Pier 1 Imports

One claims it's the company's only chance for survival. Atari has filed for Chapter 11 bankruptcy protection. 311. . . EWA presents the difference between. . . Kodak is filing for Chapter 11 bankruptcy protection. If you've ever sought out to decorate your own living space, you'll know it's a crowded market full of many options. Just a few years and decades ago, however, there was one brand which was Even further back, it was one of the only interesting options to buy from. But over a rather short amount of time, they lost their way and eventually collapsed entirely in 2020. So let's take a deeper look into what happened to this classic, well-known brick and mortar chain and how Pier 1 imports ultimately went bankrupt. This episode is sponsored by CuriosityStream, get it as well as the creator Runnebula by using the link in the description below. San Mateo, California was the location of their first store. It was created by Luther Henderson and later invested in by Charles Tandy. Tandy might sound familiar for some of you mainly because he was the business mind behind Radiojack. They opened in 1962 under the name Cost Plus Imports and the premise was to import cheap, ratten furniture and sell it at a markup within a liquidation store format. It was already very popular and by 1966 they had started importing even more exotic goods from Asia and changed their name to Pier 1 Imports. By the next year, sales had grown to over $4. 5 million annually, and steadily increasing as sales grew. By now, they had multiple locations across the country and with ambition to grow even more, they filed for an initial public offering on the American Stock Exchange. It was now 1970 and this effort proved to be very effective, now giving the Fort Worth-based company lots of capital to expand. Just within a few years, the brand grew to over 120 stores with enormous sales growth. By the early 1980s, they continued that moment Things were changing for the company as they began to shift their entire product strategy away from exotic overseas goods to more traditional and contemporary items. A healthy mix between the two, they were now targeting the ever lucrative first time and sophisticated homeowners in America. This mon Luckily for them, in a survey they conducted in the mid 1980s, 86% of people claimed they decorated their own home. When the media reported on the survey, Pier 1 was front and center, essentially being advertised alongside their findings. The brand was quickly becoming the most popular place for amateur interior designers to shop and not with their new preferred cardholder membership, customers were not only returning to Pier 1, but they were also spending much more. By 1989, there were over 550 stores producing over $517 million in sales. The brand expanded internationally now too, opening stores in new countries. However, it was the early 1990s which now saw a slowing economy and more competition, two potentially deadly combinations if not handled right. So, Pier 1 imports applied the brakes a bit. During this time, the corporation had done some restructuring, ultimately stabilizing losses yet taking on some long term debt. However, at least for now, Pier 1 imports was on top of their markets, still the go-to place for home accessories. In 1994, they posted $685 million in sales and grew their stores to over 600. The chain also expanded their product availability, still offering unique goods from overseas, while also fleshing out other categories Allowed the company to grow year after year, but still, their CEO Clark Johnson had even bigger aspirations. As more stores continued to open across the world, Pier 1 imports had reached their long-term goal when they surpassed $1 billion in sales by the end of 1998. However, as the millenni 2000, while earning lots in sales, the year over year growth had slowed rather dramatically. This was also another time when similar furniture and home accessory stores started to gain some steam, which ultimately started to bite away at Pier 1's market share. Brands By around 2003, the company had opened their 1000th store and posted $1. 7 billion in sales, with $129 million of that being profits, which is pretty good and by far the highest ever achieved for the brand. The products in the stores were priced much lower than the rivals, which caused a huge influx of customers. They were absolutely killing it in sales during this time, as Pier 1 had now become a household name across North America. Their stock price too was drifted into insane waters as they crossed $500 a share. Back in their stores, Pier 1 had been making it clear that while importing foreign treasures was still a big part of their product line, they were also expanding categories in furniture, kitchen accessories, and pillows. However, in reality, their place in the market was becoming the go-to brand for people who wanted something at Pottery Barn, yet couldn't afford it. Pier 1 was becoming a discount Pottery Barn. 2006 is when the company had peaked with the n Across the world, there were over 1300 Pier 1 import locations, all of them very much not ready for the next few years. By 2009, the recession had hit and their stock took a nosedive all the way down to $2 by March. The company was forced to close stores and lost almost $130 million that year. The recession had crippled the brand, which just a few years prior was posting their highest sales figures ever. The company's CEO position was switched out and Alex Smith took the helm, guiding the brand out of this precarious spot. By 2010, they regained profitability and did so for the next eight years. Their stock price too rebounded quite significantly, shooting back up to over $470, a 20,000% increase which I'm sure made many investors a lot of money. However, with sales approaching the $2 billion mark, the company had looming issues that weren't entirely apparent at first glance. Mr. Smith had turned the company around, however when he left in 