Pier 1 2011 Annual Report Download - page 3

Fellow Shareholders:
Our fiscal 2011 results were truly exceptional as we passed two major milestones – achieving both annual
operating income for the first time in six years and net income in each of the four quarters during the fiscal year.
For the last four years, we have been talking to you about returning our Company to profitability and beyond.
In looking back to when we first started our journey, each of the years had its own distinctive theme. Our first year,
2007, was all about right sizing the business, establishing our business priorities and positioning us for our
turnaround. The next two years were dominated by going into, traveling through and coming out of the terrible
recession. We worked hard to ensure we exited the recession stronger than when we entered it. And finally in fiscal
2011, our fourth year that we are now reporting, we moved from playing defense to playing offense as our business
gained strength and we began reaping the benefits of previous accomplishments. Constant in each of the last four
years has been the disciplined and persistent execution of clear business strategies.
Now that profitability has been achieved, we are ready and eager to move our respected Company into the next
chapter – beyond profitability. The creativity, rigor and steadfastness that are deeply embedded in the culture of Pier
1 Imports have served us well and will continue to serve us well as we extend the reach of the distinctive Pier 1
Imports brand. We plan to grow sales and profitability by maintaining the performance trajectory of our stores. At
the same time, we are developing several new avenues which will bring new customers to the Pier 1 Imports
experience and give existing customers more reasons to shop with us. With an outstanding management team, the
strength of the Pier 1 Imports brand and rigorous capital discipline, we are working towards developing our
Company into a best-in-class, multi-channel retailer.
Based on our recent successes, the strength of our balance sheet and ongoing cash generation, we are well-
positioned to invest in the future of our Company, return value to our shareholders and maintain a strong cash
balance. In April 2011, we announced a three-year growth plan designed to sustain and enhance sales and further
improve profitability and increase shareholder value. Within the next three years, our goal is to achieve sales of
$200 per retail square foot and drive our operating margin to at least 10% of sales. We also expect to grow an online
business that contributes at least 10% of revenues over the next five years. The growth plan provides for the
investment of $200 million in capital initiatives over the next three years. It includes the acceleration of
e-Commerce initiatives, existing store improvements, expansion of our Pier 1 Imports store portfolio, and
improvements in infrastructure and technology. These initiatives will enhance business processes and efficiencies
throughout our entire organization. In addition, we were pleased to announce that our Board approved a plan to
return value to our shareholders by an initial share repurchase program of up to $100 million.
Over the coming years we plan to grow from a single brand, bricks and mortar retailer into a multi-channel
retailer, with assortments and brand reach significantly greater from where we are today. We will do it carefully,
thoughtfully, and at an appropriate pace. Evolution, not revolution, is our mantra. The investments we make in our
stores, our technology and our evolution into a best-in-class retailer will greatly assist in the achievement of our
goals, exceed the expectations of our customers, and improve Pier 1 Imports’ competitive position in the
marketplace. We will continue to reap benefits from the carefully planned investments we have made and are
making in the business and look forward to building upon these successes – one customer and one SKU at a time.
We would like to thank our talented and dedicated associates throughout our organization who have brought us
so far already and who will take us into a profitable future. We also appreciate the contributions of and relationships
with our vendors, agents and other business partners who have helped make this past year a success. To be sure, we
look forward to building an even better future together.
Sincerely,
Alexander W. Smith Michael R. Ferrari
President and Chief Executive Officer Chairman of the Board