Pier 1 2009 Annual Report Download - page 33

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Net sales during fiscal 2008 were $1,511.8 million, a decrease of $111.4 million or 6.9%, from
$1,623.2 million for fiscal 2007. The decrease in sales for fiscal 2008 was comprised of the following
components (in thousands):
2008
New stores opened during fiscal 2008 .......................... $ 2,641
Stores opened during fiscal 2007 .............................. 9,778
Comparable stores ........................................ (23,860)
Closed stores and other(1) ................................... (99,943)
Net decrease in sales ...................................... $(111,384)
(1) Includes a decrease in sales related to the 53rd week in fiscal 2007 as well as the decrease
in catalog and e-commerce sales.
Comparable store sales for fiscal 2008 declined 1.7%. The Company’s net sales from Canadian
stores were subject to fluctuation in currency conversion rates. These fluctuations had a favorable
impact of approximately 70 basis points on both net sales and comparable store calculations in fiscal
2008 compared to fiscal 2007.
During fiscal 2008, the Company opened four new stores and closed 83 store locations, including
all Pier 1 Kids and clearance stores. In addition, the Company closed its direct to consumer business.
As of March 1, 2008, the Company operated 1,117 stores in the United States and Canada. A summary
reconciliation of the Company’s stores open at the beginning of fiscal 2008, 2007 and 2006 to the
number open at the end of each period follows (openings and closings include relocated stores):
United States Canada Total
Open at February 26, 2005 ..................... 1,115 80 1,195
Openings ................................ 65 4 69
Closings ................................. (37) (1) (38)
Open at February 25, 2006 ..................... 1,143 83 1,226
Openings ................................ 32 2 34
Closings ................................. (63) (1) (64)
Open at March 3, 2007 ....................... 1,112 84 1,196
Openings ................................ 4 — 4
Closings ................................. (82) (1) (83)
Open at March 1, 2008(1) ...................... 1,034 83 1,117
(1) The Company supplies merchandise and licenses the Pier 1 Imports name to Grupo
Sanborns, S.A. de C.V. and Sears Roebuck de Puerto Rico, Inc. which sell Pier 1 Imports
merchandise primarily in a ‘‘store within a store’’ format. At the end of fiscal 2008, there
were 31 and seven locations in Mexico and Puerto Rico, respectively.
Gross Profit
Gross profit after related buying and store occupancy costs, expressed as a percentage of sales, was
29.1% in fiscal 2008 compared to 29.2% in fiscal 2007. Merchandise margins were 48.5% as a
percentage of sales, an increase of 60 basis points over 47.9% in fiscal 2007. Although margins
improved overall in fiscal 2008, margins were negatively impacted by the clearance activities related to
the liquidation of the Company’s modern craftsmen merchandise, the closure of its Pier 1 Kids stores,
clearance stores and its direct to consumer channel. Merchandise margins in fiscal 2007 were negatively
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