Exhibit 99.1

           Pier 1 Imports, Inc. Discontinues Cash Dividend

    FORT WORTH, Texas--(BUSINESS WIRE)--Oct. 3, 2006--Pier 1 Imports,
Inc. (NYSE:PIR) announces that its Board of Directors has decided to
discontinue the Company's $0.10 per share quarterly dividend.

    Marvin J. Girouard, Pier 1's Chairman and Chief Executive Officer,
commented, "We believe that discontinuing the cash dividend will
improve the Company's near-term liquidity and is consistent with our
efforts to provide financial stability as we execute Pier 1's
turnaround strategy. While the discontinuation of the cash dividend
was done in an effort to provide additional flexibility, we still
believe that the Company's cash on hand, available lines of credit and
proceeds from the sale of the credit card business will be sufficient
to meet our expected cash requirements over the next fiscal year."

    Any forward-looking projections or statements made in this press
release should be considered in conjunction with the cautionary
statements contained in the Company's most recently filed report on
Form 10-Q. Management's expectations and assumptions regarding planned
store openings, financing of Company obligations from operations,
results from its new marketing, merchandising and store operations
strategies, and other future results are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the anticipated results or other expectations
expressed in the forward-looking statements. Risks and uncertainties
that may affect Company operations and performance include, among
others, the effects of terrorist attacks or other acts of war,
conflicts or war involving the United States or its allies or trading
partners, labor strikes, weather conditions or natural disasters,
volatility of fuel and utility costs, the general strength of the
economy and levels of consumer spending, consumer confidence, the
availability of new sites for expansion along with sufficient labor to
facilitate growth, the availability and proper functioning of
technology and communications systems supporting the Company's key
business processes, the ability of the Company to import merchandise
from foreign countries without significantly restrictive tariffs,
duties or quotas and the ability of the Company to source, ship and
deliver items from foreign countries to its U.S. distribution centers
at reasonable prices and rates and in a timely fashion. The Company
assumes no obligation to update or otherwise revise its
forward-looking statements even if experience or future changes make
it clear that any projected results expressed or implied will not be
realized.

    Pier 1 Imports, Inc. is North America's largest specialty retailer
of imported decorative home furnishings and gifts with Pier 1
Imports(R) stores in 49 states, Puerto Rico, Canada, and Mexico and
Pier 1 kids(R) stores in the United States. Information about the
Company is available on www.pier1.com.

    CONTACT: Pier 1 Imports, Inc., Fort Worth
             Cary Turner, 817-252-8400