Pier 1 Cuts Staff and Weighs Bankruptcy Plan; Stock Plunges (1)

Pier 1 Imports Inc. is planning to dismiss about 40% of its headquarters staff and shut about 450 stores in an attempt to overhaul the troubled home furnishings business.

The retailer has drafted a bankruptcy plan and last month made a presentation to creditors that envisioned a smaller company with about $900 million in annual sales, according to people with knowledge of the matter. It’s also canceling some orders and has held talks with current lenders about providing Chapter 11 financing, said the people, who asked not to be identified because the process is private.

The company’s shares plunged as ...