Updated from 10:38 a.m. EDT

In an effort to stay afloat in a sea of red ink,

Pier 1 Imports

(PIR) - Get Report

said Thursday that it will toss its catalog, kids stores and e-commerce business overboard.

Shares of the home-décor seller were sinking 30 cents, or 3.5%, to $8.33 in recent trading.

The news comes as the retailer struggles with an ongoing sales slide and steepening losses amid a series of merchandising missteps and competition from bigger, cheaper rivals.

During a conference call with analysts after the company reported a sharply wider first-quarter loss, CEO Alex Smith said the company plans to exit all "non-Pier 1 activities" by closing its clearance stores and its Pier 1 Kids business. The 24 clearance stores will be closed by July 31 and the 33 Pier 1 Kids stores will be shuttered by Oct. 31.

In addition, Smith said, the company will bid bon voyage to its Internet-selling and catalog business by Aug. 31, although the Web site will be retained for marketing purposes.

Smith said the simplification of the business will release about $20 million of inventory and produce further cost savings. However, he stressed that exiting these areas was not only about cost reduction.

"It's about focusing on what really matters, which is the Pier 1 stores, which lost the bulk of last year's $228 million," he said.

Smith, who took the helm at the company earlier this year, said Pier 1 would also reduce the use of coupons and other discount activities to preserve margins and establish steady prices for customers.

The company will discontinue TV advertising and instead rely on "web-isodes" that will be available on the Web site. The backbone of external marketing will be monthly mailers, he said, which also will be available on the Web site.

Earlier Thursday, the Fort Worth, Texas-based retailer said its first-quarter loss widened to $56.4 million, or 64 cents a share, from a year-earlier loss of $23.2 million, or 27 cents a share. The latest quarter's results included a $3.5 million charge related to severance costs from the company's previously announced job cuts.

Sales dropped 5.2% to $356.4 million. Same-store sales, or sales at stores open at least a year, fell 5.4%.

The bottom-line results were worse than analysts' average estimate for a loss of 32 cents a share, according to Thomson Financial. Sales edged past Wall Street's target of $350.7 million.

Merchandise margins declined to 45.5% from 53.8% a year ago, which Pier 1 attributed to the aggressive liquidation of its "modern craftsman" merchandise, a collection of contemporary goods that failed to attract customers.

"As you can see from the numbers, we've been very busy cleaning house," said Smith. "I'm pleased this albatross around our neck is now largely removed and I expect margins to start to return to more sustainable levels by the end of the second quarter."

Smith said the company's financial position is sound and its cash position is better than it had planned.

Responding to a question about competition from discount-retail giant


(TGT) - Get Report

, Smith said, "No one does what we do in terms of the total package."