Pier 1 2011 Annual Report Download - page 31

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The total sales decline for fiscal 2010 was primarily the result of a net decrease of 38 stores compared to
the same period in the prior year. As of February 27, 2010, the Company operated 1,054 stores in the United
States and Canada, compared to 1,092 stores at the end of fiscal 2009. The Company’s net sales from Canadian
stores were subject to fluctuation in currency conversion rates. However, these fluctuations had no net impact on
either the net sales or comparable store calculations in fiscal 2010 compared to fiscal 2009.
A summary reconciliation of the Company’s stores open at the beginning of fiscal 2010, 2009 and 2008
to the number open at the end of each period follows (openings and closings include relocated stores):
United States Canada Total
Open at March 3, 2007 1,112 84 1,196
Openings 4 - 4
Closings (82) (1) (83)
Open at March 1, 2008 1,034 83 1,117
Openings 1 - 1
Closings (24) (2) (26)
Open at February 28, 2009 1,011 81 1,092
Openings - - -
Closings (38) - (38)
Open at February 27, 2010 (1) 973 81 1,054
(1) The Company supplies merchandise and licenses the Pier 1 Imports name to Grupo Sanborns, S.A. de C.V. which sells Pier 1
Imports merchandise primarily in a “store within a store” format. At the end of fiscal 2010, there were 35 of these locations in
Mexico. During the third quarter of fiscal 2010, the company ended its relationship with Sears Roebuck de Puerto Rico, Inc.
and closed all seven “store within a store” locations in Puerto Rico. These locations are excluded from the table above.
Gross Profit
Gross profit, which is calculated by deducting store occupancy costs from merchandise margin dollars,
was 34.1% expressed as a percentage of sales in fiscal 2010 compared to 27.5% in fiscal 2009. Merchandise
margins were 54.8% as a percentage of sales, an increase of 580 basis points over 49.0% in fiscal 2009.
Improvements in merchandise margin over the previous year were primarily the result of significantly lower
markdowns resulting from well managed inventory levels along with better buying strategies throughout fiscal
2010.
Store occupancy costs during fiscal 2010 were $267.1 million, or 20.7% of sales, a decrease of $17.0
million and 80 basis points from store occupancy costs of $284.1 million, or 21.5% of sales during fiscal 2009.
The decrease of $17.0 million was primarily the result of negotiated rental reductions and a decrease in the total
number of stores.
25