FORM 10-Q

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

(Mark One)

[ X ]  QUARTERLY  REPORT  PURSUANT  TO  SECTION 13 OR  15(d) OF THE 
       SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended May 30, 1998

                                     OR

[   ]  TRANSITION  REPORT  PURSUANT  TO  SECTION 13 OR 15(d)  OF THE
       SECURITIES EXCHANGE ACT OF 1934.

For the transition period from [            ]  to [             ]

Commission File Number 1-7832

                            PIER 1 IMPORTS, INC.
           (Exact name of registrant as specified in its charter)

       Delaware                                        75-1729843       
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                   Identification Number)


           301 Commerce Street, Suite 600, Fort Worth, Texas 76102
        (Address of principal executive offices, including zip code)

                               (817) 252-8000
            (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes [ X ].  No [   ].


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


          Class                         Shares outstanding as of July 6, 1998
- -----------------------------           -------------------------------------
Common Stock, $1.00 par value                     65,700,457

                                   PART I
                                   ------
Item 1. Financial Statements.
        ---------------------
                            PIER 1 IMPORTS, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands except per share amounts)
                                 (Unaudited)

                                                      Three Months Ended   
                                                     May 30,        May 31,
                                                      1998           1997  
                                                    --------       --------
Net sales                                           $250,508       $229,243

Operating costs and expenses:
  Cost of sales (including buying and
   store occupancy)                                  140,821        130,087
  Selling, general and administrative expenses        76,290         70,938
  Depreciation and amortization                        6,996          5,415
                                                    --------       --------
                                                     224,107        206,440
                                                    --------       --------
     Operating income                                 26,401         22,803

Nonoperating (income) and expense:
  Interest income                                       (730)          (294)
  Interest expense                                     2,128          2,027
                                                    --------       --------
                                                       1,398          1,733
                                                    --------       --------
     Income before income taxes                       25,003         21,070

Provision for income taxes                             9,502          8,431
                                                    --------       --------
Net income                                          $ 15,501       $ 12,639
                                                    ========       ========
Net income per share:*
   Basic                                                $.15           $.13
                                                        ====           ====
   Diluted                                              $.14           $.12
                                                        ====           ====
Average shares outstanding during period,
  including common stock equivalents:*
   Basic                                             100,936        100,903
                                                     =======        =======
   Diluted                                           113,046        112,500
                                                     =======        =======

* Adjusted to reflect a three for two stock split effected in the form of a
  stock dividend declared June 25, 1998.

The accompanying notes are an integral part of these financial statements.

                            PIER 1 IMPORTS, INC.
                         CONSOLIDATED BALANCE SHEETS
                      (In thousands except share data)
                                 (Unaudited)


                                                     May 30,   February 28,
                                                      1998         1998    
                                                    --------   ------------
ASSETS
Current assets:
  Cash, including temporary investments of $42,795
   and $67,972, respectively                        $ 57,387       $ 80,729
  Accounts receivable, net                            10,618         12,638
  Inventories                                        240,409        234,180
  Prepaid expenses and other current assets           77,343         74,834
                                                    --------       --------
     Total current assets                            385,757        402,381

Properties, net                                      231,556        216,330
Other assets                                          35,208         34,699
                                                    --------       --------
                                                    $652,521       $653,410
                                                    ========       ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Notes payable and current portion of long-term
   debt                                             $  1,982       $  1,994
  Accounts payable and accrued liabilities           121,252        119,596
                                                    --------       --------
     Total current liabilities                       123,234        121,590
Long-term debt                                       114,856        114,881
Other non-current liabilities                         24,352         24,208

Stockholders' equity:
  Common stock, $1.00 par, 500,000,000 shares
   authorized, 67,903,000 issued                      67,903         67,903
  Paid-in capital                                    165,618        166,824
  Retained earnings                                  178,148        165,345
  Cumulative other comprehensive income               (1,315)        (1,108)
  Less - 735,000 and 176,000 common shares in
   treasury, at cost, respectively                   (17,634)        (3,149)
  Less - unearned compensation                        (2,641)        (3,084)
                                                    --------       --------
                                                     390,079        392,731
                                                    --------       --------
                                                    $652,521       $653,410
                                                    ========       ========

The accompanying notes are an integral part of these financial statements.

                            PIER 1 IMPORTS, INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)
                                 (Unaudited)

                                                      Three Months Ended   
                                                     May 30,        May 31,
                                                      1998           1997  
                                                     -------        -------
Cash flow from operating activities:
Net income                                           $15,501        $12,639
  Adjustments to reconcile to net cash provided by
   operating activities:
   Depreciation and amortization                       6,996          5,415
   Deferred taxes and other                              267            734
   Change in cash from: 
     Inventories                                      (6,229)          (783)
     Accounts receivable and other current assets     (2,227)        (2,600)
     Accounts payable and accrued expenses              (608)        (1,205)
     Other assets, liabilities, and other, net          (303)          (954)
                                                     -------        -------
       Net cash provided by operating activities      13,397         13,246
                                                     -------        -------
Cash flow from investing activities:
  Capital expenditures                               (24,346)        (9,550)
  Proceeds from disposition of properties                503            509
  Beneficial interest in securitized receivables       2,609         (2,935)
  Acquisition of national bank charter                    --           (943)
                                                     -------        -------
     Net cash used in investing activities           (21,234)       (12,919)
                                                     -------        -------
Cash flow from financing activities:
  Cash dividends                                      (2,698)        (1,802)
  Purchases of treasury stock                        (14,742)        (1,662)
  Proceeds (payments) from sales (purchases) of
   stock options exercised, stock purchase plan
   and other, net                                      1,935          1,724
                                                     -------        -------
     Net cash used in financing activities           (15,505)        (1,740)
                                                     -------        -------
Change in cash and cash equivalents                  (23,342)        (1,413)
Cash and cash equivalents at beginning of period      80,729         32,280
                                                     -------        -------
Cash and cash equivalents at end of period           $57,387        $30,867
                                                     =======        =======

The accompanying notes are an integral part of these financial statements.

