Pottery Barn 2006 Annual Report Download - page 35

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new stores (including our largest downtown location which will be in Washington D.C.), increase circulation and
page count to support growth, implement initiatives to improve e-commerce conversion and test our value
proposition within shipping costs. In PBteen, we will continue to capture marketing opportunities that appeal to
families with teens by focusing on the following initiatives: building brand awareness through innovative
marketing; expanding our assortment; driving key categories through product innovation; refining our contact
strategy to optimize response rates; improving our in-stock position to increase order fulfillment rates and testing
new product categories that hold sizable potential. In Williams-Sonoma Home, our top priority in fiscal 2007 is
superior execution, from product design to world class furniture delivery. We are modifying our brand rollout
strategy to coincide with the further development of the infrastructure necessary to accelerate the business,
therefore, in fiscal 2007, we plan to open two additional stores in Dallas, Texas and St. Louis, Missouri and
reduce catalog circulation until such time as we can improve the overall productivity of the direct-to-customer
business.
To improve our overall cost structure, we will continue to drive efficiencies within our supply chain, leverage our
emerging brand infrastructure and maintain tight controls around overhead expenses while investing in our
future. We expect, however, that we will see further short-term compression in our operating margin in fiscal
2007 as a result of continued softness in the home-furnishings macro-economic environment, increased costs
associated with the Pottery Barn recovery plan and higher incentive compensation.
To enhance shareholder value, we will continue to adhere to the principles that have successfully guided us in the
past: building the authority of our existing brands in the market segments that we serve; and continuing to
leverage the potential of our multi-channel strategy.
We are also increasing our quarterly dividend by 15%, from $0.10 per common share to $0.115 per common
share, in addition to continuing our ongoing share repurchase program. As we enter fiscal 2007, we are
authorized to repurchase up to 6,195,000 shares of our common stock.
23
Form 10-K