The man who helped turn Fort Worth-based Pier 1 Imports Inc. around is leaving after sales and growth have stalled.
The home-furnishings retailer on Sept. 7 announced that its board of directors and CEO Alex Smith have “mutually agreed” to part ways effective Dec. 31.
Smith has been CEO for nearly 10 years, arriving in February 2007 and leading the company as it executed a remarkable turnaround to become one of the most profitable specialty stores in the home furnishing sector.
But recently, that turnaround has run aground. On the same day the company announced Smith would make his exit at the end of the year, the home-furnishings retailer said its second-quarter loss would be wider than expected.
“We greatly appreciate Alex’s many years of leadership and considerable contributions to Pier 1 Imports,” said Terry London, chairman of the board of directors. “Most notably, he led a remarkable turnaround of the business from 2009 to 2013, creating one of the most profitable specialty stores in our sector.”
Smith also led Pier 1 Imports’ shift from a pure brick-and-mortar business to increase the company’s online sales.
“Leading the Pier 1 Imports team for nearly 10 years has been a joy,” Smith said in a statement. “Our wonderful associates across the organization have inspired me every day. Together we have achieved a great deal of success, sustained by our exceptional culture.”
The board of directors is putting in place its succession plan and conducting a CEO search with the help of human resources consultants Korn Ferry.
Whoever the chain chooses to replace Smith will face a tough, unforgiving climate for retailers.
Barnes & Noble Inc. chairman and founder Leonard Riggio said the bookstore chain is suffering from the one of the worst retail environments in decades after traffic in stores hit “close to a historic low point.” The bookstore chain recently ousted its CEO following slumping sales.
The retail climate is “terrible,” Riggio said on the company’s first-quarter earnings call on Sept. 8. “Better put, is it is one of the worst I have ever experienced in the 50 years I have been in this industry.”
Pier 1’s Smith, 63, received $1.4 million in annual pay, according to the company’s latest annual report.
While Smith’s turnaround led to a revival of the home furnishings retailer, gains of late have been harder to come by.
“I wasn’t surprised about the announcement as I was expecting it,” said Marvin J. Girouard, who retired as Pier 1 CEO in 2007 after 33 years at the company. “He has disappointed Wall Street with lower than expected results for some time and fired his CFO about a year ago. Both bad signs.”
Economic conditions helped Pier 1’s turnaround, Girourad said.
“[Smith] was fortunate after the recession ended in 2008 that the auto bailouts and other events made Pier 1 an easy turnaround from 2009-2013 and he got the credit,” he said. “Retail is cyclical and what goes round always comes round. As one of my foreign friends said upon learning of Alex’s fate, ‘I am not surprised. Everybody has a time limited.’ ”
Girouard say he is “not sure what exactly needs to be done to again turn around Pier 1, but they need to control inventory better and quickly figure out the balance of stores vs. Internet shopping.”
Pier 1 Imports also announced Sept. 7 that second-quarter net sales fell 6.7 percent compared to the same period a year ago and comparable-store sales fell 4.3 percent. The company is scheduled to report second-quarter results Sept. 15. In 2015, the company reported sales of $1.9 billion, but net income of $39 million, compared to sales of $1.9 billion and net income of $75 million the previous year.
The company operates 953 stores in the U.S. and has 79 stores in Canada. – Bloomberg News contributed to this report.