Pier 1 2007 Annual Report Download - page 20

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
MANAGEMENT OVERVIEW
Introduction
Pier 1 Imports, Inc. (together with its consolidated subsidiaries, the “Company”) is one of North America’s
largest specialty retailers of unique decorative home furnishings, gifts and related items. The Company imports
merchandise directly from over 40 countries, and sells a wide variety of furniture collections, decorative
accessories, bed and bath products, housewares and other seasonal assortments in its stores. During fiscal year
2007, the Company opened 34 new stores and closed 64 stores. The Company operates stores in the United
States and Canada under the names “Pier 1 Imports” (“Pier 1”), and “Pier 1 Kids.” Pier 1 Kids stores sell
children’s home furnishings and decorative accessories. As of March 3, 2007, the Company operated 1,196 stores
in the United States and Canada, including 36 Pier 1 Kids stores and 26 clearance stores. The Company conducts
business as one operating segment.
During the fourth quarter of fiscal 2006, the Company’s Board of Directors authorized management to
sell its operations of The Pier Retail Group Limited (“The Pier”), the Company’s subsidiary based in United
Kingdom. The Company met the criteria of Statement of Financial Accounting Standards, No. 144, “Account-
ing for the Impairment or Disposal of Long-Lived Assets” that allowed it to classify The Pier as held for sale
and present its results of operations as discontinued as of February 25, 2006, with prior periods reclassified
accordingly. On March 20, 2006, the Company sold The Pier to Palli Limited for approximately $15.0 million.
Palli Limited is a wholly owned subsidiary of Lagerinn ehf, an Iceland corporation owned by Jakup a Dul
Jacobsen. According to a Schedule 13D filing, collectively Lagerinn and Mr. Jacobsen beneficially owned
approximately 9.9% of the Company’s common stock on March 20, 2006. Expenses incurred in March 2006
by the Company related to The Pier were $0.4 million, net of taxes.
The following discussion and analysis of financial condition, results of operations, liquidity and capital
resources relates to continuing operations, unless otherwise stated, and should be read in conjunction with the
accompanying audited Consolidated Financial Statements and notes thereto which can be found in Item 8 of
this report. Fiscal 2007 consisted of a 53-week year while fiscal 2006 and fiscal 2005 were 52-week years.
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