Pottery Barn 2010 Annual Report Download - page 18

PBteen
The PBteen brand began with the introduction of the PBteen catalog in 2003. PBteen offers exclusive collections
of home furnishings and decorative accessories that are specifically designed to reflect the personalities of the
teenage market. In late 2003, we launched our PBteen e-commerce website.
International
In 2001, we expanded the geographic reach of our brands by opening five retail stores in Toronto, Canada and, as
of January 30, 2011, we now operate 16 stores across Canada representing all of our retail brands. In 2008, we
further increased our presence by opening two new retail stores in Puerto Rico, one Pottery Barn store 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. Two Pottery Barn stores and two Pottery Barn
Kids stores were opened in Dubai and one Pottery Barn store and one Pottery Barn Kids store were opened in
Kuwait in fiscal 2010.
DIRECT-TO-CUSTOMER OPERATIONS
As of January 30, 2011, 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
six direct-mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen,
and West Elm) 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 business complements the retail business by building brand awareness and acting as an
effective advertising vehicle. In addition, we believe that our direct-mail catalogs and the Internet act as a cost-
efficient means of testing market acceptance of new products and new brands.
The direct-to-customer channel over the past several years has been strengthened by the introduction of
e-commerce websites in all of our brands and has contributed to the shift we are continuing to see in the
purchasing behavior of our customers across all channels. As a result, our marketing efforts, including the
circulation of catalogs and the use of Internet advertising, are targeted toward driving sales to all of our channels,
including retail. While we know this shift in behavior is continuing to occur, the quantification of the sales driven
to each channel by our marketing efforts has become increasingly difficult to determine and analyze. Therefore,
our estimate of advertising costs by segment are currently based on historical allocation methodologies, which
may be required to be refined as additional information becomes available.
Consistent with our published privacy policies, we send our catalogs to addresses from our proprietary customer
list, as well as to addresses from lists of other mail order merchandisers, magazines and companies with whom
we establish a business relationship. In accordance with prevailing industry practice and our privacy policies, we
primarily rent our list to select merchandisers. Our customer mailings are continually updated to include new
prospects and to eliminate non-responders. In addition, we send electronic direct marketing communications only
to those customers who have voluntarily provided us with their email addresses. These e-mail addresses are not
shared with any third parties.
Detailed financial information about the direct-to-customer segment is found in Note M to our Consolidated
Financial Statements.
RETAIL STORES
As of January 30, 2011, the retail segment has four merchandising concepts (Williams-Sonoma, Pottery Barn,
Pottery Barn Kids, and West Elm), operating 592 retail stores located in 44 states, Washington, D.C., Canada and
Puerto Rico. This represents 260 Williams-Sonoma, 193 Pottery Barn, 85 Pottery Barn Kids, 36 West Elm, and
18 Outlet stores (which carry merchandise from all merchandising concepts).
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