Pier 1 Imports Inc (“Pier 1”) voluntarily filed for Chapter 11 Bankruptcy on February 17, 2020 and is pursuing a sale of the company. Pier 1 is a U.S. based retailer, specializing in imported home furnishings and décor. To date, they’ve already initiated going out of business sales or closed over 400 locations with another 450 locations to follow suit. The FHR was 15, Very High Risk.
|FHR at time of default: 15, Very High Risk|
What the ratings tell you.
Pier 1 Imports has declined significantly over 2 years, from a 76 (Low Risk) to a 15 (Very High Risk), placing their Estimated Probability of Default at 24.86%.
With a Very High Risk FHR of 15 and a Poor Core Health Score (CHS) of 25, Pier 1 Imports is placed in Quadrant C. These companies are riskiest as both medium-term efficiency and short-term resiliency outlooks are negative. Most of the Retail Sector is in Quadrant A, which represents the strongest companies
Where our analysis tells the story.
For many clients, the first point of analysis is the Financial Dialogue, which presents key items for review, with specific questions listed to either direct your analysis or to shape your discussion if you’re in direct contact with the company. While the report generally presents a balanced perspective of strengths and weaknesses, the Pier 1 report has nothing positive to highlight. The top areas of concern are cash ratio, profitability and interest coverage, with questions like "Are you comfortable with this level of cash availability?" and "What are your plans to improve profitability?".
For those needing a deeper dive, the below performance scores show the driving factors in our CHS and FHR, which represent that Pier 1 Imports was not performing in a sustainable manner.
Our analysis showed a sharp drop in Operating and Net Profitability, which are key drivers in Core Health. As shown in the Peer Benchmark Report, their Operating Profit decreased from $54.86 M to -$288.27 M in under 3 years.
Operating at a loss causes significant downstream impact as it is used to over non-operating expenses, such as debt and interest
The full set of reports are available for our clients on our portal.