Pottery Barn 2004 Annual Report Download - page 12

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SUPPLIERS
We purchase our merchandise from numerous foreign and domestic manufacturers and importers, the largest of
which individually accounted for approximately 2.5% of purchases during fiscal 2004. Approximately 62% of
our merchandise purchases in fiscal 2004 were foreign-sourced from manufacturers in 38 countries, primarily
from Asia and Europe. Substantially all of our foreign purchases of merchandise are negotiated and paid for in
U.S. dollars.
COMPETITION AND SEASONALITY
The specialty retail business is highly competitive. Our specialty retail stores, mail order catalogs and e-
commerce websites compete with other retail stores, including large department stores, discount stores, other
specialty retailers offering home centered assortments, other mail order catalogs and other e-commerce websites.
The substantial sales growth in the direct-to-customer industry within the last decade has encouraged the entry of
many new competitors and an increase in competition from established companies. We compete on the basis of
our brand authority, the quality of our merchandise, service to our customers and our proprietary customer list, as
well as location and appearance of our stores. We believe that we compare favorably with many of our current
competitors with respect to some or all of these factors.
Our business is subject to substantial seasonal variations in demand. Historically, a significant portion of our
revenues and net earnings have been realized during the period from October through December, and levels of
net revenues and net earnings have generally been lower during the period from January through September. We
believe this is the general pattern associated with the direct-to-customer and retail industries. In anticipation of
our peak season, we hire a substantial number of additional employees in our retail stores and direct-to-customer
processing and distribution areas, and incur significant fixed catalog production and mailing costs.
PATENTS, TRADEMARKS, COPYRIGHTS AND DOMAIN NAMES
We own and/or have applied to register over 150 trademarks and service marks. We own and/or have applied to
register our marks in the U.S., Canada and in approximately 20 additional jurisdictions. Exclusive rights to the
trademarks and service marks are held by Williams-Sonoma, Inc. and are used by our subsidiaries under license.
These marks include brand names for products as well as house marks for our subsidiaries and their signature
publications and websites. The house marks in particular, including “Williams-Sonoma,” the Williams-Sonoma
Grande Cuisine logo, “Pottery Barn,” “hold everything,” “pottery barn kids,” “PBteen,” “west elm” and
“Williams-Sonoma Home” are of material importance to us. Trademarks are generally valid as long as they are in
use and/or their registrations are properly maintained, and they have not been found to have become generic.
Trademark registrations can generally be renewed indefinitely so long as the marks are in use. We own numerous
copyrights and trade dress rights for our products, product packaging, catalogs, books, house publications and
website designs, among other things, which are also used by our subsidiaries under license. We hold patents on
certain product functions and product designs. Patents are generally valid for 20 years as long as their
registrations are properly maintained. In addition, we have registered and maintain numerous Internet domain
names, including “wsweddings.com,” “williams-sonoma.com,” “potterybarn.com,” “potterybarnkids.com,”
“pbteen.com,” “westelm.com,” “holdeverything.com,” “williamssonomahome.com,” and “williams-
sonomainc.com.” Collectively, the copyrights, trade dress rights, patents and domain names that we hold are of
material importance to us.
EMPLOYEES
As of January 30, 2005, we had approximately 36,000 employees, approximately 7,200 of whom were full-time
employees. During the fiscal 2004 peak season, we hired approximately 16,400 temporary employees in our
stores and in our direct-to-customer processing and distribution centers.
5
Form 10-K