Pier 1 Imports

Well, t 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, t 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 t Here's the big news, they filed their 10Q, their t 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, w 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, w 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, w 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 t Looking at everyt So unless somet Alright, you get the picture. Now I want to talk about how t Right now, I could tell you the biggest reason be They started by using they take advantage of favorable exchange rates. One US dollar spent in the US doesn't get you nearly as much as one US dollar spent in another country. It depends on the country, of course, but they find countries where the US dollar is comparatively stronger. It's almost always Asian countries, that's where they import most of their merchandise from. I don't I've actually seen a few different versions of how they started with some inconsistent details, 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 logical. It's interesting, because they evolved into the chain of stores we know today in three separate stages, each involving a different person. I'll explain. In the beginning, it was William Amthor. In the late 1950s, he ran 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 furniture, which is Charles Tandy. T For example, he started by taking over More famously, he took another small company you've probably heard of called Radio Shack and turned it into somet Sure, he was focused on Cost Plus, because he saw some potential in the strategy. The fact that they needed money provided a way for 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 Amthor retaining the owners T You can imagine that t I that's I hope that was all clear, because I have one more layer. T Now, as soon as Luther Henderson and the rest of the investors gained owners That way the name better reflected the fact that they imported their merchandise, and 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, apparently owned by Bed Bath and Beyond. 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 w 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, w They were providing everyone with t In 1988, they introduced the Pure One Preferred Customer Card, basically the Pure One Credit Card, and that helped increase their revenue. Wit It was also in the 90s when they made a big push to expand internationally, first in Puerto Rico in 1993, and then they had they even started opening these store-wit So that's an overview of how they became the large international company that we all know today, and I t 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 t IKEA is another one. T I also fear that they may not be targeting the right customer anymore. I hope we can all agree that to me anyway, it looks It's just the vibe I get from the environment and the type of stuff that they're selling, but then, conversely, they've done well over the years by selling to first time home buyers. Their stuff isn'the You see what I'm saying? They have this long history of younger customers, for good reason, yet today it really doesn't seem The other potential big reason for their decline is all of the clutter. The few times I've been in the store, everyt The sections all run together and everyt On the surface, to me, it looks They purposely create t It could be effective, but I don'think it works Maybe it has to do with the internet and how it delivers quick search results that we've all come to expect. I don't know, but if that is the case, again, they're doing a poor job in attracting the younger generations. To s Years ago, they responded to that competition in ways that may have fixed t Meanw Then we have these unorganized stores and questionable core customers and they took out t 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? These n So if you are one of those people, why did you stop? Also, what do you see for the future of the company? Do you t And then I have to ask, is there even anyt Do they provide anyt I'd