Pier 1 2016 Annual Report Download - page 28

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Company Comparable Sales Calculation — For fiscal 2016 and fiscal 2015, the company comparable sales calculation
included sales that were fulfilled, ordered or sold in a store, provided that the store was open prior to the beginning of the
preceding fiscal year and was still open at period end. In addition, orders placed online as direct-to-customer sales (as defined
below) were included in the calculation, as a result of direct-to-customer sales being active prior to the beginning of the
preceding fiscal year. Remodeled or relocated stores are included if they meet specific criteria. Those criteria include the
following: the new store is within a specified distance serving the same market, no significant change in store size and no
significant overlap or gap between the store closing and reopening. Such stores are included in the company comparable sales
calculation in the first full month after the reopening. If a relocated or remodeled store does not meet the above criteria, it is
excluded from the calculation until it meets the Company’s established definition as described above.
For the fiscal 2014 company comparable sales calculation, sales included in the calculation were determined in the same
manner as above, except that direct-to-customer sales were excluded because those sales did not meet the criteria for inclusion
at that time.
FISCAL YEARS ENDED FEBRUARY 27, 2016 AND FEBRUARY 28, 2015
Net Sales
Net sales consisted almost entirely of sales to retail customers, net of discounts and returns, but also included delivery revenues
and wholesale sales and royalties. Net sales during fiscal years 2016 and 2015 were as follows (in thousands):
2016 2015
Retail sales $1,876,854 $1,868,895
Other (1) 15,376 15,662
Net sales $1,892,230 $1,884,557
(1) The Company supplies merchandise and licenses the Pier 1 Imports name to Grupo Sanborns, which sells Pier 1 Imports merchandise primarily in a “store within a store” format. Other sales
consisted primarily of these wholesale sales and royalties received from Grupo Sanborns and gift card breakage.
Net sales during fiscal 2016 were $1.892 billion, an increase of 0.4%, from $1.885 billion in the prior fiscal year. Company
comparable sales increased 0.7% for the year which was primarily the result of an increase in online traffic, online conversion and
average ticket compared to the prior year. The Company’s e-Commerce sales accounted for 16.1% of net sales for fiscal 2016
compared to 11.1% for fiscal 2015. E-Commerce sales are comprised of both customer orders placed online which were
shipped directly to the customer (“direct-to-customer”) and those picked up by the customer at a store location (“store pick-up”).
Sales at the Company’s Canadian stores are subject to fluctuations in currency conversion rates. The year-over-year decline in
the value of the Canadian Dollar, relative to the U.S. Dollar, negatively impacted net sales and company comparable sales by
approximately 100 basis points in fiscal 2016. Sales on the Pier 1 rewards credit card comprised 34.2% of U.S. sales for the
twelve months ended February 27, 2016, compared to 32.4% last year. The Company’s proprietary credit card program
provides both economic and strategic benefits to the Company.
The increase in net sales for fiscal 2016 was comprised of the following components (in thousands):
Net Sales
Net sales for fiscal 2015 $1,884,557
Incremental sales growth (decline) from:
Company comparable sales 11,997
New stores opened during fiscal 2016 19,588
Stores opened during fiscal 2015 17,622
Closed stores and other (41,534)
Net sales for fiscal 2016 $1,892,230
22 PIER 1 IMPORTS, INC. 2016 Form 10-K