Pottery Barn 2009 Annual Report Download - page 30

period may be materially impacted by changes in the mix and level of earnings or by changes to existing
accounting rules or regulations. Further, there is proposed tax legislation that may be enacted in the future, which
could negatively impact our current or future tax structure and effective tax rates.
If we fail to attract and retain key personnel, our business and operating results may be harmed.
Our future success depends to a significant degree on the skills, experience and efforts of key personnel in our
senior management, whose vision for our company, knowledge of our business and expertise would be difficult
to replace. If any of our key employees leaves, is seriously injured or is unable to work, and we are unable to find
a qualified replacement, we may be unable to execute our business strategy.
In addition, our main offices are located in the San Francisco Bay Area, where competition for personnel with
retail and technology skills can be intense. If we fail to identify, attract, retain and motivate these skilled
personnel, especially in this challenging economic environment, our business may be harmed. Further, in the
event we need to hire additional personnel, we may experience difficulties in attracting and successfully hiring
such individuals due to competition for highly skilled personnel, as well as the significantly higher cost of living
expenses in our market.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We lease store locations, distribution centers, customer care centers and corporate facilities for original terms
ranging generally from 2 to 22 years. Certain leases contain renewal options for periods of up to 20 years.
For our store locations, our gross leased store space, as of January 31, 2010, totaled approximately 6,081,000
square feet for 610 stores compared to approximately 6,148,000 square feet for 627 stores as of February 1, 2009.
Distribution Centers
We lease distribution facility space in the following locations:
Location Square Footage (Approximate)
Olive Branch, Mississippi 2,105,000
Memphis, Tennessee11,023,000
City of Industry, California 1,180,000
Cranbury and South Brunswick, New Jersey 1,199,000
Hickory, North Carolina 199,000
Lakeland and Pompano Beach, Florida 72,000
Urbancrest, Ohio 38,000
1See Note F to our Consolidated Financial Statements for more information.
During the second quarter of fiscal 2009, we entered into a lease agreement in Ohio for 38,000 square feet of
distribution facility space associated with the additional insourcing of our furniture delivery hubs within the
region.
During the third quarter of fiscal 2009, we eliminated 1,170,000 square feet of excess distribution capacity by
exiting one of our distribution centers located in Olive Branch, Mississippi prior to its lease expiration.
During the fourth quarter of fiscal 2009, we entered into an agreement to lease a 1,351,000 square foot
distribution center in South Brunswick, New Jersey. We will occupy this new building in two phases,
approximately in June 2010 and October 2011, corresponding with the natural expiration of the leases on our
current New Jersey distribution centers. This distribution center will replace the two existing New Jersey
distribution centers, which currently occupy 1,199,000 square feet.
In addition to the above long-term contracts, we enter into other agreements for such things as our offsite storage
needs for both our distribution centers and our retail store locations. As of January 31, 2010, we had
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