                                                        PIER 1 IMPORTS, INC.
                                           CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                               FOR THE THREE MONTHS ENDED MAY 30, 1998
                                                           (In thousands)
                                                             (Unaudited)
Cumulative Other Total Common Paid-in Retained Comprehensive Treasury Unearned Stockholders' Stock Capital Earnings Income Stock Compensation Equity ------- -------- -------- ------------- --------- ------------- ------------- Balance, February 28, 1998 $67,903 $166,824 $165,345 ($1,108) ($ 3,149) ($3,084) $392,731 -------- Comprehensive income Net income 15,501 15,501 Other comprehensive income, net of tax: Foreign currency translation adjustments (207) (207) -------- Comprehensive income 15,294 -------- Purchases of treasury stock (19,857) (19,857) Restricted stock grant and amortization 443 443 Stock purchase plan, exercise of stock options and other (1,206) 5,372 4,166 Cash dividends, declared or paid ($.04 per share) (2,698) (2,698) ------- -------- -------- ------- -------- ------- -------- Balance, May 30, 1998 $67,903 $165,618 $178,148 ($1,315) ($17,634) ($2,641) $390,079 ======= ======== ======== ======= ======= ===== ======== The accompanying notes are an integral part of these financial statements.
PIER 1 IMPORTS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MAY 30, 1998 AND MAY 31, 1997 (Unaudited) The accompanying unaudited financial statements should be read in conjunction with the Form 10-K for the year ended February 28, 1998. All adjustments that are, in the opinion of management, necessary for a fair statement of the financial position as of May 30, 1998, and the results of operations and cash flows for the three months ended May 30, 1998 and May 31, 1997 have been made and consist only of normal recurring adjustments. The results of operations for the three months ended May 30, 1998 and May 31, 1997 are not indicative of results to be expected for the fiscal year because of, among other things, seasonality factors in the retail business. The classifications of certain amounts previously reported in the statement of cash flows for the three months ended May 31, 1997 have been modified to conform with the May 30, 1998 method of presentation. Note 1 - Net income per share Basic net income per share was determined by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share amounts are similarly computed, but include the effect, when dilutive, of the Company's weighted average number of stock options outstanding and the average number of common shares that would be issuable upon conversion of the Company's convertible securities. To determine dilutive net income, interest and debt issue costs, net of any applicable taxes, have been added back to net income to reflect assumed conversions. Net income per share for the three months ended May 30, 1998 and May 31, 1997 (adjusted for the stock split effected in the form of a stock dividend declared June 25, 1998) are calculated as follows: Three Months Ended May 30, May 31, 1998 1997 ------- ------- (in thousands except per share amounts) Net income $15,501 $12,639 Assumed conversion of 5 3/4% subordinated notes: Plus interest and debt issue costs, net of tax 838 811 ------- ------- Diluted net income $16,339 $13,450 ======= ======= Average shares outstanding during period: Basic 100,936 100,903 Plus assumed exercise of stock options 1,621 1,107 Plus assumed conversion of 5 3/4% subordinated notes to common stock 10,489 10,490 ------- ------- Diluted 113,046 112,500 ======= ======= Net income per share: Basic $.15 $.13 ==== ==== Diluted $.14 $.12 ==== ==== Note 2 - Subsequent event - three for two stock split In June 1998, the Company announced a three for two stock split of its common shares distributable to shareholders of record on July 15, 1998. The stock split will be effected in the form of a 50% stock dividend. The new shares will be distributed on July 29, 1998. All per share amounts have been adjusted to reflect the impact of the stock split. The effect of this stock split has not been reflected in the May 30, 1998 consolidated balance sheet. Additionally, the Company announced a 12.5% effective increase in the Company's quarterly cash dividend on the post split shares. The cash dividend of $.03 will be paid August 26, 1998 to shareholders of record on August 12, 1998. Note 3 - Adoption of new accounting standards In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 130, "Reporting Comprehensive Income." This standard was adopted by the Company in the first quarter of fiscal 1999. SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components, which for the Company includes foreign currency translation adjustments. The impact of the adoption of this statement was primarily limited to the form and content of the disclosures on the Company's consolidated balance sheets and statement of stockholders' equity with no impact to the Company's financial position or net income. The May 31, 1997 first quarter financial statements have been reclassified to conform to the requirements of SFAS No. 130. The components of comprehensive income, net of related tax, for the first quarter of fiscal 1999 and 1998 are as follows: Three Months Ended May 30, May 31, 1998 1997 ------- ------- (in thousands) Net income $15,501 $12,639 Foreign currency translation adjustments (207) (15) ------- ------- Comprehensive income $15,294 $12,624 ======= ======= PART I ------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations For the first quarter of fiscal 1999, Pier 1 Imports, Inc. ("the Company") recorded net sales of $250.5 million, a 9.3% increase over the $229.2 million recorded for the same period in fiscal 1998. Same-store sales for the first quarter of fiscal 1999 increased 8.3% compared to the first quarter of fiscal 1998. The growth in same-store sales is primarily a result of the Company's expanded network television advertising campaign, which added more networks to the previous advertising schedule, and the increasing number of remodeled and remerchandised stores. Additionally, the Company initiated a new credit card program which enables customers to make lower periodic payments on big ticket purchases. This new credit card program fueled hard goods sales on furniture and decorative accessories with increases of 14.4% and 13.4%, respectively, for the first quarter of fiscal 1999 compared to the first quarter of fiscal 1998. Sales on the Company's proprietary credit card totaled $65.9 million for the first three months of fiscal 1999, an increase of $5.2 million, or 8.5% over the same period of fiscal 1998. The Company opened five new stores and closed six stores in North America during the first quarter of fiscal 1999. After a two year testing period, the Company decided not to proceed with the concept of mall- based stores operating under the name "The Market of Pier 1." The remaining eight test stores were closed during the first quarter of fiscal 1999 bringing the North American store count to 709 at the end of the quarter compared to 689 stores a year earlier. Stores worldwide, including North America, Puerto Rico, the United Kingdom, Mexico and Japan, totaled 754 at the fiscal 1999 first quarter-end. Gross profit, after related buying and store occupancy costs, expressed as a percentage of sales, increased 50 basis points to 43.8% for the first quarter of fiscal 1999 compared to 43.3% for the first quarter of fiscal 1998. These increases are principally the result of higher merchandise margins on certain items, particularly furniture and decorative accessories, offset partially by a slight increase in clearance and promotional markdowns. Store occupancy costs, as a percentage of sales, declined to 13.1% during the first three months of fiscal 1999 from 13.3% for the comparable period of fiscal 1998. This improvement is primarily due to leveraging relatively fixed store rental rates over a higher sales base. Selling, general and administrative expenses, including marketing, as a percentage of sales, improved 40 basis points to 30.5% in the first quarter of fiscal 1999 compared to the same period a year earlier. In total dollars, expenses for the first quarter of fiscal 1999 increased $5.4 million over the first quarter of fiscal 1998. Expenses that normally grow proportionately with sales and net new stores, such as store salaries, equipment rental, supplies and marketing, grew by $5.9 million, a 60 basis point increase over the first quarter of last year as a percentage of sales. These variable expenses increased primarily due to a 40 basis point increase in marketing expenses related to the timing of the Company's national television advertising expenses coupled with the introduction of a major seasonal direct mail piece. In addition, other selling, general and administrative expenses grew in the first quarter of fiscal 1999 by $2.7 million related to non-store compensation costs, offset by a $1.9 million decrease in net proprietary credit card costs. All other selling, general and administrative expenses decreased by $1.3 million. Operating income increased $3.6 million, or 15.8%, to $26.4 million for the first quarter of fiscal 1999 compared to $22.8 million in the first quarter of fiscal 1998. During the first quarter of fiscal 1999, net interest expense declined $.3 million primarily as a result of increased interest income on higher cash balances and short-term investments. The Company's effective income tax rate for fiscal 1999 is estimated at 38% compared to 40% recorded in the first quarter of fiscal 1998. The decline in the estimated effective income tax rate is a result of favorable resolution of a number of federal tax issues as well as state income tax benefits resulting from certain operational initiatives. Net income for the first quarter of fiscal 1999 was $15.5 million or $.14 per share on a diluted basis compared to net income of $12.6 million or $.12 per share on a diluted basis for the first quarter of fiscal 1998. These per share amounts have been adjusted to reflect the impact of the three for two stock split declared June 25, 1998. See: Note 2 of the Notes to Consolidated Financial Statements. Liquidity and Capital Resources Cash, including temporary investments, decreased $23.3 million to $57.4 million at the end of the first quarter of fiscal 1999 from $80.7 million at fiscal 1998 year-end. This decrease is primarily due to capital expenditures of $24.3 million, repurchases of the Company's common stock in open market transactions of $14.7 million and cash dividend payments of $2.7 million. These cash expenditures were partially offset by cash flow from operations of $13.4 million and decreased beneficial interest in securitized receivables of $2.6 million. Other investing and financing activities provided cash of $2.4 million. During fiscal 1999, the Company estimates capital expenditures to be approximately $80 million, with the majority of these expenses related to the Company's store development plans for new and existing locations, including various store-related technology investments. In the first quarter of fiscal 1999, capital expenditures were $24.3 million. Capital expenditures are expected to continue to be funded by operations, working capital and bank lines of credit. The Company expects working capital requirements will continue to be funded through cash flow from operations, sales of proprietary credit card receivables and bank lines of credit. The bank facilities consist of a committed $65 million competitive advance and revolving credit facility, which expires in December 1998, all of which was available at the end of the first quarter of fiscal 1999, other short-term (12-month) bank facilities used principally for the issuance of letters of credit totaling $146.1 million, $60.6 million of which was available at the end of the first quarter of fiscal 1999, and other long-term bank facilities of $32.1 million. At the end of the first quarter of fiscal 1999, the short-term bank facilities consisted of $4.8 million of committed lines of credit and $141.3 million of uncommitted lines, while the long-term facilities consisted of $25.6 million of committed lines of credit and $6.5 million in uncommitted lines. The Company expects to replace the competitive advance and revolving credit facility, prior to the existing facility's expiration date, with a five year $125 million facility that will have substantially similar or better terms. Additionally, Pier 1 Imports Credit Card Master Trust has issued Series 1997- 2 variable funding certificates maturing October 2002 that provide for a maximum outstanding principal balance of $50 million. At the end of the first quarter of fiscal 1999, approximately $9 million was available to be drawn against the variable funding certificates, and as of May 30, 1998, no amounts had been drawn against such certificates. The Company's current ratio at the end of the first quarter of fiscal 1999 was 3.1 to 1 compared to 3.3 to 1 at the end of fiscal 1998. At the end of fiscal 1998, the Company had utilized commitments from an unaffiliated party to make available up to $23.6 million for the development or acquisition of store properties for lease to the Company. This facility was to expire on June 15, 1998. Prior to the expiration date, the Company arranged alternative financing by entering into lease agreements with another unaffiliated party for these store properties. The Company's minimum operating lease commitments remaining for fiscal 1998 are $74.5 million, and the present value of total existing minimum operating lease commitments is $398 million. The Company expects to fund these commitments from operating cash flow. The Company continues to guarantee certain nursery store leases of Wolfe Nursery, Inc. ("Wolfe"), a subsidiary of Sunbelt Nursery Group, Inc. ("Sunbelt"). These commitments totaled $2.1 million at the end of the first quarter of fiscal 1999. In April 1998, Sunbelt initiated bankruptcy proceedings and as of June 30, 1998, all of the leases were rejected by Wolfe in these proceedings. The Company believes it has accrued sufficient amounts to cover any deficiencies in payments on these store lease commitments as a result of Wolfe's defaults on these leases and its bankruptcy. Any cash payments to satisfy these guarantees are expected to be funded through working capital and operations. In April 1998, the Board of Directors approved the purchase of up to three million shares of the Company's outstanding common stock. During the first three months of fiscal 1999, the Company repurchased approximately 698,100 shares of its common stock in open market transactions for approximately $17.6 million, of which $14.7 million was paid in the first quarter of fiscal 1999. In addition, approximately 93,000 shares of common stock were acquired as payment for the exercise of employee stock options. As of June 30, 1998, the Company has repurchased approximately 2,189,400 shares in open market transactions for approximately $51.9 million. In June 1998, the Company announced a three for two stock split of its common shares distributable July 29, 1998 to shareholders of record on July 15, 1998. The stock split will be effected in the form of a 50% stock dividend. All per share amounts have been adjusted to reflect the impact of the stock split. The effect of this stock split has not been reflected in the May 30, 1998 consolidated balance sheet. In the first quarter of fiscal 1999, the Company paid a $.04 per share cash dividend and in June 1998 declared a cash dividend of $.03 per share, a 12.5% effective increase in the Company's quarterly cash dividend on the post split shares, payable on August 26, 1998 to shareholders of record on August 12, 1998. The Company currently expects to continue to pay cash dividends in fiscal 1999 but to retain most of its future earnings for expansion of the Company's business. In June 1998, Standard & Poor's ("S&P") raised the Company's corporate credit rating to an investment grade of BBB-. In addition, S&P raised the Company's convertible subordinated debt rating to BB+ from BB-. The investment grade rating should provide the Company the opportunity to obtain more favorable interest rates as well as provide an advantage in lease agreement negotiations on new stores. Impact of Year 2000 Issues The Company is in the process of reviewing and addressing its computer systems with regard to the year 2000 issue. The Company has conducted an initial review of its computer systems to identify those areas both internally and externally that could be affected by the year 2000 issue and has engaged consultants to review its assessments and implementation strategies. The year 2000 project has been divided into five phases: 1) awareness, 2) assessment, 3) renovation, 4) validation and 5) implementation. The Company's systems are in various stages of these phases; some of the systems have completed the implementation phase and are running in production. The Company plans to complete the assessment phase of its year 2000 project in the second quarter of fiscal 1999. The Company's strategy also includes development of contingency plans for critical business processes in the event of a compliance failure on the part of the Company or any of its business partners. Additionally, the Company is in the process of communicating with service providers and suppliers of merchandise in order to assess their year 2000 readiness and the extent to which the Company may be vulnerable to any third parties' failure to remediate their own year 2000 issues. If necessary modifications and conversions by other companies on whose systems the Company's business processes rely are not completed on time, the year 2000 issue may have an adverse effect on the Company's operations. The areas of greatest risk include communications systems and elements of the merchandise supply chain, including procurement, transportation, and import activities. The Company plans to continue to rely primarily on internal resources in order to identify, correct or reprogram and test systems for year 2000 compliance. Costs incurred to date for year 2000 remediation have totaled approximately $1 million, the majority of which consisted of normal salaries paid to existing employees; such costs were consistent with the Company's operating budget and have not had a material effect on the results of operations in any period or on liquidity or financial position. Remaining remediation costs are not expected to exceed $3 million over the next seven quarters. Cost estimates will be further refined as the assessment phase nears completion. Contingency plans include arrangements for engaging external resources to assist in remediation efforts if necessary. Significant utilization of such outside resources, although not expected, could cause remediation costs to increase above the Company's estimates. The Company's plan provides for internal compliance of all mission-critical systems by mid-1999. Impact of Inflation Inflation has not had a significant impact on the operations of the Company. PART II ------- Item 2. Changes in Securities. --------------------- The Company's Certificate of Incorporation was amended, effective June 29, 1998 to increase the authorized number of shares of common stock from 200,000,000 to 500,000,000. Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- The Annual Meeting of Shareholders of the Company was held June 25, 1998 for the purpose of electing six (6) Directors to hold office until the next Annual Meeting of Shareholders and to vote upon the proposed amendment to the Company's certificate of incorporation. The result of this vote follows: Director Election ----------------- Director FOR WITHHELD -------- --- -------- Clark A. Johnson 59,465,336 106,149 Marvin J. Girouard 59,478,807 92,678 Martin L. Berman 59,462,781 108,704 Craig C. Gordon 59,480,320 91,165 James M. Hoak, Jr. 59,480,814 90,671 Sally F. McKenzie 59,446,662 124,823 Proposed Amendment to the Company's Certificate of Incorporation ---------------------------------------------------------------- For Against Abstained --- ------- --------- 36,910,324 22,562,654 98,507 Item 6. Exhibits and Reports on Form 8-K. -------------------------------- (a) Exhibits See Exhibit Index. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PIER 1 IMPORTS, INC. (Registrant) Date: July 14, 1998 By: /s/ Marvin J. Girouard ------------- -------------------------------------------- Marvin J. Girouard, President and Chief Executive Officer (Principal Executive Officer) Date: July 14, 1998 By: /s/ Stephen F. Mangum ------------- ------------------------------------------- Stephen F. Mangum, Senior Vice President and Chief Financial Officer (Principal Accounting Officer) EXHIBIT INDEX Exhibit No. Description - ------- ----------- 3(i) Certificate of Incorporation and Amendments thereto. 27 Financial Data Schedule for Three-Month Period ended May 30, 1998.
                                EXHIBIT 3(i)

