Pottery Barn 2007 Annual Report Download - page 6

our core and emerging brands, we believe short-term sector declines are likely and that revenue growth in 2008
could be negative. Given this belief, we have taken decisive action to drive down operating costs and reduce
inventory levels to the extent that these actions do not affect service levels to our customers. We are committed
to improving our operations and processes on all levels, from global sourcing to supply chain to inventory
management. At the same time, we are remaining focused on continuous improvements in customer satisfaction,
channel interaction, and vertical integration. Our approach in this environment will not be “business as usual”.
Also during this time, it is critically important that we remain focused on the long-term. As such, we will
capitalize on the opportunities that this economic downturn will create for “best-of-class” retailers and invest in
those initiatives that will strategically position us for accelerated growth when the economy rebounds and
consumers begin reinvesting in their homes.
Increase in Quarterly Dividend
While we recognize the challenges of the current economic environment, we continue to approach the future with
confidence – including our ability to generate cash flows in excess of the funding requirements necessary to grow
and operate our business. Based on this confidence – combined with our current cash position and projected
future cash flows – we recently increased our cash dividend per share by 4.3%, from $0.115 per quarter to
$0.12 per quarter – in addition to our share repurchase program. Currently, we are authorized to repurchase up to
$150 million of our common stock. In fiscal 2007, we repurchased approximately 6.2 million shares of our
common stock at an aggregate cost of approximately $190 million.
A Vision for the Future
As we look beyond the macro headwinds facing the home furnishings industry today, we are optimistic about our
competitive positioning in the marketplace and our ability to generate long-term value for our shareholders. With
adversity comes opportunity, and we are excited about the opportunities that lie before us. I would like to offer
my sincere thanks to our associates, vendors, and customers who contribute every day to the future of our
company. I would also like to thank you, our shareholders, for your continued support.
W. Howard Lester
Chairman of the Board of Directors and Chief Executive Officer
This letter contains forward-looking statements. Please see the section titled “Forward-Looking Statements” on
page 1 of our Annual Report on Form 10-K for the fiscal year ended February 3, 2008, which is part of this
Annual Report to Shareholders, for important cautionary language regarding these statements.