Pier 1 2015 Annual Report Download - page 10

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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 stores
and an e-Commerce website all conducting business under the name Pier 1 Imports.
As of February 28, 2015, the Company had 1,065 stores in the United States and Canada. In fiscal 2015, the Company opened
30 new stores and closed 37 stores, approximately half of which were relocations. During fiscal 2015, the Company also
opened an e-Commerce fulfillment center in Columbus, Ohio, completed one store remodel and added new fixtures in all
existing stores. On April 8, 2015, the Company announced that it has initiated a plan to optimize its store portfolio as part of its ‘1
Pier 1’ strategy to drive growth through its omni-channel platform, reduce store occupancy and payroll costs and improve
efficiency. The Company plans to close approximately 100 stores over the next three years, primarily through natural lease
expirations and relocations. 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, unless those agreements are renewed and extended. 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 2015, 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 February 28, 2015, the Company operated 984 stores in the United States, 81 stores in Canada and an e-Commerce
website. The Company also 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 68 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 7,900 square feet of retail selling space. The stores are located in freestanding units 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. The Company generally has its highest sales volumes during November and December
as a result of the holiday selling season. In fiscal 2015, net sales of the Company totaled $1.9 billion.
Pier 1 Imports offers a unique selection of merchandise 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 and trends. 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 65% of Pier 1 Imports’ sales in fiscal years 2015, 2014 and
4PIER 1 IMPORTS, INC. 2015 Form 10-K