Pier 1 Imports (PIR.US), a large US furniture and household retailer, announced plans to close 450 stores earlier this month, accounting for nearly half of its 942 stores, Zhitong Financial APP learned. The company has not released a complete list of locations that will be closed. Recently, there have been bankruptcy rumors, and some stores have begun to make final sales, but company representatives did not respond to media questions, but released quarterly reports.
Pier 1 is a large furniture and household supermarket chain founded in 1962, operating nearly 1000 stores in the United States (about 90% of the total number of stores) and Canada. Pier 1 focuses on well-designed high-end furniture, etc., the price is on the high side. It is different from Ikea's low-price competitive business model.
Sales of Pier 1 in the most recently reported fiscal year were $1.6 billion, down 13.7% from the previous year.
In recent years, the competition in the American furniture industry is becoming more and more fierce, and offline stores and online stores seize the market with each other. According to the statistics of Alphabet Inc-CL C Company, the proportion of physical stores directly replaced by online sales and affecting prices accumulates nearly 70%. The direct substitution ratio was 7.6%, and the proportion affecting prices was 62%.
The pressure is even greater for traditional furniture retailers that rely on leasing operations offline.
Pier 1 calculates that it can't cancel $1 billion in leases, and if a loss-making store wants to close, it's best to terminate it before it loses money, or bear a loss on rent or a loss on the store.
Pier 1's closed stores may be good news for other retailers that sell furniture and furniture.
According to the analysis of Telsey Consulting Group, the retailers benefiting from the Pier 1 closure trend are Wayfair (W.US), HomeGoods, Target and At Home (HOME.US).
Wayfair mainly sells products online, but a geographic study by Telsey found that 60%At Home stores, 59 per cent of HomeGoods stores and 35 per cent of Target stores are all within three miles of Pier 1.
The furniture market in the United States is estimated to be about $200 billion. Cristina Fernandez, an analyst at Telsey, estimates that if Pier 1 closes all its stores, US sales of Wayfair and HomeGoods will grow by 100bp, while Target will grow by 20bp.
While a well-known company, Bed Bath & Beyond (BBBY.US), did not appear on Telsey's list, Telsey said that Bed Bath & Beyond and Pier 1 overlap most geographically, with 75% of the stores only a mile from Pier 1, but it may not benefit from the closure wave because it is in the process of change, with the new CEO Triton at the helm, who was once Target's chief marketing officer if he moves quickly. There may be more opportunities to increase sales and attract new customers. Otherwise, Wayfair will win more customers online.
Shares in Pier 1 rose 1.4% at midday on Tuesday, valuing it at $15 million. Pier 1's share price has fallen nearly 75 per cent in the past 12 months.
Wayfair has a market capitalization of nearly $10 billion and its shares have risen more than 5 per cent in the past year.