Pier 1 2016 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 27, 2016, the Company had 1,032 stores in the United States and Canada. In fiscal 2016, the Company opened
17 new stores and closed 50 stores, approximately a quarter of which were relocations. On April 8, 2015, the Company
announced 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 real estate optimization plan includes three parts:
(1) closure of approximately 100 stores over a three to four fiscal-year period commencing in fiscal 2016, primarily through natural
lease expirations and relocations; (2) a more modest new store opening and relocation program; and (3) ongoing renegotiations
of rent commitments. The Company operates regional distribution center facilities and/or fulfillment centers in or near Baltimore,
Maryland; Columbus, Ohio; Fort Worth, Texas; Ontario, California; Savannah, Georgia; and Tacoma, Washington; and its
executive offices are located in Fort Worth, Texas.
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 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 2016, the Company conducted business as one operating segment consisting of retail sales of decorative accessories,
furniture, candles, housewares, gifts and seasonal products.
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 decorative accessories, furniture, candles, housewares, gifts and seasonal
products.
As of February 27, 2016, the Company operated 953 stores in the United States and 79 stores in Canada in addition to its e-
Commerce website, Pier1.com. 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 72 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 2016, 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 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 2016, 2015 and
4PIER 1 IMPORTS, INC. 2016 Form 10-K