                        CERTIFICATE OF INCORPORATION
                                     OF
                            PIER 1 IMPORTS, INC.
                                      
                                      
                The undersigned, in order to form a corporation for the
purposes hereinafter stated, under and pursuant to the provisions of the
General Corporation Law of the State of Delaware, does hereby certify as
follows:

                FIRST:  The name of the corporation is

                            PIER 1 IMPORTS, INC.

                SECOND:  The registered office of the corporation is to be
located at 1209 Orange Street, in the City of Wilmington in the County of New
Castle, in the State of Delaware.  The name of its registered agent at such
address is The Corporation Trust Company.

                THIRD:  The purpose for which the corporation is formed is to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware.

                FOURTH:  The number of shares of stock which the corporation
shall have authority to issue is Twenty-Five Million (25,000,000) shares of
Common Stock having a par value of One Dollar ($1.00) per share and One
Million (1,000,000) shares of Preferred Stock having a par value of One
Dollar ($1.00) per share.

                The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article FOURTH, to provide for
the issuance of the shares of Preferred Stock in one or more series, and by
filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each
such series, and to fix such voting powers, full or limited, or no voting
powers, and such designations, preferences and relative, participating,
optional or other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof.

                The authority of the Board with respect to each series shall
include, but not be limited to, determination to the following:

                (a)   The number of shares constituting that series and the
distinctive designation of that series;

                (b)   The dividend rate on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of
that series;

                (c)   Whether that series shall be convertible into, or
exchangeable of any other class or series, and, if so, the terms and
conditions of such conversion or exchange, including provisions for
adjustment of the conversion or exchange rate in such events as the Board of
Directors shall determine;

                (d)   The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution, distribution of assets or
winding up of the corporation, and the relative rights of priority, if any,
of payment of shares of that series;

                (e)   Whether or not the shares of that series shall be
redeemable for cash property or other rights, and, if so, the terms and
conditions of such redemption, including the date or dates upon or after
which they shall be redeemable;

                (f)   Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;

                (g)   Any other relative rights, preferences and limitations
of that series.

                Dividends on outstanding shares of Preferred Stock shall be
paid or declared and set apart for payment, before any dividends shall be
paid or declared and set apart for payment, on the Common Stock with respect
to the same dividend period.

                FIFTH:  The name and address of the Sole Incorporator is as
follows:

                NAMEADDRESS

                J. Rodney LawrencePier 1 Inc.
                301 Commerce Street, Suite 600
                Fort Worth, Texas 76102

                SIXTH:  The number of directors of the corporation shall be
such as from time to time shall be fixed by, or in the manner provided in,
the bylaws.  Election of directors need not be by written ballot unless the
bylaws so provide.

                SEVENTH:  The corporation shall have the power, to the full
extent permitted by Section 145 of the General Corporation Law of the State
of Delaware, as amended from time to time, to indemnify each director,
officer, employee or agent who serves or has served the corporation and each
director, officer, employee or agent who serves or has served at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.

                EIGHTH:  In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized to
adopt, amend or repeal the bylaws of the corporation.

                NINTH:  The corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation
in the manner now or hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are subject to this
reserved power.

                IN WITNESS WHEREOF, the undersigned has hereunto set his hand
and
seal this 28th day of April, 1986.


                /s/  J. Rodney Lawrence
                Sole Incorporator


                          CERTIFICATE OF AMENDMENT
                                     OF
                        CERTIFICATE OF INCORPORATION
                                      
                            PIER 1 IMPORTS, INC.
                                      
                                      
                Pier 1 Imports, Inc. (the "Company"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State
of Delaware, DOES HEREBY CERTIFY:

                FIRST: That at a meeting of the Board of Directors of the
Company held on March 25, 1987, resolutions were duly adopted setting forth
the following proposed amendments of the Certificate of Incorporation of the
Company, and directing that they be submitted to the stockholders at the next
annual meeting of stockholders:

                A.    That Article Seventh of the Company's Certificate of
                Incorporation be amended to read as follows:

                "SEVENTH: (a)  Limitation on Certain
                Liability of Directors and Officers.  A
                director or officer of the corporation shall
                not be personally liable to the corporation
                or its stockholders for monetary damages for
                breach of fiduciary duty as a director or
                officer, except for liability (i) for any
                breach of the director's or officer's duty of
                loyalty to the corporation or its
                stockholders, (ii) for acts or omissions not
                in good faith or which involve intentional
                misconduct or a knowing violation of law,
                (iii) under Section 174 of the Delaware
                General Corporation Law, or (iv) for any
                transaction from which the director or
                officer is found by a court of law to have
                derived an improper personal benefit.

