Pier 1 2008 Annual Report Download - page 6

(b) Financial Information about Industry Segments.
In fiscal 2008, the Company conducted business as one operating segment consisting of the retail sale of
decorative home furnishings, gifts and related items.
Financial information with respect to the Company’s business is found in the Company’s Consolidated
Financial Statements, which are set forth in Item 8 herein.
(c) Narrative Description of Business.
The specialty retail operations of the Company consist of retail stores operating under the name “Pier 1
Imports”, selling a wide variety of furniture, wicker, decorative home furnishings, dining and kitchen goods,
epicurean products, bath and bedding accessories, candles and other specialty items for the home.
On March 1, 2008, the Company operated 1,034 Pier 1 Imports stores in the United States and 83 Pier 1
Imports stores in Canada. The Company had three remaining franchise agreements to operate stores in the
United States that expired in June 2007. During fiscal 2008, the Company supplied merchandise and licensed
the Pier 1 Imports name to Grupo Sanborns and Sears Puerto Rico, which sold Pier 1 Imports merchandise
primarily in a “store within a store” format in 31 Sears Mexico stores and in seven Sears Puerto Rico stores.
Pier 1 Imports stores in the United States and Canada average approximately 9,900 gross square feet, which
includes an average of approximately 7,900 square feet of retail selling space. The stores consist of
freestanding units located near shopping centers or malls and in-line positions in major shopping centers. Pier
1 Imports operates in all major U.S. metropolitan areas and many of the primary smaller markets. Pier 1
Imports stores generally have their highest sales volumes during November and December as a result of the
holiday selling season. In fiscal 2008, net sales of the Company totaled $1.5 billion.
Pier 1 Imports offers a unique selection of merchandise consisting of more than 4,000 items imported
from over 50 countries around the world. While the broad categories of Pier 1 Imports’ merchandise remain
fairly constant, individual items within these product categories change frequently in order to meet the
changing demands and preferences of customers. The principal categories of merchandise include the
following:
DECORATIVE ACCESSORIES — This product group constitutes the broadest category of merchan-
dise in Pier 1 Imports’ sales mix and contributed approximately 63% to Pier 1 Imports’ total U.S. and
Canadian retail sales in fiscal year 2008, 62% in fiscal year 2007 and 60% in fiscal year 2006. These
items are imported primarily from Asian and European countries, as well as some domestic sources. This
category includes decorative wood accessories, lamps, vases, dried and artificial flowers, baskets, wall
decorations, ceramics, dinnerware, bath and fragrance products, candles, bedding, epicurean products, and
seasonal and gift items.
FURNITURE — This product group consists of furniture and furniture cushions to be used in living,
dining, kitchen and bedroom areas, sunrooms, and on patios. This product group constituted approxi-
mately 37% of Pier 1 Imports’ total U.S. and Canadian retail sales in fiscal year 2008, 38% in fiscal year
2007 and 40% in fiscal year 2006. These goods are imported from a variety of countries such as Italy,
Malaysia, Brazil, Mexico, China, the Philippines and Indonesia, and are also obtained from domestic
sources. The furniture is made of metal or handcrafted natural materials, including rattan, pine, beech,
rubberwood and selected hardwoods with either natural, stained, painted or upholstered finishes.
Pier 1 Imports merchandise largely consists of items that feature a significant degree of handcraftsman-
ship and are mostly imported directly from foreign suppliers. For the most part, the imported merchandise is
handcrafted in cottage industries and small factories. Pier 1 Imports is not dependent on any particular supplier
and has enjoyed long-standing relationships with many vendors and agents. The Company believes alternative
sources of products could be procured over a relatively short period of time, if necessary. In selecting the
source of a product, Pier 1 Imports considers quality, dependability of delivery, and cost. During fiscal 2008,
Pier 1 Imports sold merchandise imported from over 50 different countries with slightly more than one-third
of its sales derived from merchandise produced in China. The remainder of its merchandise is sourced from
Indonesia, India and other countries around the world.
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