Pier 1 2007 Annual Report Download - page 7

sources. The furniture is made of metal or handcrafted natural materials, including rattan, pine, beech,
rubberwood and selected hardwoods with either natural, stained or painted finishes. Pier 1 also sells
upholstered furniture.
DECORATIVE ACCESSORIES — This product group constitutes the broadest category of merchan-
dise in Pier 1’s sales mix and contributed approximately 27% to Pier 1’s total U.S. and Canadian retail
sales in fiscal year 2007, 26% in fiscal year 2006 and 25% in fiscal year 2005. These items are imported
from approximately 35 countries and include wood items, lamps, vases, dried and artificial flowers,
baskets, wall decorations and numerous other decorative items. A majority of these products are
handcrafted from natural materials.
HOUSEWARES — This product group is imported mainly from the Far East and Europe and includes
ceramics, dinnerware and other functional and decorative items. These goods accounted for approximately
12% of Pier 1’s total U.S. and Canadian retail sales in fiscal year 2007, 13% in fiscal years 2006 and
2005.
BED, BATH & CANDLES — This product group is imported mainly from India, Germany, Thailand
and China, and is also obtained from domestic sources. This group includes bath and fragrance products,
candles and bedding. These goods accounted for approximately 17% of Pier 1’s total U.S. and Canadian
retail sales in fiscal year 2007, 15% in fiscal year 2006 and 16% in fiscal year 2005.
SEASONAL — This product group consists of merchandise for celebrating holidays and spring/
summer entertaining, imported mainly from Europe, Indonesia, China, the Philippines and India, and also
obtained from domestic sources. These items accounted for approximately 6% of Pier 1’s total U.S. and
Canadian retail sales in fiscal year 2007, 6% in fiscal year 2006 and 7% in fiscal year 2005.
Pier 1 merchandise largely consists of items that require a significant degree of handcraftsmanship 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 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 considers quality, dependability of delivery and cost. During fiscal 2007, Pier 1 sold
merchandise imported from over 40 different countries with 35% of its sales derived from merchandise
produced in China, 14% derived from merchandise produced in Indonesia, 13% derived from merchandise
produced in India, 13% derived from merchandise produced in the United States and 21% derived from
merchandise produced in Brazil, Thailand, Italy, the Philippines, Vietnam and Mexico. The remaining 4% of
sales was from merchandise produced in various Asian, European, Central American, South American and
African countries, and Canada.
Imported merchandise and a portion of domestic purchases are delivered to the Company’s distribution
centers, unpacked and made available for shipment to the various stores in each distribution center’s region.
Because of the time delays involved in procuring merchandise from foreign suppliers, the Company maintains
a substantial inventory in its distribution center facilities to assure a sufficient supply of products to its stores.
The Company, through certain of its wholly owned subsidiaries, owns a number of federally registered
service marks under which Pier 1 and Pier 1 Kids stores do business. Additionally, certain subsidiaries of the
Company have registered and have applications pending for the registration of certain other Pier 1 and Pier 1
Kids trademarks and service marks in the United States and in numerous foreign countries. The Company
believes that its marks have significant value and are important in its marketing efforts. The Company
maintains a policy of pursuing registration of its marks and opposing any infringement of its marks.
The Company is in the highly competitive specialty retail business and competes primarily with specialty
sections of large department stores, furniture and decorative home furnishings retailers, small specialty stores,
mass merchandising discounters, and catalog and Internet retailers.
The Company allows customers to return merchandise within a reasonable time after the date of purchase
without limitation as to reason. Most returns occur within 30 days of the date of purchase. The Company
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