Sears in Mexico. So that's an overview of how they became the large internationalings in Sears in Mexico. So that's an overview of how they became the large internationalers and closing their online operations. It didn't seem too significant at the time since it's a company that we all know today and I think that leads us back to their recent decline. I have a few potential only accounted for about 1% of their sales but we can now see how shutting down their online store company that we all know today and I think that leads us back to their recent decline. I have a few potential reasons for it. The biggest one would have to be increased competition and or in 2007 was not the best idea. It made it very easy for Amazon potential reasons for it. The biggest one would have to be increased competition and the way they responded to it. Around 2005 they started getting it from all angles and all the other online competitors to take their share of the growing market. They did relaunch it and the way they responded to it. Around 2005 they started getting it from all angles. I guess the world finally started recognizing the demand for this sort of stuff because all these stores similar 2012 but that was sort of late and the damage was done. Plus there's this other similar stores. I guess the world finally started recognizing the demand for this sort of stuff because all these stores similar to theirs started popping up and growing and then discount stores Ikea is another one. Here to there started popping up and growing and then discount stores They were sharing the market in ways that they never had to before. Things are just way more competitive than ever before and for multiple reasons they're not in a good position items. They were sharing the market in ways that they never had to before. One of the ways they responded to it was by putting a full focus on their stores and to fight it. I also fear that they may not be targeting the right one of the ways they responded to it was by putting a full focus on their stores and closing their online operations. It didn't seem too significant at the time since I'm a customer anymore. I hope we can all agree that this is not a modern trendy store and closing their online operations. It didn't seem too significant at the time since it only accounted for about 1% of their sales but we can now see how shutting down their online store to me anyway it looks It made it very easy for Amazon putting as much effort into the younger ones. It's just the vibe I get from the environment and the type of store in 2007 was not the best idea. It made it very easy for Amazon that they're selling but then conversely they've done well over the years by selling to first time Hun and all the other online competitors to take their share of the growing market. They did relaunch it in Tombuyers. Their stuff isn'the highest quality but it is fairly cheap and unique making it attract 2012 but that was sort of late and the damage was done. Plus there's this other similar store to young people without much money to spend decorating their home. Do you see what I'm saying? They have this long history called home goods that's been doing pretty well over the past few years. Ikea is another one. Three of younger customers for good reason yet today it really doesn't seem Ikea is another one. Things are just way more competitive than ever before and for multiple reasons they're not in a good position very well. The other potential big reason for their decline is all of the clutter. The few times I've been in the store everything was a mess. The sections all run together and everything wishing to fight it. I also fear that they may not be targeting the Russian to may not be targeting the red and the sections are all scattered around on the surface. To me it looks I hope we can all agree that this is not a modern trendy store to maintain very well. But in reality I think this is intentional to a degree. To me anyway it looks It's just the vibe I get from the environment and the type of stuff putting as much effort into the younger ones. It's just the vibe I get from the environment and the type of stuff you feel rewarded when you find it and possibly end up finding other things during the search. It could be effective but I don'think it works Home buyers their stuff isn'the highest quality but it is fairly cheap and unique making it attract home buyers. Their stuff isn'the highest quality but it is fairly cheap and unique making it attract maybe it has to do with the internet and how it delivers quick search results that we've all come to expect. Active to young people without much money to spend decorating their home. Do you see what I'm saying? They have this long history. Active to young people without much money to spend decorating their home. Do you see what I'm saying? They have this long history. I don't know but if that is the case again they're doing a poor job in attracting the younger generation of younger customers for good reason yet today it really doesn't seem To s The other potential big reason for their decline is all of the clutter in them very well. The other potential big reason for their decline is all of the clutter ever before. Years ago they responded to that competition in ways that may have fixed things the few times I've been in the store everything was a mess. The sections all run together and everything was immediately but ended up making things worse in the long term. Meanwhile the competition in the sections are all surface to me it looks Courses and questionable core customers and they took out this $190 million loan out of they purposely create this chaotic environment where you have to search for things and in doing so very bad time combine all of it and I think it helps explain what's been happening to pure you feel rewarded when you find it and possibly end up finding other things during the search it could be effective but one imports let me know in the comments do you agree are these the biggest reasons for their struggles or are there other factors that I failed to mention what's your perception as a customer but I don'think it works