                (b)  Right to Indemnification.   Each person
                who was or is made a party or is threatened
                to be made a party to or is involved in any
                action, suit or proceeding, whether civil,
                criminal, administrative or investigative
                (hereinafter a "proceeding"), by reason of
                the fact that he or she, or a person of whom
                he or she is the legal representative, is or
                was a director or officer of the corporation,
                or is or was serving at the request of the
                corporation as a director, officer, employee
                or agent of another corporation or of a
                partnership, joint venture, trust or other
                enterprise, including service with respect to
                employee benefit plans, whether the basis of
                such proceeding is alleged action in an
                official capacity as a director, officer,
                employee or agent or in any other capacity
                while serving as a director, officer,
                employee or agent, shall be indemnified and
                held harmless by the corporation to the
                fullest extent authorized by the Delaware
                General Corporation Law, as the same exists
                or may hereafter be amended (but, in the case
                of any such amendment, only to the extent
                that such amendment permits the corporation
                to provide broader indemnification rights
                than said law permitted the corporation to
                provide prior to such amendment), against all
                expense, liability and loss including
                attorneys' fees, judgments, fines, ERISA
                excise taxes or penalties and amounts paid or
                to be paid in settlement) reasonably incurred
                or suffered by such person in connection
                therewith and such indemnification shall
                continue as to a person who has ceased to be
                a director, officer, employee or agent and
                shall inure to the benefit of his or her
                heirs, executors and administrators; provided
                however, that, except as provided in
                paragraph (c) hereof, the corporation shall
                indemnify any such person seeking
                indemnification in connection with a
                proceeding (or part thereof) initiated by
                such person only if such proceeding (or part
                thereof) was authorized by the Board of
                Directors of the corporation.  The right to
                indemnification conferred in this Article
                shall be a contract right and shall include
                the right to be paid by the corporation the
                expenses incurred in defending any such
                proceeding in advance of its final
                disposition; provided however, that if the
                Delaware General Corporation Law requires,
                the payment of such expenses incurred by a
                director or officer in his or her capacity as
                a director or officer (and not in any other
                capacity in which service was or is rendered
                by such person while a director or officer,
                including, without limitation, service to an
                employee benefit plan) in advance of the
                final disposition of a proceeding, shall be
                made only upon delivery to the corporation of
                an undertaking, by or on behalf of such
                director or officer, to repay all amounts so
                advanced if it shall ultimately be determined
                that such director or officer is not entitled
                to be indemnified under this Article or
                otherwise.  The corporation may, by action of
                its Board of Directors, provide
                indemnification to other employees or agents
                of the corporation with the same scope and
                effect as the foregoing indemnification of
                directors and officers.

                (c) Right of Claimant to Bring Suit. If a
                claim under paragraph (b) of this Article is
                not paid in full by the corporation within
                forty-five days after a written claim has
                been received by the corporation, the
                claimant may at any time thereafter bring
                suit against the corporation to recover the
                unpaid amount of the claim and, if successful
                in whole or in part, the claimant shall be
                entitled to be paid also the expense of
                prosecuting such claim.  It shall be a
                defense to any such action (other than an
                action brought to enforce a claim for
                expenses incurred in defending any proceeding
                in advance of its final disposition where the
                required undertaking, if any is required, has
                been tendered to the corporation) that the
                claimant has not met the standards of conduct
                which make it permissible under the Delaware
                General Corporation Law for the corporation
                to indemnify the claimant for the amount
                claimed, but the burden of proving such
                defense shall be on the corporation. Neither
                the failure of the corporation (including its
                Board of Directors, independent legal
                counsel, or its stockholders) to have made a
                determination prior to the commencement of
                such action that indemnification of the
                claimant is proper in the circumstances
                because he or she has met the applicable
                standard of conduct set forth in the Delaware
                General Corporation Law, nor an actual
                determination by the corporation (including
                its Board of Directors, independent legal
                counsel, or its stockholders) that the
                claimant has not met such applicable standard
                of conduct, shall be a defense to the action
                or create a presumption that the claimant has
                not met the applicable standard of conduct.

                (d) Non-Exclusivity of Rights.  The right to
                indemnification and the payment of expenses
                incurred in defending a proceeding in advance
                of its final disposition conferred in this
                Article shall not be exclusive of any other
                right which any person may have or hereafter
                acquire under any statute, provision of the
                Certificate of Incorporation, bylaw,
                agreement, vote of stockholders or
                disinterested directors or otherwise.

                (e) Insurance.  The corporation may maintain
                insurance, at its expense, to protect itself
                and any director, officer, employee or agent
                of the corporation or another corporation,
                partnership, joint venture, trust or other
                enterprise against any such expense,
                liability or loss, whether or not the
                corporation would have the power to indemnify
                such person against such expense, liability
                or loss under the Delaware General
                Corporation Law."

                B. That the first paragraph of Article Fourth of the
                Company's Certificate of Incorporation be amended to read as
                follows:

                "FOURTH: The number of shares of stock which
                the corporation shall have authority to issue
                is One Hundred Million (100,000,000) shares
                of Common Stock having a par value of One
                Dollar ($1.00) per share and Five Million
                (5,000,000) shares of Preferred Stock having
                a par value of One Dollar ($1.00) per share."

                SECOND:  That thereafter, pursuant to resolution of its Board
of Directors, an annual meeting of the stockholders of the Company was duly
called and held on June 24, 1987 upon notice in accordance with Section 222
of the General Corporation Law of the State of Delaware, at which meeting the
necessary number of shares as required by statute were voted in favor of the
amendments.

                THIRD:  That such amendments were duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the
State of Delaware.

                FOURTH:  That the capital of the Company shall not be reduced
under or by reason of such amendments.

  IN WITNESS WHEREOF, Pier 1 Imports, Inc. has caused this certificate to be
signed and attested by its duly authorized officers, this 1st day of July,
1987.

                PIER 1 IMPORTS, INC.

                By: /s/ Clark A. Johnson       
                    Clark A. Johnson, President

ATTEST:

 /s/ J. Rodney Lawrence        
J. Rodney Lawrence, Secretary
                    CERTIFICATE OF AMENDMENT
                                     OF
                        CERTIFICATE OF INCORPORATION
                                     OF
                            PIER 1 IMPORTS, INC.

