Home furnishings retailer Pier 1 Imports Inc., in the process of winding down its operations at more than 900 stores in the U.S. and Canada as the pandemic lingers, found a would-be buyer offering more than $20 million in cash for its intellectual property and e-commerce business.
The 58-year-old retailer, based in Fort Worth, Texas, named Retail Ecommerce Ventures LLC as its stalking horse bidder to acquire its intellectual property, data and other assets tied to its e-commerce business in a deal totaling $20.075 million, according to a court filing in the U.S. Bankruptcy Court for the Eastern District of Virginia. The would-be buyer is best known for acquiring the Dressbarn brand and its e-commerce business from Ascena Retail Group Inc., the parent company of Ann Taylor and Lane Bryant. The bidder didn’t immediately respond to an emailed request for comment.
The move may be a sign of a transformation path more retailers take as they struggle with the cost of a nationwide network of store properties during the pandemic. The proposed deal comes after other retailers, such as Linens ‘n Things, RadioShack and Toys R Us, were resurrected in some form online as investors sought to use their name recognition on e-commerce platforms, said Ivan Gold, a real estate attorney with Allen Matkins, who represents 10 landlords throughout the country in Pier 1’s Chapter 11 bankruptcy case.
The possibilities of what a buyer could do with Pier 1’s name include beefing up the online presence for the name once steeped in brick-and-mortar real estate with a loyal following, or in the case the buyer is a rival company, they could buy the assets only to bury it once acquired. And the potential deal could bring other would-be bidders to the table ahead of some important deadlines, Gold said. Right now, the brick-and-mortar stores are expected to stay open until at least October as they conduct liquidation sales, raising money that can be used to pay owed rent.
“Particularly in the online era, there are multiple ventures out there, like this group that could buy one of the brands that have voluntarily liquidated and turn around and sell it or see value in the current structure,” Gold said in an interview with CoStar News.
Pier 1 plans to hold a bankruptcy auction Wednesday morning after receiving offers from other potential bidders, according to a court filing. Another hearing is scheduled for July 30 to either approve the sale to the stalking horse bidder or to other potential bidders.
If the proposed deal by Retail Ecommerce Ventures goes through, the entity could make Pier 1 an online-only platform, competing with the likes of other similar e-commerce furniture retailers such as Wayfair and Amazon. If done, this could be a smart move from the stalking horse bidder, said Eric Horn, an attorney at A.Y. Strauss, a New Jersey-based law firm who is not involved with the Pier 1 case.
“Doing the online play is the way to do it so you are not burdened by picking out stores or rejecting stores you don’t want,” Horn said in an interview. “It’s an easy way to acquire what could be a valuable name on the cheap.”
For landlords, it underscores what many already knew, which is Pier 1’s brick-and-mortar retail presence is “dead,” for the time being, Horn said. But, he said, anything is possible given this probably means there will be some kind of Pier 1 retail platform going forward. Pier 1 didn’t immediately respond to a request for comment.
Pier 1 filed for Chapter 11 bankruptcy protection in mid-February before the pandemic hit, and because of the timing, it was unable to emerge from Chapter 11 as initially hoped because of state and local government mandates to close nonessential businesses to help mitigate the spread of the COVID-19 pandemic. In April, Pier 1 CEO Robert Riesbeck told creditors he didn’t believe anyone would bid on the company.
The bankruptcy court gave approval for the home goods retailer to wind down its operations instead of restructure.
The stalking horse bid is the first move from a potential bidder showing interest in the continued e-commerce platform, which Riesbeck said has been operating at Black Friday-like levels as customers flock to the store closing sales. The brand has proven to be resilient with online sales, which have beaten corporate projections, said Gold, the lawyer for about 10 of Pier 1’s landlords throughout the country.
“In the e-commerce era, the brand is going to have a continued impact where Pier 1 certainly has proven to be more resilient, even in liquidation, with sales in excess of corporate projections,” he said. “This means this brand could live to fight another day.”