Pottery Barn 2006 Annual Report Download - page 15

PART I
ITEM 1. BUSINESS
OVERVIEW
We are a specialty retailer of products for the home. The retail segment of our business sells our products through
our five retail store concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm and Williams-
Sonoma Home). The direct-to-customer segment of our business sells similar products through our seven direct-
mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen, West
Elm and Williams-Sonoma Home) and six e-commerce websites (williams-sonoma.com, potterybarn.com,
potterybarnkids.com, pbteen.com, westelm.com and wshome.com). The catalogs reach customers throughout the
U.S., while the five retail concepts currently operate 588 stores in 44 states, Washington, D.C. and Canada.
Based on net revenues in fiscal 2006, retail net revenues accounted for 57.8% of our business and
direct-to-customer net revenues accounted for 42.2% of our business. Based on their contribution to our net
revenues in fiscal 2006, the core brands in both retail and direct-to-customer are: Pottery Barn, which sells casual
home furnishings; Williams-Sonoma, which sells cooking and entertaining essentials; and Pottery Barn Kids,
which sells stylish children’s furnishings.
We were founded in 1956 by Charles E. Williams, currently a Director Emeritus, with the opening of our first
store in Sonoma, California. Today, the Williams-Sonoma stores offer a wide selection of culinary and serving
equipment, including cookware, cookbooks, cutlery, informal dinnerware, glassware, table linens, specialty foods
and cooking ingredients. Our direct-to-customer business began in 1972 when we introduced our flagship
catalog, “A Catalog for Cooks,” which marketed the Williams-Sonoma brand.
In 1983, we internally developed the Hold Everything catalog to offer innovative solutions for household storage
needs by providing efficient organization solutions for every room in the house. The first Hold Everything store
opened in 1985.
In 1986, we acquired Pottery Barn, a retailer of casual home furnishings, and in 1987 launched the first Pottery
Barn catalog. Pottery Barn features a large assortment of home furnishings and furniture that we design internally
and source from around the world to create a dynamic look in the home.
In 1989, we developed Chambers, a mail order merchandiser of high quality linens, towels, robes, soaps and
accessories for the bed and bath.
In 1999, we launched both our Williams-Sonoma e-commerce website and our Williams-Sonoma bridal and gift
registry. In addition, we launched the Pottery Barn Kids catalog.
In 2000, we opened our first Pottery Barn Kids stores across the U.S. In addition, we introduced our Pottery Barn
e-commerce website and created Pottery Barn Bed and Bath, a catalog dedicated to bed and bath products.
In 2001, we launched our Pottery Barn Kids e-commerce website, Pottery Barn gift and bridal registry, and
Pottery Barn Kids gift registry. Additionally, in 2001, we opened five new retail stores (two Williams-Sonoma,
two Pottery Barn and one Pottery Barn Kids) in Toronto, Canada, our first stores operated by us outside of the
U.S.
In 2002, we launched our West Elm catalog. The brand targets design conscious consumers looking for a modern
aesthetic to furnish and accessorize their living spaces with quality products at accessible price points. West Elm
offers a broad range of home furnishing categories including furniture, textiles, decorative accessories, lighting
and tabletop items.
In 2003, we launched our West Elm e-commerce website, opened our first West Elm retail store and launched
our newest extension of the Pottery Barn brand, PBteen, with the introduction of the PBteen catalog. PBteen
offers exclusive collections of home furnishings and decorative accessories that are specifically designed to
reflect the personalities of the teenage market. In late 2003, we launched our PBteen e-commerce website.
3
Form 10-K