Hedge fund buys stake in Pier 1 Imports, pushing for change

A New York hedge fund that has bought up troubled newspaper companies in recent years is now pressuring the board of Pier 1 Imports for change after accumulating a 9.5 percent stake in the company.

Alden Global Capital disclosed its Pier 1 holdings in a Securities and Exchange Commission filing on Monday, saying it has opened a dialogue on issues including the retailer’s operations, shareholder representation on the board and the search for a new chief executive.

Pier 1 is at “a critical juncture,” Alden said, adding that it’s “hopeful that the board will voluntarily take appropriate action to address the concerns.”

For its part, Pier 1 said it “values constructive input from investors” and will “continue to engage with shareholders, including Alden Global Capital, and evaluate opportunities to increase long-term shareholder value.”

The news follows the announcement earlier this month that Pier 1’s President and CEO Alex Smith, 64, who has led the company since 2007, will leave the company at the end of the year. That same day, the company said preliminary net sales for the most recent quarter, ended Aug. 27, declined by 6.7 percent. Earnings are scheduled to be released next week.

Pier 1 has been struggling over the past two years to adapt to a shift in buying habits to the Internet. It relaunched an e-commerce site, investing heavily in its “omni-channel” operations, but rising online sales have not been able to make up for declining sales at its traditional stores.

According to the SEC filing, Alden acquired 7.9 million shares of Pier 1 after that announcement, between Sept. 8 and Sept. 16, at prices ranging from $3.86 a share to $4.16.

According to various reports, Alden Global Capital has bought into several newspaper companies in recent years and has a controlling stake in Digital First Media, which owns papers including the Los Angeles Daily News, The Denver Post and The Orange County Register.

In June, a union representing workers at the papers, the NewsGuild-Communications Workers of America, announced a campaign seeking more information on Alden’s ownership role, calling the investment firm “secretive even by hedge fund standards, with money stashed in notorious tax havens around the world.”

The union alleged that Alden was seizing assets by selling real estate, slashing staff in newsrooms and outsourcing work.

Pier 1 shares (ticker: PIR) gained 2 cents on Tuesday to close at $4.12 a share.

This story was originally published September 20, 2016 at 9:40 AM with the headline "Hedge fund buys stake in Pier 1 Imports, pushing for change."