S&P cuts Pier 1 to junk

Standard & Poor's said it lowered its corporate credit rating on Pier 1 Imports Inc. to BB from BBB- and removed the rating from CreditWatch, where it was placed with negative implications on March 4.

The outlook is stable.

S&P said the rating downgrade for the company reflects its weakening operating performance, deteriorating credit protection measures and uncertainty regarding the success of a series of new marketing and merchandising initiatives implemented this year.

The rating reflects Pier 1's participation in the highly competitive and fragmented home furnishings industry, substantial fashion risk and exposure to macroeconomic trends, the agency said. These factors are tempered by Pier 1's ability to generate adequate cash flow and its niche position in value-priced home furnishings.

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