Pier 1 Imports
jumped Wednesday after the struggling home furnishings chain said it struck a deal to sell its credit card operations to
JP Morgan Chase
The retailer expects to collect $155 million in cash proceeds as a result of the deal, which is set to close in fourth quarter. The bank agreed to buy about a million active private-label credit card accounts with total outstanding balances of about $140 million.
Pier 1's CEO, Martin Girouard, told analysts on a conference call earlier this year that the company was considering such a sale.
The two parties will sign a long-term marketing and servicing agreement, under which Chase will provide modeling strategies and payment products to Pier 1 cardholders and they both will collaborate on marketing initiatives.
Pier 1's sales have been in decline for months, and with the entire retail sector feeling the effects of slower consumer spending, especially for big-ticket items like furniture, the company appears to be taking steps to shore up its liquidity.
In March, Pier 1 agreed to sell its U.K.-based operations to Palli Ltd. for about $15 million. Palli is a unit of Lagerinn ehf, an Icelandic corporation owned by Jakup a Dul Jacobsen, who owns a 9.9% stake in Pier 1.
Jacobsen franchises Jysk stores (pronounced yoo-sk), a home-furnishings chain that's known as the Danish version of IKEA and has 1,000 stores worldwide. His interest in Pier 1 has led to speculation that he might be interested in taking over the company as its stock price declines.
Shares of Pier 1 were recently trading up 58 cents, or 9.6%, to $6.64. The stock hit a 52-week low of $5.61 last week, compared with a 52-week high of $13.70 last September.