                Pier 1 Imports, Inc., a Delaware corporation (the
"Corporation"), pursuant to Section 242 of the General Corporation Law of the
State of Delaware hereby certifies that:
                FIRST: On August 6, 1987, the Board of Directors of the
Corporation, acting by unanimous consent in accordance with the General
Corporation Law of the State of Delaware and the By-laws of the Corporation,
adopted the following resolution setting forth and recommending a proposed
amendment to the Certificate of Incorporation of the Corporation, as amended
by the Certificate of Designation filed by the Corporation on February 17,
1987 with respect to the Corporation's $.25 Preferred Stock:
                RESOLVED, that the Board of Directors hereby adopts and
declares advisable the following amendments to the Company's Certificate of
Incorporation, as amended by the Certificate of Designation filed by the
Company on February 17, 1987 with respect to the Company's $.25 Preferred
Stock (the "Certificate of Designation"):

                The designation of the Company's $.25 Preferred Stock is
                amended so that it shall be "Formula Rate Preferred Stock,"
                and the text of the Certificate of Designation is amended to
                read in its entirety as follows:

                "RESOLVED: That pursuant to authority conferred upon the
                Board of Directors by the Certificate of Incorporation of the
                Company, the Board of Directors hereby authorizes the
                issuance of up to 5,000,000 shares of the Preferred Stock of
                the Company, and hereby fixes the designation, powers,
                preferences and relative, participating, optional or other
                special rights, and the qualifications, limitations or
                restrictions thereof, of such shares, in addition to those
                set forth in the Certificate of Incorporation, as follows:

                (a) The initial series of Preferred Stock shall be designated
                Formula Rate Preferred Stock.

                (b) The number of shares constituting the Formula Rate
                Preferred Stock shall be 5,000,000 shares.

                (c) The Formula Rate Preferred Stock shall have a Par value
                of $1.00 Per share.

                (d) In the event of a voluntary or involuntary liquidation,
                dissolution, or winding up of the Company, the holders of
                Formula Rate Preferred Stock shall be entitled to receive,
                out of the assets of the Company, whether such assets are
                capital or surplus, an amount equal to $.66 2/3 per share of
                Formula Rate Preferred Stock (the "Liquidation Preference"),
                before any payment shall be made or any assets distributed to
                the holders of Common Stock; provided, however, that in the
                event the Company effects a stock split, either by way of a
                lawful stock dividend to the holders of, or a
                reclassification of the shares of, the Formula Rate Preferred
                Stock, then the amount of the Liquidation Preference per
                share which the holders of the Formula Rate Preferred Stock
                shall be entitled to receive shall be adjusted to be equal to
                the Liquidation Preference then in effect for shares of
                Formula Rate Preferred Stock multiplied by a fraction the
                numerator of which is the number of shares of Formula Rate
                Preferred Stock outstanding immediately prior to the
                distribution of shares (in the case of a stock split by way
                of a stock dividend) or the effectiveness of the stock split
                (in the case of a stock split by way of a reclassification of
                shares) and the denominator of which is the number of shares
                of Formula Rate Preferred Stock outstanding immediately after
                such stock split.  If upon such liquidation, dissolution, or
                winding up of the Company the assets thus distributed among
                the holders of Formula Rate Preferred Stock shall be
                insufficient to permit the payment to such stockholders of
                the full preferential amounts aforesaid, then the entire
                assets of the Company are to be distributed ratably among the
                holders of Formula Rate Preferred Stock.  After payment or
                distribution to the holders of Formula Rate Preferred Stock
                of the full preferential amounts aforesaid, the holders of
                Common Stock shall be entitled to receive, ratably, all
                remaining assets of the Company.  A consolidation or merger
                of the Company with or into any other corporation or
                corporations, or a sale of all or substantially all of the
                assets of the Company, shall not be deemed to be a
                liquidation, dissolution, or winding up within the meaning of
                this paragraph.

                (e) The holders of the Formula Rate Preferred Stock shall be
                entitled to receive, subject only to the availability of
                funds legally available therefor, a cumulative annual cash
                dividend in the sum of Sixteen and Two-Thirds Cents ($.16
                2/3) per share, and no more, which shall be payable in one or
                more installments, when and as may be declared by the Board
                of Directors from time to time; provided, however, that in
                the event the Company effects a stock split, either by way of
                a lawful stock dividend to the holders of, or a
                reclassification of the shares of, the Formula Rate Preferred
                Stock, then the amount of dividend per share which the
                holders of the Formula Rate Preferred Stock shall be entitled
                to receive shall be adjusted to be equal to the per share
                dividend then in effect for shares of Formula Rate Preferred
                Stock multiplied by a fraction the numerator of which is the
                number of shares of Formula Rate Preferred Stock outstanding
                immediately prior to the distribution of shares (in the case
                of a stock split by way of a stock dividend) or the
                effectiveness of the stock split (in the case of a stock
                split by way of a reclassification of shares) and the
                denominator of which is the number of shares of Formula Rate
                Preferred Stock outstanding immediately after such stock
                split.  The resulting dividend rate shall hereinafter be
                referred to as the "Formula Rate." Dividends on the Formula
                Rate Preferred Stock shall begin to accrue at the Formula
                Rate from and after the date upon which the shares of stock
                are distributed (in the case of a stock split by way of a
                stock dividend) or the reclassification becomes effective (in
                the case of a stock split by way of reclassification of
                shares).  In the event of any such adjustment the Company
                shall (i) prepare a certificate setting forth the calculation
                of the Formula Rate which certificate shall be kept by the
                Secretary of the Company and made available to any holder of
                Formula Rate Preferred Stock who requests such certificate,
                and (ii) notify holders of such stock of the adjustment.  The
                Formula Rate shall continue in effect unless and until the
                Company effects another stock split, in which case the
                Formula Rate shall be further adjusted pursuant to the
                procedure set forth above.  Except as provided in this
                subparagraph (e), the holders of Formula Rate Preferred Stock
                shall not be entitled to receive or participate in any cash
                dividends which may be declared by the Board of Directors or
                paid by the Company.

                (f) The holders of the Formula Rate Preferred Stock are
                entitled to vote with the holders of the Common Stock as a
                single class, as follows:

                1.  On matters subject to a vote by holders of Common Stock
                the holders of Formula Rate Preferred Stock shall be entitled
                to ten (10) votes per share, voting as a single class
                together with the Common Stock, which is entitled to one vote
                per share.

                2.  The affirmative vote of at least two-thirds of the shares
                of the Formula Rate Preferred Stock, voting as a single
                class, shall be required (i) to authorize, effect or validate
                any amendment, alteration or repeal of any of the provisions
                of the Company's Certificate of Incorporation which would
                adversely affect the preferences, special rights or powers of
                the Formula Rate Preferred Stock (provided, however, that an
                amendment that would authorize or create or increase the
                authorized number of shares of any stock ranking junior to
                the Formula Rate Preferred Stock shall not be deemed to
                adversely affect the preferences, rights or powers of the
                Formula Rate Preferred Stock); or (ii) to authorize,
                designate or create, or increase the authorized number of
                shares of, any capital stock of the Company of any class or
                series, or any security convertible into such capital stock,
                ranking prior to the Formula Rate Preferred Stock as to
                dividends or rights upon liquidation, dissolution or winding
                up.  In addition, the affirmative vote of the holders of at
                least a majority of the Formula Rate Preferred Stock, voting
                as a single class, shall be required to authorize, designate
                or create or increase the authorized number of shares of, any
                class or series of capital stock of the Company or any
                security convertible into capital stock of the Company of any
                class ranking on a parity with the Formula Rate Preferred
                Stock as to dividends and liquidation rights.  No affirmative
                vote or consent of the holders of the Formula Rate Preferred
                Stock is required for the creation, designation or
                classification of, or an increase or decrease in the number
                of shares of, Formula Rate Preferred Stock out of presently
                authorized shares of Preferred Stock.

