Shares of Pier 1 ( PIR) climbed Tuesday after the struggling home furnishings retailer named TJX ( TJX) executive Alex W. Smith as its new president and CEO. Smith will replace Marvin Girouard, who announced last year that he planned to retire after 32 years with the Fort Worth, Texas, company. Pier 1 said director Tom Thomas will take Girouard's place as chairman. The move is effective Feb. 19. Shares of Pier 1 jumped 45 cents, or 7.4%, to $6.56. Smith, 54, most recently held the role of senior executive vice president - group president at TJX, the operator of discount stores T.J. Maxx and Marshall's. "Alex is a career retailer having spent a significant part of his early career on the merchandising side for department and specialty stores," said Thomas in a statement. "He has played a key role throughout his career in the companies for which he worked and he has the necessary understanding of the retail industry in North America and globally to lead the company." Smith will have his work cut out for him as he takes the helm. Pier 1 has been struggling with same-store sales declines and quarterly losses for nearly two years. For the first nine months of fiscal 2007, the company's loss totaled $168.5 million, or $1.93 a share.
Meanwhile, rumors of a sale has been floating around the company. In October, Pier 1 said it had received one "preliminary indication of interest" from an unnamed buyer, but that buyer later broke off negotiations. Much of the attention has been focused on Jakup a Dul Jacobsen, a Danish retail magnate who has a 10% stake in Pier 1 and signed a confidentiality agreement with the company in September. Howard Davidowitz, chairman of the New York-based retail consulting and investment-banking firm Davidowitz & Associates, says Smith clearly has a depth of retail experience, but that experience is in running retailer divisions. "That's different from running a high-profile a public company," he says. "Everything will be fine if he fixes the business, but I don't think he'll be able to fix the business." As a whole, the home furnishings segment has been suffering. Davidowitz notes that even large companies that have positions in home furnishings -- such as Federated Department Stores ( FD) and Wal-Mart ( WMT) -- have seen losses in this area. "
Smith's challenge is to come up with a mix of merchandise that can catch the imagination of the public," he says. "Pier 1 did it for years. They got killed when everybody else got into the game, including Target ( TGT). This guy has got to come up with a new focus, a new category of products that's somehow going to excite the public." Smith's compensation package includes a base salary of $1 million a year, a first-year bonus between $500,000 and $750,000, and stock option grants for 3 million Pier 1 shares.