Pier 1 Pulls Plug on Catalog/Web Business

Jun 22, 2007 3:23 AM  By

Pier 1 is exiting the direct business. The home furnishings and decor retailer announced on June 21 it will shelve its three-year-old catalog and its seven-year-old e-commerce site by the end of August. The struggling Pier 1 wants to focus on its stores, though it will have fewer to focus on: It is planning to close 100 stores by the end of this year, including 24 clearance centers, and its 33 Pier 1 Kids stores.

Pier 1, which says it will continue to operate a Website for marketing purposes, has been in a financial freefall. For the fiscal first quarter ended June 2, the company posted a loss of $56.4 million, compared with a loss of $23.2 million for the period last year. Pier 1’s sales for the quarter fell 5.2% to $356.4 million.

President/CEO Alex W. Smith, who took the reins of Pier 1 in February, addressed the company’s dire finances during a conference call, reiterating the need to concentrate on retail. “It’s become very clear to me if we are to be successful at returning Pier1 to profitability and beyond, we need to focus 100% of our attention on our core business, the Pier 1 import stores, without any distraction, excuses, or dilution of assets,” he said.

Pier 1 began testing the print catalog in fall 2004. It rolled out with a nationwide drop of 2 million copies of an 80-page book in September 2005. The merchant had mailed a catalog for two years in the mid-1980s, but stopped it in 1986 to focus on growing its store chain.

Why can’t Pier 1 seem to make a go of its e-commerce and catalog businesses? Jon Schreibfeder, president of Coppell, TX-based retail consultancy Effective Inventory Management, offers his views. “I am seeing a lot of people having problems with Internet sales across the board,” he says. “I’m not sure demand is as high over the Internet as people might think. Pier 1 deals a lot with impulse items–items that you don’t absolutely need to live, but it’s hard to sell that over the Internet because these are physical items that need to be felt and touched.”

The Fort Worth, TX-based company may one day take another crack at the catalog business, however. “With business the way it is, we really have to focus on our core business in stores,” says Pier 1 spokesperson Misty Otto. “Once business improves and gets back on track, we’d look at another e-commerce site in the future and catalogs would be a possibility.”