Pottery Barn 2011 Annual Report Download - page 44

Fiscal 2011 Fiscal 2010 Fiscal 2009
Store
Count
Avg. LSF
Per Store
Store
Count
Avg. LSF
Per Store
Store
Count
Avg. LSF
Per Store
Williams-Sonoma 259 6,500 260 6,400 259 6,300
Pottery Barn 194 13,800 193 13,100 199 13,000
Pottery Barn Kids 83 8,200 85 8,100 87 8,100
West Elm 37 17,100 36 17,100 36 17,600
Williams-Sonoma Home — — — — 11 13,200
Rejuvenation 3 17,200 — — — —
Outlets1— — 18 19,600 18 20,200
Total2576 10,000 592 9,800 610 10,000
1Beginning in fiscal 2011, Outlet stores and their leased square footage have been reclassified into their respective brands.
2Temporary “pop-up” stores, where lease terms are typically short-term in nature and are used to test new markets, are not
included in the totals above as they are not considered permanent stores.
Retail net revenues in fiscal 2011 increased by $36,498,000, or 1.8%, compared to fiscal 2010. This increase was
primarily driven by West Elm, Pottery Barn, international franchise operations and Pottery Barn Kids, despite a
1.5% year-over-year reduction in retail leased square footage, due to 16 net fewer stores (including the closure of
our Williams-Sonoma Home stores at the end of fiscal 2010). Comparable store sales in fiscal 2011 increased
3.5%.
Retail net revenues in fiscal 2010 increased by $173,552,000, or 9.2%, compared to fiscal 2009. This increase
was driven by growth of 9.8% in comparable store sales, partially offset by a 4.1% year-over-year reduction in
retail leased square footage, including 18 net fewer stores. Increased net revenues during fiscal 2010 were driven
by the Pottery Barn, West Elm and Williams-Sonoma brands.
COST OF GOODS SOLD
Dollars in thousands Fiscal 2011
% Net
Revenues Fiscal 2010
% Net
Revenues Fiscal 2009
% Net
Revenues
Cost of goods sold1$2,261,039 60.8% $2,130,299 60.8% $1,999,467 64.4%
1Includes total occupancy expenses of $500,660,000, $506,712,000 and $519,224,000 in fiscal 2011, fiscal 2010 and fiscal 2009,
respectively.
Cost of goods sold includes cost of goods, occupancy expenses and shipping costs. Cost of goods consists of cost
of merchandise, inbound freight expenses, freight-to-store expenses and other inventory related costs such as
shrinkage, damages and replacements. Occupancy expenses consist of rent, depreciation and other occupancy
costs, including common area maintenance and utilities. Shipping costs consist of third party delivery services
and shipping materials.
Our classification of expenses in cost of goods sold may not be comparable to other public companies, as we do
not include non-occupancy related costs associated with our distribution network in cost of goods sold. These
costs, which include distribution network employment, third party warehouse management and other
distribution-related administrative expenses, are recorded in selling, general and administrative expenses.
Within our reportable segments, the direct-to-customer channel does not incur freight-to-store or store occupancy
expenses, and typically operates with lower markdowns and inventory shrinkage than the retail channel.
However, the direct-to-customer channel incurs higher customer shipping, damage and replacement costs than
the retail channel.
Fiscal 2011 vs. Fiscal 2010
Cost of goods sold increased by $130,740,000, or 6.1%, in fiscal 2011 compared to fiscal 2010. Cost of goods
sold as a percentage of net revenues remained flat at 60.8% in fiscal 2011 (which includes expense of
approximately $375,000 from lease termination related costs associated with underperforming retail stores)
30