Pier 1 Imports Reveals Big Loss Retailer Blames Loss On Consultant’s ‘Inappropriate Trading Activities’
Pier 1 Imports Inc., the well-known purveyor of wicker furniture and other goods, said Tuesday that a consultant’s “inappropriate trading activities” have resulted in a $20 million loss.
The news sent Pier 1 stock sprawling 13 percent.
Pier 1 said in a statement that the loss, calculated before taxes, was caused by a financial consultant who was managing the company’s excess cash and short-term investments.
It said the loss will not materially affect liquidity or the company’s operations. Pier 1 provided few other specifics.
“They have the financial flexibility to ride through this, but that doesn’t mean it’s good news,” said Maureen McGrath, an analyst at Smith Barney Inc.
Skip Helm, an analyst at William Blair & Co., went further. He called the news catastrophic.
Pier 1 officials did not return telephone calls seeking comment.
Word of the $20 million loss came as retailers nationwide were tallying Christmas sales amid expectations for a weak year. In its statement, Pier 1 said its December sales continued to be robust through Christmas.
Sales for the month will be reported Jan. 4.
Pier 1 operates 690 retail stores in 47 states, Canada and Puerto Rico selling a variety of rattan furniture, wicker, decorative home furnishings, casual clothing and fashion accessories. It also has operations in Mexico and the United Kingdom.
The company, based in Fort Worth, did not say when the trading loss occurred or in which quarter it would be booked.
Wall Street reacted negatively to what it heard. Pier 1 stock lost $1.50 a share to $10.50 a share on the New York Stock Exchange.
McGrath, who had spoken with Pier 1 officials, said the company found out about the loss late last week. “They don’t have a lot of details, but they do have to apprise people of the problems,” she said.
In its statement, Pier 1 said it would take appropriate legal action and had launched an investigation. The company said a special committee of outside directors has been appointed to investigate circumstances surrounding the loss and take any measures needed to properly account for the loss.
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