Pier 1 2014 Annual Report Download - page 7

Download and view the complete annual report

Please find page 7 of the 2014 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

ITEM 1. BUSINESS.
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 and an e-Commerce website conducting business under the name Pier 1 Imports®.
As of March 1, 2014, the Company had 1,072 stores in the United States and Canada. In fiscal 2014, the Company opened 27 new
Pier 1 Imports stores and closed 17 stores, most of which were relocations. Subject to changes in the retail environment, availability of
suitable store sites, and lease renewal negotiations, the Company plans to open approximately 30 new Pier 1 Imports stores and
close 25 stores, most of which will be relocations, during fiscal 2015. During fiscal 2014, the Company also refurbished approximately
50 stores with a new merchandise fixture package and lighting upgrades, completed major remodels at six locations, and added new
fixtures in numerous existing stores. During fiscal 2013, the Company successfully executed the launch of its e-Commerce enabled
website, Pier1.com. The Company operates regional distribution center facilities and fulfillment centers in or near Baltimore, Maryland;
Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma, Washington.
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
agreements with Grupo Sanborns will expire January 1, 2017. The agreements are structured in a manner which substantially
insulates the Company from currency fluctuations in the value of the Mexican peso.
(b) Financial Information about Industry Segments.
In fiscal 2014, the Company conducted business as one operating segment consisting of the retail sales of decorative home
furnishings, furniture, gifts and related items.
Financial information with respect to the Company’s business is found in the Company’s Consolidated Financial Statements,
which are set forth in Item 8 herein.
(c) Narrative Description of Business.
The specialty retail operations of the Company consist of retail stores and an e-Commerce website conducting business 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 March 1, 2014, the Company operated 991 Pier 1 Imports stores in the United States, 81 Pier 1 Imports stores in Canada and
an e-Commerce website. During fiscal 2014, 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 56 stores in Mexico 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 8,000 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. and Canadian 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 2014, net sales of the Company totaled $1.8 billion.
Pier 1 Imports offers a unique selection of merchandise consisting of items 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 has remained constant at approximately 60% of Pier 1 Imports’ total U.S. and Canadian retail sales in
PIER 1 IMPORTS, INC. 2014 Form 10-K 3