Pottery Barn 2007 Annual Report Download - page 14

In 2004, the Chambers brand was retired as a result of the launch of Williams-Sonoma Home, our newest brand.
This premium brand, offering classic home furnishings and decorative accessories, extends the Williams-Sonoma
lifestyle beyond the kitchen into every room of the home.
In 2005, we opened our first three Williams-Sonoma Home stores and, in 2006, we launched our Williams-
Sonoma Home e-commerce website.
In 2006, after testing five new prototype stores and several merchandise assortment transitions throughout 2004
and 2005, we decided to transition the merchandising strategies of the Hold Everything brand into our other
existing brands. All of our Hold Everything retail stores were closed during late 2005 and the first quarter of
fiscal 2006, and the final phase of our operational shutdown was completed in the second quarter of fiscal 2006.
RETAIL STORES
The retail segment has five merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West
Elm and Williams-Sonoma Home). As of February 3, 2008, we operated 600 retail stores, located in 44 states,
Washington, D.C. and Canada. This represents 256 Williams-Sonoma, 198 Pottery Barn, 94 Pottery Barn Kids,
27 West Elm, 9 Williams-Sonoma Home and 16 Outlet stores (our Outlet stores carry merchandise from all
merchandising concepts).
In fiscal 2008, we expect to increase retail leased square footage by approximately 8% through the addition of 29
net new stores, including 31 new stores (12 West Elm, 7 Pottery Barn, 7 Williams-Sonoma, 2 Pottery Barn Kids,
1 Williams-Sonoma Home and 2 Outlet) and 20 remodeled or expanded stores (11 Williams-Sonoma, 7 Pottery
Barn and 2 Pottery Barn Kids), partially offset by the permanent closure of 4 stores (3 Pottery Barn and 1
Williams-Sonoma) and the temporary closure of 18 stores (11 Williams-Sonoma, 5 Pottery Barn and 2 Pottery
Barn Kids). The average leased square footage for new and expanded stores in fiscal 2008 will be approximately
17,000 leased square feet for Outlet, 16,400 leased square feet for Pottery Barn, 15,300 leased square feet for
West Elm, 13,000 leased square feet for Williams-Sonoma Home, 9,600 leased square feet for Pottery Barn Kids
and 7,100 leased square feet for Williams-Sonoma.
The retail business complements the direct-to-customer business by building brand awareness. Our retail stores
serve as billboards for our brands, which we believe inspires confidence in our customers to shop via our
direct-to-customer channels.
Detailed financial information about the retail segment is found in Note M to our Consolidated Financial Statements.
DIRECT-TO-CUSTOMER OPERATIONS
The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn
Kids, PBteen, West Elm and Williams-Sonoma Home) and sells 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). Of these six merchandising concepts, the
Pottery Barn brand and its extensions have been the major source of revenue growth in the direct-to-customer
segment for the last several years, which we believe reflects our continuing investment in product design, product
quality and multi-channel marketing.
The direct-to-customer channel over the past several years has been strengthened by the introduction of
e-commerce websites in all of our core brands and the launching of our newest brands: West Elm, PBteen and
Williams-Sonoma Home. Although the amount of e-commerce revenues that are incremental to our
direct-to-customer channel cannot be identified precisely, we estimate that approximately 40% of our company-
wide non-gift registry Internet revenues are incremental to the direct-to-customer channel and approximately
60% are driven by customers who recently received a catalog.
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