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Moody's may cut Pier 1 to junk
Moody's Investors Service said it placed the Baa3 senior unsecured issuer rating of Pier 1 Imports under review for possible downgrade in light of the company's continuing weak operating performance as depicted by the accelerating same store sales decline.
Through the first quarter ended May 2005, the company has reported same store sales compression for 14 straight months and 22 of the last 27 months, despite its recently launched advertising campaign, store remodeling efforts and merchandizing initiatives.
In addition to the same store sales decline, margins have also been squeezed over the last couple of years. The declining operating trends are a result of increased competition from lower cost competitors.
Moody's said the company's response to such pressure has thus far been insufficient to stem the deterioration.
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