                3.  Whenever the cumulative annual dividend on the Formula
                Rate Preferred Stock shall be in arrears for as much as one
                calendar year, the number of directors of the Company shall
                be increased by two, and the holders of the Formula Rate
                Preferred Stock shall have, in addition to any other voting
                rights, the exclusive and special right, voting separately as
                a class, to elect by the affirmative vote of the holders of
                at least a majority of the Formula Rate Preferred Stock, two
                persons to fill such newly created directorships.  Whenever
                such right of the holders of the Formula Rate Preferred Stock
                shall have vested, it may be exercised initially either at a
                special meeting of such holders called as provided below, or
                at any annual meeting of stockholders, and thereafter at
                annual meetings of stockholders.  This special voting right
                shall continue until such time as all dividends accumulated
                on the Formula Rate Preferred Stock shall have been paid in
                full, at which time the special right shall terminate,
                subject to revesting in the event of each and every
                subsequent default in an annual dividend which continues for
                as much as one calendar year.  For purposes only of this
                subparagraph (3) of this paragraph (f), each holder of
                Formula Rate Preferred Stock shall be entitled to cast one
                vote for each share of Formula Rate Preferred Stock held by
                such holder.  At any time when such special voting power
                shall have vested in the holders of the shares of Formula
                Rate Preferred Stock as provided in this subparagraph (3), a
                proper officer of the Company shall, upon the written request
                of the holders of record of at least 10% of the number of
                shares of Formula Rate Preferred Stock at the time
                outstanding, addressed to the Secretary of the Company, call
                a special meeting of the holders of shares of Formula Rate
                Preferred Stock and of any other class of stock having voting
                power, for the purpose of electing directors.  Such meeting
                shall be held at the earliest practicable date at the
                principal office of the Company.  If such meeting shall not
                be called by a proper officer of the Company within 20 days
                after personal service of said written request upon the
                Secretary of the Company, or within 20 days after mailing the
                same within the United States of America by registered mail
                addressed to the Secretary of the Company at its principal
                office, then the holders of record of at least 10% of the
                number of shares of Formula Rate Preferred Stock at the time
                outstanding may designate in writing one of their numbers to
                call such meeting at the expense of the Company, and such
                meeting may be called by such person so designated upon the
                notice required for annual meetings of stockholders and shall
                be held at said principal office.  Any holder of shares of
                Formula Rate Preferred Stock so designated shall have access
                to the stock books of the Company for the purpose of causing
                meetings of stockholders to be called pursuant to these
                provisions.  Notwithstanding the provisions of this
                subparagraph (3), no such special meeting shall be called
                during the 90 days immediately preceding the date fixed for
                the next annual meeting of stockholders.  At any meeting held
                for the purpose of electing directors at which the holders of
                shares of Formula Rate Preferred Stock shall have the special
                right, voting separately as a class, to elect directors as
                provided in this subparagraph (3), the presence, in person or
                by proxy, of the holders of a majority of the number of
                shares of Formula Rate Preferred Stock at the time
                outstanding shall be required to constitute a quorum of such
                class for the election of any director by the holders of the
                Formula Rate Preferred Stock as a class, each share of
                Formula Rate Preferred Stock counting, for purposes only of
                determining the presence of such a quorum, as one share of
                Formula Rate Preferred Stock.  At any such meeting or
                adjournment thereof, (i) the absence of a quorum of Formula
                Rate Preferred Stock shall not prevent the election of the
                directors other than the two directors to be elected by the
                holders of shares of Formula Rate Preferred Stock voting as a
                class and the absence of a quorum for the election of such
                other directors shall not prevent the election of the
                directors to be elected by holders of shares of Formula Rate
                Preferred Stock voting as a class and (ii) in the absence of
                either or both such quorums, a majority of the holders
                present in person or by proxy of the stock or stocks which
                lack a quorum shall have power to adjourn the meeting for the
                election of directors which they are entitled to elect from
                time to time, without notice other than announcement at the
                meeting, until a quorum shall be present.  During any period
                the holders of shares of Formula Rate Preferred Stock have
                the right to vote as a class for the directors as provided in
                this subparagraph (3), the directors so elected by the
                holders of the Formula Rate Preferred Stock shall continue in
                office until termination of the right of the holders of the
                Formula Rate Preferred Stock to vote as a class for two
                directors, and any vacancies in the Board of Directors shall
                be filled only by vote of a majority (which majority may
                consist of only a single director) of the remaining directors
                theretofore elected by the class or classes of stock which
                elected the director whose office shall have become vacant.

                (g) The Company shall have the right, but not the obligation,
                to redeem on or at any time after February 1, 1990 (the date
                on which the Company gives notice for such redemption is
                called the "Redemption Date") all, but not less than all, of
                the shares of the Formula Rate Preferred Stock which are
                issued and outstanding as of the Redemption Date, upon the
                payment of the sum of $1.66 2/3 in cash for each outstanding
                share of the Formula Rate Preferred Stock (the "Redemption
                Price"); provided, however, that in the event the Company
                effects a stock split, either by way of lawful stock dividend
                to the holders of, or a reclassification of the shares of,
                the Formula Rate Preferred Stock, then the Redemption Price
                shall be adjusted to an amount per share equal to ten (10)
                times the Formula Rate, as determined pursuant to the
                procedure set forth in paragraph (e) of this Certificate of
                Designation, such adjusted Redemption Price to take effect
                from and after the date upon which such Formula Rate shall
                take effect.  In the event of any such adjustment the Company
                shall (i) prepare a certificate setting forth the calculation
                of the adjusted Redemption Price, which certificate shall be
                kept by the Secretary of the Company and made available to
                any holder of Formula Rate Preferred Stock who requests such
                certificate, and which may be set forth in the same
                certificate as required by paragraph (e) of this Certificate
                of Designation, and (ii) notify holders of such stock of the
                adjustment.  Payment of the Redemption Price shall be made
                within 30 days following the Redemption Date to the holders
                of record as of the Redemption Date.

                (h) On the Redemption Date the Company shall, and before such
                Redemption Date the Company may, deposit for the pro rata
                benefit of the holders of the shares of the Formula Rate
                Preferred Stock so called for redemption the funds necessary
                for such redemption with a bank or trust company in the
                Borough of Manhattan, The City of New York having a capital
                and surplus of at least $50,000,000.  Any monies so deposited
                by the Company and unclaimed at the end of five years from
                the Redemption Date shall revert to the general funds of the
                Company.  After such reversion, any such bank or trust
                company shall, upon demand, pay over to the Company such
                unclaimed amounts and thereupon such bank or trust company
                shall be relieved of all responsibility in respect thereof to
                such holder and such holder shall look only to the Company
                for the payment of the Redemption Price.  Any interest
                accrued on funds so deposited pursuant to this paragraph (h)
                shall be paid from time to time to the Company for its own
                account.

