Palli and Jakup a Dul Jacobsen, Lagerinn's owner, control 9.9% of Pier 1 common stock. The sale of the UK chain results in a pre-tax impairment charge of $7 million for Pier 1.

Last year a group that included Jacobsen and Lagerinn acquired close to 5.4 million shares of retailer Linens 'n Things for just over $137 million. The Icelandic firm was rumored to be a suitor for the whole company, however, Clifton, NJ-based Linens was eventually bought by private-equity firm Apollo Management and shopping-center developer NRDC Real Estate Advisors for about $1.3 billion.

Pier 1, which operates about 1,000 stores in North America, has seen its sales lag of late due to competition from discount chains like Target Corp. Year-over-year same-store sales declined 10.8% in February, and total sales fell 6.5%, to about $109.7 million.