2016, things began to fall apart. In 2017, sales were already on a downward trend, as was profits. By the following year, it was even worse, and by 2019, the company had lost almost $200 million by the end of that year. Pier 1 was now capturing just a little over 2% of the entire market. Things were getting bad and the brand bled money every quarter. The coming pandemic of 2020 was going to be the final blow. With a final push to market to young buyers, the long downfall had finally come to its end. The brand had almost $250 million in long term debt. In order to pay that off and recover from their dire financial situation, 2020 would have needed to be a great year for the company. Of course, that's not how things turned out. After announcing they would close over 400 stores, by the next month, Pier 1 imports had filed for Chapter 11 bankruptcy protection. In this filing, they also announced they would be shutting down the entirety of their Canadian operations. By May, with the United States imposing closure restrictions for retail, Pier 1 had decided to liquefy its remaining assets after no buyers were found to bail the company out. This was the end of Pier 1'stores. To put this in perspective, their stock went from $503 a share in May of 2013 down to just 24 cents today. I don'think I've ever seen that sharp of a drop for a stock price ever in that span of time for a retail brand. It is a staggering fall from the top. However, while locations began to close all across America and the world, their intellectual property and online e-commerce operations were purchased by Rev, or Retail E-commerce Ventures, which is strangely co-owned by Tai Lopez. Here in my garage. Okay, but how did this happen? Because while the unprecedented events of 2020 surely did accelerate their demise, it certainly isn'the only, or even the primary reason. It really all began with their first attempt on creating a website in June 2000. It was rudimentary with a little online inventory which eliminated the main draw of searching for hidden treasures in the store. It was a costly endeavor by the company and ultimately it was shut down in 2007. This allowed the competition to take its place in the online e-commerce, as Pier 1 stuck to just brick and mortar. Eventually in 2012, they relaunched the website, however the damage was done. But it's not just online sales that they handled poorly. It was in their stores and even where those stores were placed. Pier 1 began adding locations and cheaper plazas, often next to discount stores or unrelated market retail. This started a perception issue with the brand and inside the stores, things weren't much better. The chain struggled to move inventory, which meant their stores would constantly have clearance shelves with tons of stock in them. This caused their stores to appear clutter and not well organized, just further hindering the brand reputation and cons The products that were on the shelves were generic and undistinguished from other cheap home stores. Remember, Pier 1 had started out as a treasure hunt for people to come into their stores and find unique items and contemporary home products. The makeup of their inventory did as well. In a February 2020 New York Times article, they quote Professor Hart Posen from the University of Wisconsin School of Business. He s Is that compared to now? Would anyone care if Pier 1 disappeared? I think the answer is no. The thing that ultimately killed Pier 1 though was its competition. Everything else was certainly a contributing factor and even played to the other guy's advantage, but really the market they had dominated in had become oversaturated. Pottery Barn, Creighton Barrel, and Restoration Hardware took the premi That's not to mention the purely online companies Pier 1 just couldn't keep up with those other brands as much as they tried. Those stores were offering similar products at cheaper prices, which forced Pier 1 to slash theirs. Still though, many cons Pier 1 Imports simply outgrew itself. The word Imports doesn't mean the same thing to customers now. Imports is now synonymous with synthetic and cheaply made products, not But surviving the modern retail landscape, especially one as competitive as home furnishings, was just not possible for them by the end. I mean, even when I look at my own situation, I have always known about Pier 1, but I never made the trip there as an adult. I always cited for Creighton Barrel or Pottery Barn since they are the brand's best known for quality products. Regardless of even my perception was wrong, I always thought of Pier 1 as an overpriced store with sort of crappy products. And I have a feeling that's what many others thought too, and that's not a great brand perception in today's market, especially when you're trying to survive mainly on in-store sales. So while management thought they were doing the right thing by endless discounts and changing their products to fit more in line with other retailers, it really ended up hindering the company and ultimately left them bankrupt. The department store and really all of retail has come a staggeringly long way. It's been an incredible evolution and one I often detail to companies who can't keep up. I think it's important and very interesting however to see where it all started. And the two-part docuseries The Birth of Shopping presents that very story. I very much enjoyed it and you can only find it on this episode'sponsor Curiosity Stream. They have an enormous catalog of high quality doc If you enjoy my videos then you'll absolutely find something on there which is both educational yet very entertaining. Partnered with them is another streaming service which I am actually a part of called Nebula. There you can enjoy even more content from creators which I love as well as my videos a full day before they'released on YouTube. You can get both services for just $2. 99 but if you go to curiositystream. com slash bsf and use the code bsf you can get 26% off annual plan.