Cheryl Bachelder’s first month and a half leading Pier 1 Imports Inc. hasn’t been an easy one.

Just one day after she was named interim chief executive officer of the struggling retailer, Moody’s Investors Service changed its outlook on the company to negative; S&P followed suit the very next morning. And with shares closing below $1 every day since her appointment in late December, Pier 1 is now in danger of being taken off the New York Stock Exchange.

Turnarounds aren’t new for Bachelder, whose successful run leading Popeyes Louisiana Kitchen led to its purchase by Burger King’s parent for $1.8bn. But Pier 1 brings a whole new set of challenges, from about 1,000 physical stores to an expensive online strategy to a failure to entice a new generation of shoppers. Analysts say it needs to move fast to boost sales and cut costs if it’s going to stay relevant — and keep from being delisted.

The chain’s “value proposition just isn’t there to the degree it was five to 10 years ago,’’ said Bradley Thomas, an analyst at Keybanc Capital Markets. “This is going to be very difficult to turn around.”

The company declined to make Bachelder available for this story. “We have taken a number of actions to enhance financial flexibility, and we are narrowing our focus and honing execution with a distinctive Pier 1 style and value proposition for our customers,” the company said in an emailed statement.

Silent Stores

Inside Pier 1’s store on Manhattan’s Upper East Side, it’s quiet as a library on three recent visits, even as the city streets outside are bustling. Most of the products are on sale — an entire floor is dedicated to clearance items — but no one’s in the checkout line. That’s emblematic of the broader struggles the retailer faces getting shoppers in its doors.

What went wrong? For starters, e-commerce has been problematic for the company — but not in the way that it’s derailed others in the industry. Unlike peers who were slow to adapt to the internet, Pier 1 may have embraced it too vigorously, with expensive web sales diverting revenue from stores, said Anthony Chukumba, an analyst at Loop Capital Markets who has a hold rating on the stock.

The delivery of large, heavy items, has eaten into profit and compressed margins, leaving less money to invest in marketing to fickle millennials, who haven’t embraced the chain.

Bachelder, who inherited Pier 1 following the abrupt departure of her predecessor Alasdair James, hasn’t yet disclosed her strategy for the Fort Worth, Texas-based home décor store. In December, the company said it would evaluate strategic options with the help of Credit Suisse and won’t go into further detail until a course of action has been approved by the board.

“The leadership team and the entire Pier 1 organization are laser-focused on improving the trajectory of the business and accelerating sales and profitability for the benefit of all stakeholders,” the company said in an email, declining to comment further.

But analysts say its turnaround has to be multi-pronged: improve its in-store experiences, trim its store count and borrow from the playbook of upstart rivals who’ve better mastered the balance between a strong web presence and margin-eating delivery.

Turnaround History

Both Pier 1 and Bachelder have been through turnarounds before. Under former CEO Alex Smith, Pier 1 came back from the brink of bankruptcy in 2009. Bachelder, meanwhile, showed her leadership chops at Popeyes, where she became CEO in 2007. Top line restaurant sales soared 45 percent and bottom line restaurant operating profit more than doubled during her tenure, Popeyes said when she exited in 2017 after its sale to Restaurant Brands International Inc.

“It’s stature in the industry: It was in very tough shape,” said Dick Lynch, CEO at Granite City Food & Brewery, who previously worked with Bachelder at Popeyes. She didn’t shy away from making tough — and at times unpopular — decisions that were in the best interests of the fried-chicken chain, Lynch said. She also surrounded herself with the right people, creating the team that drove the transformation, he said.

The question is whether she’ll be able to repeat that success at Pier 1. “If anybody can do it, if it is rescue-able, she’s the one who can do it,” Lynch said.

New Competition

The furniture and home decoration space has gotten crowded in recent years, with heavyweights Amazon.com Inc. and Wayfair Inc. buying allegiance and market share with low or free shipping as well as two-day home delivery on many items.

Competitors are finding success in other ways. At Home Group Inc., for example, stands out: While products are listed online, they can only be purchased in one of the Plano, Texas-based company’s 180 stores, or delivered by a third party. That means At Home doesn’t have to worry about online shopping cannibalizing in-store sales or lowering profit margin.

At the same time, Pier 1 — founded in San Mateo, California, when John F. Kennedy was president — has struggled to appeal to young consumers without alienating part of its older base.

“I think it’s really tough to get those millennials,” said Chukumba of Loop Capital Markets. “They don’t want to shop at their mother’s home furnishing store.”

It’s not yet clear if Pier 1 has a longer term CEO in mind, or if Bachelder moves from interim chief to the role permanently. Either way, Chukumba said, “she or whoever they hire has a real uphill climb.”

Debt Load

Fortunately, Pier 1 has some runway: It has “adequate’’ near-term liquidity, Moody’s said. Still the majority of its $251m of debt comes due in the next two years, meaning the turnaround needs to materialize soon. Pier 1’s $200m first lien term loan B, which matures in 2021, is trading around 71 cents on the dollar, Bloomberg data show.

It also pledged to cut capital expenditures in fiscal 2019 to $40m from $60m in order to manage cash flow. For now, investors are awaiting the retailer’s fourth-quarter report, which is expected in April.

“If they have a hard fourth quarter, it’s another name you could see moving to bankruptcy sooner or later,” Keybanc’s Thomas said, noting that one way to cut costs will be to close stores. “Otherwise, I don’t know what you go in and cut.”