Pottery Barn 2010 Annual Report Download - page 7

Dear Fellow Shareholders,
On behalf of our associates at Williams-Sonoma, Inc., I want to thank you for your continued support and
confidence. Fiscal 2010 was a year marked by a number of financial and operational milestones—all of which
point to the company’s strong position in the market place.
As this is my first official letter to all of you, I want to share with you why I believe we achieved these
milestones and why I believe the company is poised for even greater success in fiscal 2011 and beyond.
From our humble beginning over 50 years ago, our mission has been to enhance the quality of our customers’
lives at home. From the day our founder, Chuck Williams, opened his first store in Sonoma, California in 1956,
to today when we serve more than a third of our customers on-line, we have been the trusted source for
innovative and quality products and a superior shopping experience. Our customers’ tastes and needs have
evolved, and we have responded by starting new businesses and adjusting our business model, but our focus on
the customer is stronger than ever.
We love the business we are in and so do our customers. We spend our time designing and testing products,
studying lifestyle trends, building relationships with the cooking and design communities, talking to customers,
training our associates, building better websites, and finding new ways to further enhance our customers’
experiences in every channel. We are passionate about everything that touches the customer and understand that
without our customers we have no future. We see ourselves as shopkeepers and know that the difference is made
one customer at a time.
We know that in order to care for our customers we need to care for our associates and uphold a strong internal
culture of respect and innovation. We also know that to be a high performance organization, we have to drive
continuous improvement in all of our operations and measure ourselves against increasingly aggressive
objectives that will result in better value for our customers. It is this disciplined cultural and operational strength
that has allowed our innovation to succeed.
I am proud to say that we are a stronger company today than ever before. To achieve this, we embraced the
challenges that the economy of the past several years presented to us and embarked on a company-wide initiative
to drive new creativity, a higher level of customer engagement, and greater operational efficiency across the
company. This initiative contained several key elements, including:
• Significantly increasing our investment in e-commerce and e-commerce marketing to broaden and deepen
our interaction with on-line customers;
• Successfully reducing our prices without reducing our quality;
• Improving our designs by bringing more authentic, artisanal and exclusive product to market;
• Reengineering our supply chain and reducing costs – allowing us to deliver more value to our customers
through reduced shipping fees;
• Optimizing our catalog mailings through better targeting and the introduction of new, innovative formats; and
• Reinventing the customers’ in-store experience by taking service and relationships to a new level.
Through this initiative, we were able to achieve new milestones in our business – including record financial
results. Net revenues in fiscal 2010 increased 13% – from $3.1 billion in fiscal year 2009 to $3.5 billion this past
year. Diluted earnings per share increased 154% – from $0.72 in fiscal 2009 to $1.83 in fiscal 2010. These results
were driven by impressive sales increases in both our direct-to-customer and retail segments, improved selling
margins, and highly leveraged fixed occupancy and selling, general, and administrative costs. We also
significantly strengthened our balance sheet – ending the year with $628 million in cash after returning nearly
$185 million to our shareholders through share repurchases and dividends.
Finally, due to the strength of our balance sheet, we also announced an additional share repurchase program of
$125 million for fiscal year 2011, as well as a 13% increase in our quarterly dividend.
Shareholders Letters