Pottery Barn 2008 Annual Report Download - page 16

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Williams-Sonoma Home
In 2004, the Williams-Sonoma Home brand was started with the introduction of the Williams-Sonoma Home
catalog. 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.
Canada and Puerto Rico
In 2001, we expanded the geographic impact of our brands by opening five new retail stores in Toronto, Canada
and as of February 1, 2009, now operate 16 stores across Canada representing all of our brands except Williams-
Sonoma Home. In fiscal 2008, we further increased our presence by opening two new retail stores in Puerto Rico,
one Pottery Barn and one West Elm store, and the response thus far has been positive.
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 1, 2009, we operated 627 retail stores, located in 44 states,
Washington, D.C., Canada and Puerto Rico. This represents 264 Williams-Sonoma, 204 Pottery Barn, 95 Pottery
Barn Kids, 36 West Elm, 10 Williams-Sonoma Home and 18 Outlet stores, which carry merchandise from all
merchandising concepts.
In fiscal 2009, we expect to increase retail leased square footage by approximately 1% through the addition of 15
new stores, including 8 new stores (4 West Elm, 1 Pottery Barn, 1 Williams-Sonoma, 1 Pottery Barn Kids and 1
Williams-Sonoma Home) and 7 remodeled or expanded stores (4 Pottery Barn, 2 Williams-Sonoma and 1 Pottery
Barn Kids), partially offset by the permanent closure of 7 stores (3 Pottery Barn, 2 Williams-Sonoma and 2
Pottery Barn Kids) and the temporary closure of 7 stores (4 Pottery Barn, 2 Williams-Sonoma and 1 Pottery Barn
Kids). The average leased square footage for new and expanded stores in fiscal 2009 will be approximately
17,300 leased square feet for West Elm, 16,900 leased square feet for Pottery Barn, 13,000 leased square feet for
Williams-Sonoma Home, 6,500 leased square feet for Pottery Barn Kids and 5,400 leased square feet for
Williams-Sonoma. Although we expect to increase our retail leased squared footage in fiscal 2009, we will
continue to evaluate opportunities to close any underperforming retail stores.
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 O 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 continue to be the major source of revenue in the direct-to-customer
segment.
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. We do, however, expect to see this percentage
begin to decrease as we continue to reduce our catalog advertising costs and increase our investment in other
internet marketing vehicles, in conjunction with our catalog circulation optimization strategy.
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