Pier 1 2007 Annual Report Download - page 5

PART I
Item 1. Business.
(a) General Development of Business.
Throughout this report, references to the “Company” include Pier 1 Imports, Inc. and its consolidated
subsidiaries. References to “Pier 1” relate to the Company’s retail locations operating under the name Pier 1
Imports». References to “Pier 1 Kids” relate to the Company’s retail locations operating under the name Pier 1
Kids».
On March 20, 2006, the Company announced the sale of its subsidiary based in the United Kingdom, The
Pier Retail Group Limited (“The Pier”). At fiscal 2006 year end, The Pier was classified as held for sale and
included in discontinued operations for all years presented in the Company’s financial statements; therefore,
all discussions in this report relate to continuing operations, unless stated otherwise.
In fiscal 2007, the Company opened 34 new Pier 1 stores, closed 57 Pier 1 stores and closed seven Pier 1
Kids stores. Subject to changes in the retail environment, availability of suitable store sites, lease renewal
negotiations and availability of adequate financing, the Company plans to open approximately five new Pier 1
stores and close approximately 60 stores, including 10 Pier 1 Kids stores, during fiscal 2008.
Set forth below is a list by city of Pier 1 stores opened in the United States and Canada in fiscal 2007:
Brossard, QC Lake Forest, CA Riverdale, NJ
Carlisle, PA Lewiston, ID Sacramento, CA
City of Industry, CA Lodi, CA Somers Point, NJ
Clifton, NJ Lompoc, CA Southlake, TX
Concord, CA Medina, OH Stillwater, OK
Downey, CA Mill Creek, WA Taunton, MA
Estero, FL Mission Viejo, CA Vancouver, WA
Eureka, CA Oklahoma City, OK Victoria, BC
Evanston, IL Palm Beach Gardens, FL Woodbridge, NJ
Fort Myers, FL Phillipsburg, NJ Yuba City, CA
Fort Worth, TX Portland, OR
Kailua, HI Pottstown, PA
Presently, the Company maintains regional distribution center facilities in or near Baltimore, Maryland;
Chicago, Illinois; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma,
Washington. Upon the expiration of its lease during fiscal 2007, the Pier 1 Kids distribution facility in
Fort Worth, Texas was closed, and the merchandise was moved into the Company’s existing distribution center
in Savannah, Georgia.
During fiscal 2007, the Company had an arrangement to supply Sears Roebuck de Mexico, S.A. de C.V.
(“Sears Mexico”) with merchandise to be sold primarily in a “store within a store” format in certain Sears
Mexico stores. The agreement with Sears Mexico expired December 31, 2006, and was renewed under similar
terms with Sears Mexico’s parent company, Grupo Sanborns, S.A. de C.V., and will expire January 1, 2012.
The agreement is structured in a manner, which substantially insulates the Company from currency fluctuations
in the value of the Mexican peso. In fiscal 2007, Sears Mexico opened three new “store within a store”
locations offering Pier 1 merchandise. As of March 3, 2007, Pier 1 merchandise was offered in 29 Sears
Mexico stores. Sears Mexico’s expansion plans for fiscal 2008 include opening five new “store within a store”
locations in Mexico to sell Pier 1 merchandise. Since Sears Mexico operates these locations, the Company has
no employees or real estate obligations in Mexico.
The Company has a product distribution agreement with Sears Roebuck de Puerto Rico, Inc. (“Sears
Puerto Rico”), which allows Sears Puerto Rico to market and sell Pier 1 merchandise in a “store within a
store” format in certain Sears Puerto Rico stores. The Company has no employee or real estate obligations in
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