Pottery Barn 2009 Annual Report Download - page 16

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.
In fiscal 2009, however, after another difficult year and an extensive review of our strategic alternatives, we
concluded that the future potential of this brand is limited. As such, we are working on a plan to restructure the
unprofitable segments of the business, including the operations of our 11 retail stores. As part of this
restructuring, it is our intent to market those merchandising categories that support our bridal registry, expanded
flagship and designer assortments through the Williams-Sonoma kitchen brand. These categories will be
available both on-line and in select Williams-Sonoma stores.
International
In 2001, we expanded the geographic impact of our brands by opening five new retail stores in Toronto, Canada
and, as of January 31, 2010, we now operate 17 stores across Canada representing all of our retail brands except
Williams-Sonoma Home. In 2008, we further increased our presence by opening two new retail stores in Puerto
Rico, one Pottery Barn and one West Elm store.
In addition, during fiscal 2009, we entered into a multi-year franchise agreement with the M.H. Alshaya
Company to launch our portfolio of brands in the Middle East. We opened our first Pottery Barn and Pottery
Barn Kids stores in March 2010, and will open an additional two stores in the same brands during the second
quarter of fiscal 2010.
RETAIL STORES
The retail segment has five merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West
Elm and Williams-Sonoma Home). As of January 31, 2010, we operated 610 retail stores, located in 44 states,
Washington, D.C., Canada and Puerto Rico. This represents 259 Williams-Sonoma, 199 Pottery Barn, 87 Pottery
Barn Kids, 36 West Elm, 11 Williams-Sonoma Home and 18 Outlet stores (which carry merchandise from all
merchandising concepts).
In fiscal 2010, we expect to decrease retail leased square footage by approximately 1% to 2% through the closure
of 17 stores, including the permanent closure of 14 stores (5 Pottery Barn, 4 Williams-Sonoma, 3 West Elm,
1 Pottery Barn Kids and 1 Outlet) and the temporary closure of 3 stores (1 Pottery Barn, 1 Williams-Sonoma and
1 Outlet), partially offset by the addition of 10 stores, including 4 new stores (2 West Elm, 1 Williams-Sonoma
and 1 Outlet) and 6 remodeled or expanded stores (3 Pottery Barn, 2 Williams-Sonoma and 1 Outlet). The
average leased square footage for new and expanded stores in fiscal 2010 will be approximately 18,200 leased
square feet for West Elm, 15,300 leased square feet for Pottery Barn, 6,500 leased square feet for Williams-
Sonoma and 22,400 leased square feet for Outlet.
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.
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