Pier 1 2011 Annual Report Download - page 9

PART I
Item 1. Business.
(a) General Development of Business.
Pier 1 Imports, Inc. was incorporated as a Delaware corporation in 1986. Throughout this report,
references to the “Company” include Pier 1 Imports, Inc. and its consolidated subsidiaries. References to “Pier 1
Imports” relate to the Company’s retail locations operating under the name Pier 1 Imports®. References to “Pier
1 Kids” relate to the Company’s retail locations that operated under the name Pier 1 Kids®.
As of February 26, 2011 the Company had 1,046 stores in the United States and Canada. In fiscal 2011,
the Company opened 3 new Pier 1 Imports stores and closed 11 stores. Subject to changes in the retail
environment, availability of suitable store sites, and lease renewal negotiations, the Company plans to open 12
new Pier 1 Imports stores and close 7 stores during fiscal 2012.
As of the end of fiscal 2011, the Company operates regional distribution center facilities in or near
Baltimore, Maryland; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma,
Washington. The Company ceased operations at its Company-owned 514,000 square foot distribution center near
Chicago, Illinois during fiscal 2010 and completed the sale of the facility during the first quarter of fiscal 2011.
The Company has an arrangement to supply Grupo Sanborns, S.A. de C.V. (“Grupo Sanborns”) with Pier
1 Imports merchandise to be sold primarily in a “store within a store” format in certain stores operated by Grupo
Sanborns’ subsidiaries, Sears Operadora de Mexico, S.A. de C.V. (“Sears Mexico”) and Corporacion de Tiendas
Internationales, S.A. de C.V. (“Sears El Salvador”). The agreement with Grupo Sanborns will expire January 1,
2017. The agreement is structured in a manner which substantially insulates the Company from currency
fluctuations in the value of the Mexican peso. As of February 26, 2011, Pier 1 Imports merchandise was offered
in 38 Sears Mexico stores and one Sears El Salvador store. Since Sears Mexico and Sears El Salvador operate
these locations, the Company has no employee or real estate obligations in Mexico or El Salvador.
As of October 19, 2009, the Company terminated its agreement with Sears Roebuck de Puerto Rico, Inc.
(“Sears Puerto Rico”) and ceased operations in Puerto Rico. The Company had a product distribution agreement
with Sears Puerto Rico, which allowed Sears Puerto Rico to market and sell Pier 1 Imports merchandise in a
“store within a store” format in certain Sears Puerto Rico stores. The Company had no employee or real estate
obligations in Puerto Rico because Sears Puerto Rico operated these locations. Pier 1 Imports merchandise was
offered in seven Sears Puerto Rico stores prior to the termination of the agreement.
During fiscal 2011, the Company entered into a new private-label credit card program agreement with
Chase Bank USA, N.A. (“Chase”) effective January 1, 2011, with a term of eighteen months. In conjunction with
this agreement, the Company and Chase terminated the original program agreement in consideration of payment
to the Company from Chase of $28.3 million plus all remaining sums due to the Company by Chase.
During fiscal 2011 the Company repaid $9.5 million of industrial revenue bonds related to the Chicago,
Illinois distribution center with proceeds received from the sale of the facility. In addition, all remaining 6.375%
convertible senior notes due 2036 were surrendered in full during the fourth quarter of fiscal 2011 and the
Company paid the holders all remaining principal and accrued interest.
The Company continues to use its website, www.pier1.com for marketing and product information, plus
investor relations purposes. During fiscal 2011 the website was enhanced to include more products, better
product descriptions and now provides in-store merchandise availability. In June 2011, the Company plans to
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