Pier 1 Imports, Inc. (NYSE:PIR) moved lower today after the company issued a clarification to comments made by Chairman & CEO Marvin J. Girouard to the press. According to the press release:
"Mr. Girouard was quoted as saying that
he predicted the chances are '50-50' that the Company's Board will
reach an agreement with a buyer on a sale price. Mr. Girouard was also
reported as saying that a deal would likely happen quickly. He was
quoted as saying that, 'It would be in weeks, not in months.'"
The press release goes on to clarify the company's situation:
"Since May, Pier 1 has agreed to provide confidential financial
data to several entities for the purpose of permitting those entities
to consider a possible transaction with Pier 1, one of which was the
investor to which reference was made in the articles [Jakup a Dul Jacobsen, a Danish investor who owns 9.8% of the company. See our previous article on this topic.].
To date, Pier 1 has received one preliminary indication of
interest, but the entity submitting that indication of interest
subsequently advised Pier 1 it would not continue further discussions
with Pier 1 regarding a possible transaction. Pier 1 has had no other
substantive discussions, to date, with any of the other entities
regarding a possible transaction ... Pier 1 makes no prediction whatsoever as to
when, if ever, Pier 1's Board will reach an agreement with respect to
a proposed transaction."
Despite its large cash position, a declining free cash flow and negative margins may spell trouble for the company if it cannot find a buyer, especially after the company recently cut its dividend. Shares are currently trading down nearly 3%.
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