Pier 1 2012 Annual Report Download - page 10

Download and view the complete annual report

Please find page 10 of the 2012 Pier 1 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

(c) Narrative Description of Business.
The specialty retail operations of the Company consist of retail stores operating under the name “Pier 1
Imports,” which sell a wide variety of furniture, decorative home furnishings, dining and kitchen goods, candles,
gifts and other specialty items for the home.
As of February 25, 2012, the Company operated 971 Pier 1 Imports stores in the United States and 81
Pier 1 Imports stores in Canada. During fiscal 2012, the Company supplied merchandise and licensed the Pier 1
Imports name to Grupo Sanborns, which sold Pier 1 Imports merchandise primarily in a “store within a store”
format in 47 Sears Mexico stores and one store in El Salvador. Pier 1 Imports stores in the United States and
Canada average approximately 9,900 gross square feet, which includes an average of approximately 7,900 square
feet of retail selling space. The stores consist of freestanding units located near shopping centers or malls and
in-line positions in major shopping centers. Pier 1 Imports operates in all major U.S. metropolitan areas and
many of the primary smaller markets. Pier 1 Imports stores generally have their highest sales volumes during
November and December as a result of the holiday selling season. In fiscal 2012, net sales of the Company
totaled $1.5 billion.
Pier 1 Imports offers a unique selection of merchandise consisting of more than 6,000 items throughout
the year imported from many countries around the world. While the broad categories of Pier 1 Imports’
merchandise remain fairly constant, individual items within these merchandise categories change frequently in
order to meet the changing demands and preferences of customers. The principal categories of merchandise
include the following:
DECORATIVE ACCESSORIES – This merchandise group constitutes the broadest category of
merchandise in Pier 1 Imports’ sales mix and contributed 61% to Pier 1 Imports’ total U.S. and Canadian
retail sales in fiscal year 2012, 61% in fiscal year 2011 and 60% in fiscal year 2010. These items are imported
primarily from Asian and European countries, as well as some domestic sources. This merchandise group
includes decorative accents, lamps, vases, dried and artificial flowers, baskets, ceramics, dinnerware, bath
and fragrance products, candles, seasonal and gift items.
FURNITURE – This merchandise group consists of furniture and furniture cushions to be used in
living, dining, office, kitchen and bedroom areas, sunrooms and on patios. Also included in this group are
wall decorations and mirrors. This group constituted 39% of Pier 1 Imports’ total U.S. and Canadian retail
sales in fiscal year 2012, 39% in fiscal year 2011 and 40% in fiscal year 2010. These goods are imported
from a variety of countries such as Vietnam, Malaysia, Brazil, Thailand, China, the Philippines, India and
Indonesia, and are also obtained from domestic sources. This merchandise group is generally made of metal
or handcrafted natural materials, including rattan, pine, beech, rubberwood and selected hardwoods with
either natural, stained, painted or upholstered finishes.
Pier 1 Imports merchandise largely consists of items that feature 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 Imports has enjoyed long-standing
relationships with many vendors and agents and is not dependent on any particular supplier. The Company
believes alternative sources of merchandise could be procured over a reasonable period of time, if necessary. In
selecting the source of merchandise, Pier 1 Imports considers quality, dependability of delivery, and cost. During
fiscal 2012, Pier 1 Imports sold merchandise imported from many different countries with approximately 57.5%
of its sales derived from merchandise produced in China. The remainder of its merchandise is sourced from
India, Vietnam, Indonesia, the United States and other countries around the world.
Imported and domestic merchandise is delivered to the Company’s distribution centers, where
merchandise is received, allocated and shipped to the various stores in each distribution center’s region.
2