278130--5/1/2006--PIER_1_IMPORTS

related topics

{acquisition, growth, future}

{condition, economic, financial}

{product, market, service}

{customer, product, revenue}

{system, service, information}

{operation, natural, condition}

{debt, indebtedness, cash}

{personnel, key, retain}

{operation, international, foreign}

{capital, credit, financial}

{regulation, change, law}

Strategic Risks and Strategy Execution Risks The Company must be able to anticipate, identify and respond to changing trends and customer preferences for home furnishings. Failure to control merchandise returns could negatively impact the business. The success of the business is dependent on factors affecting consumer spending that are not controllable by the Company. The Company intends to expand its direct to consumer business in an effort to continue to grow and may face challenges that may cause these expansion plans to fail. Failure to successfully manage and execute our marketing initiatives could have a negative impact on the business. Risks Related to Profitable Growth The Company s success depends, in part, on its ability to find desirable new locations at reasonable rental rates and close underperforming stores at or before the conclusion of their lease terms. Failure to attract and retain an effective management team or changes in the costs or availability of a suitable workforce to manage and support the Company s stores and distribution facilities could adversely affect the business. Factors affecting the general strength of the economy, should they decline, could result in reduced consumer demand for the Company s products. The Company operates in a highly competitive retail environment with companies offering similar merchandise to ours, and if customers are lost to our competitors, sales could decline. Increases in certain operating costs that are not entirely controllable by the Company may have a significant impact on the Company s profitability. The Company s business is subject to seasonal variations, with a significant portion of its sales and earnings occurring during two months of the year. The Company s business may be harmed by adverse weather conditions and natural disasters. Risks Associated with Dependence on Technology The Company is heavily dependent on various kinds of technology in the operation of its business. The Company is subject to laws and regulatory requirements in many jurisdictions. Changes in these laws and requirements may result in additional costs to the Company, including the costs of compliance as well as potential penalties for non-compliance. Risks Associated with International Trade As a retailer of imported merchandise, the Company is subject to certain risks that typically do not affect retailers of domestically produced merchandise. Insufficient cash flows from operations could result in the substantial utilization of the Company s secured credit facility which may impose certain financial covenants. Changes in the Company s credit rating may result in a significant decrease in cash available for the Company s use.

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278130--5/1/2006--PIER_1_IMPORTS_INC/DE