                (i) Upon the deposit of funds pursuant to paragraph (h) in
                respect of shares of the Formula Rate Preferred Stock called
                for redemption, notwithstanding that any certificates for
                such shares shall not have been surrendered for cancellation,
                the shares represented thereby shall no longer be deemed
                outstanding, the rights to receive any dividends thereon
                shall cease to accrue from and after the Redemption Date and
                all rights of the holders of the shares of the Formula Rate
                Preferred Stock called for redemption shall cease and
                terminate, excepting only the right to receive the Redemption
                Price therefor.

                (j) In order to conform the dividend rights of the holders of
                the shares of $.25 Preferred Stock, as amended by the
                foregoing paragraphs of this Certificate, to the intention of
                the Board of Directors in declaring a stock split by way of a
                stock dividend to holders of the Common and Preferred Stock
                of the Company payable on July 2, 1987 to holders of record
                as of June 24, 1987, dividends, if any, which may have
                accrued (but which have not been declared) on shares of $.25
                Preferred Stock at any rate in excess of $.16 2/3 per share
                per annum between July 2, 1987, and the date the amendments
                to the Certificate effected by these resolutions become
                effective shall be, and they hereby are, cancelled."

                FURTHER RESOLVED, that, pursuant to Section 242 of the
                Delaware General Corporation Law, the proper officers of the
                Corporation are hereby authorized and directed to cause the
                amendment to the Certificate of Incorporation of the
                Corporation, as amended by the Certificate of Designation,
                proposed to be adopted by the preceding resolution (the
                "Proposed Amendment") to be submitted to the stockholders of
                the Corporation at the next Annual Meeting of the
                stockholders of the Corporation for the purpose of voting to
                approve or disapprove the Proposed Amendment; provided,
                however, that the Proposed Amendment need not be submitted to
                such a vote if, prior to said Annual Meeting, the Proposed
                Amendment shall have been adopted by the written consent of
                the stockholders of the Corporation pursuant to Section 228
                of the Delaware General Corporation Law.

                FURTHER RESOLVED, that, if the Proposed Amendment shall be
                approved and adopted by the stockholders of the Corporation
                in accordance with the immediately preceding resolution, the
                proper officers of the Corporation be, and they hereby are,
                authorized and directed to make and execute a Certificate of
                Amendment to the Certificate of Incorporation of the
                Corporation, setting forth the resolution to so amend the
                Certificate of Incorporation and certifying that said
                resolution has been duly adopted in accordance with the
                provisions of Section 242 of the Delaware General Corporation
                Law, and to cause the same to be filed with the Secretary of
                State of the State of Delaware and a certified copy recorded
                in the Office of the Recorder of Deeds of New Castle County,
                and to do all acts and things whatsoever, whether within or
                without the State of Delaware, which may be necessary or
                proper to effect said amendment.

                SECOND:  Thereafter the foregoing proposed amendment was
approved by the written consent of the holders of more than 50% of the voting
power of the Common Stock, par value $1.00 per share and the $.25 Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), of the Corporation,
voting together as a single class, and by the written consent of the holders
of more than 66 1/3% of the Preferred Stock of the Corporation, voting
separately as a class, pursuant to Section 228 of the General Corporation Law
of the State of Delaware.
                THIRD:  The foregoing amendment was duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
                IN WITNESS WHEREOF, Pier 1 Imports, Inc., has caused this
Certificate of Amendment to be duly executed this 29th day of October, 1987.
                PIER 1 IMPORTS, INC.


                By:/s/ R. G. Herndon
                Senior Vice President
                
ATTEST:


/s/ J. Rodney Lawrence 
Secretary
                    CERTIFICATE OF AMENDMENT
                                     OF
                        CERTIFICATE OF INCORPORATION
                                     OF 
                            PIER 1 IMPORTS, INC.

                PIER 1 IMPORTS, INC., organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify:

                FIRST: That at a meeting of the Board of Directors of the
corporation held on March 15, 1995, the Board duly adopted a resolution
declaring advisable the following amendment to the Certificate of
Incorporation of the corporation and directing that the amendment be
submitted to the stockholders of the corporation at the next annual meeting
of stockholders:

                The first paragraph of Article Fourth of the
                corporation's Certificate of Incorporation be
                amended to read as follows:

                
                "FOURTH: The number of shares of stock which
                the corporation shall have authority to issue
                is two hundred million (200,000,000) shares
                of Common Stock having a par value of one
                dollar ($1.00) per share and five million
                (5,000,000) shares of Preferred Stock having
                a par value of one dollar ($1.00) per share."

                SECOND: That such amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

                IN WITNESS WHEREOF, the corporation has caused this
certificate to be executed by its duly authorized officer this 22nd day of
June, 1995.

                PIER 1 IMPORTS, INC.


                By:/s/ J. Rodney Lawrence  
                J. Rodney Lawrence
                Senior Vice President

                    CERTIFICATE OF AMENDMENT
                                     OF
                        CERTIFICATE OF INCORPORATION
                                     OF
                            PIER 1 IMPORTS, INC.


                PIER 1 IMPORTS, INC., organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify:

                FIRST: That at a meeting of the Board of Directors of the
corporation held on March 19, 1998, the Board duly adopted a resolution
declaring advisable the following amendment to the Certificate of
Incorporation of the corporation and directing that the amendment be
submitted to the stockholders of the corporation at the next annual meeting
of stockholders:

                The first paragraph of Article Fourth of the
                corporation's Certificate of Incorporation be
                amended to read as follows:

                "FOURTH: The number of shares of stock which
                the corporation shall have authority to issue
                is five hundred million (500,000,000) shares
                of Common Stock having a par value of one
                dollar ($1.00) per share and five million
                (5,000,000) shares of Preferred Stock having
                a par value of one dollar ($1.00) per share."

                SECOND:  That such amendment was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

                IN WITNESS WHEREOF, the corporation has caused this
certificate to be executed by its duly authorized officer this 25th day of
June, 1998.

                PIER 1 IMPORTS, INC.


                By _____________________
                     J. Rodney Lawrence
                     Senior Vice President
 

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENT OF OPERATIONS AND BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS FEB-27-1999 MAY-30-1998 57,387 0 10,774 156 240,409 385,757 394,073 162,517 652,521 123,234 114,856 67,903 0 0 322,176 652,521 250,508 250,508 140,821 140,821 6,996 0 2,128 25,003 9,502 15,501 0 0 0 15,501 .15 .14 Shares outstanding have been adjusted to reflect the three for two stock split, effected in the form of a stock dividend, to be distributed July 29, 1998. Prior financial data schedules have not been restated to reflect the stock split.