Pottery Barn 2011 Annual Report Download - page 18

Rejuvenation
On November 1, 2011, we acquired Rejuvenation Inc. (“Rejuvenation”), a leading manufacturer and multi-
channel retailer of authentic reproduction lighting and high-end door and cabinet hardware. Rejuvenation’s
exclusive lighting fixtures are custom-configured and made-to-order. The brand’s high-quality products are sold
through its catalog, website and three retail stores.
Global Business
In 2001, we expanded the geographic reach of our brands by opening five retail stores in Toronto, Canada and, as
of January 29, 2012, we now operate 16 stores across Canada representing all of our retail brands except
Rejuvenation.
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. As of January 29, 2012, seven Pottery Barn Kids stores and six
Pottery Barn stores were operating in the Middle East.
In 2011, we launched our global e-commerce business by offering shipping from all of our retail brands (except
Rejuvenation) to customers in more than 75 countries worldwide.
DIRECT-TO-CUSTOMER OPERATIONS
As of January 29, 2012, the direct-to-customer segment has seven merchandising concepts (Williams-Sonoma,
Pottery Barn, Pottery Barn Kids, PBteen, West Elm, Williams-Sonoma Home and Rejuvenation) and sells
products through our six e-commerce websites (williams-sonoma.com, potterybarn.com, potterybarnkids.com,
pbteen.com, westelm.com and rejuvenation.com) and seven direct-mail catalogs (Williams-Sonoma, Pottery
Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen, West Elm and Rejuvenation). Of these seven
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.
During the past several years, the direct-to-customer channel has been strengthened by the penetration of our
e-commerce websites in all of our brands which has contributed to the shift we are continuing to see in the
purchasing behavior of our customers across all channels. Leveraging these insights and our multi-channel
positioning, 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. Because of this multi-channel marketing
strategy, sales driven to any particular channel by our marketing efforts have become increasingly difficult to
quantify 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 direct marketers, magazines and companies with whom
we establish a business relationship. In accordance with prevailing industry practice and our privacy policies, we
may also 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 email 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 29, 2012, the retail segment has five merchandising concepts (Williams-Sonoma, Pottery Barn,
Pottery Barn Kids, West Elm and Rejuvenation), operating 576 retail stores located in 44 states, Washington,
D.C., Canada and Puerto Rico. This represents 259 Williams-Sonoma, 194 Pottery Barn, 83 Pottery Barn Kids,
37 West Elm, and 3 Rejuvenation stores.
4