NEW YORK (AFX) - Moody's Investors Service downgraded Pier 1 Imports Inc.'s corporate family rating due to continuing drops in same-store sales, or sales in stores open for more than a year.
Moody's dropped the rating to 'B3' from 'B1.' Both are non-investment grade, or junk, ratings. The outlook is stable.
The ratings service said its action was prompted by Pier 1's general drop in same-store sales over the last two to three years, due to slower customer traffic and unsuccessful new products. Moody's said it expects same-store sales and operating margins will be slow to rebound over the next few quarters, but that the sale of its credit card business helped the company's liquidity.
In August, the company announced it agreed to sell its private-label credit card operations to JP Morgan Chase & Co. for about $155 million.
Shares of Pier 1 rose 43 cents, or 6.3 percent, to $7.23 in afternoon trading on the New York Stock Exchange. The company's stock has ranged from $5.61 to $13.60 in the past 52 weeks.
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