Pottery Barn 2011 Annual Report Download - page 7

Dear Stockholders,
Fiscal 2011 was a highly successful year for Williams-Sonoma, Inc. We delivered record earnings and
profitability—and gained market share—through our superior multi-channel capabilities, product innovation,
lifestyle merchandising, increased engagement with our customers, and greater operational efficiency. The
strength of our business allowed us to invest in our future, and we executed key elements of our long-term
strategies. Our commitment to our customers and mission to enhance their lives at home is evident in everything
we do, across all our brands.
In 2011, comparable brand revenue grew seven percent, diluted earnings per share climbed 21 percent to a
company record of $2.22, and e-commerce revenues increased by 18 percent. We ended the year with more than
$500 million in cash after increasing our dividend by 47 percent and returning $263 million to our stockholders
through share repurchases and dividends.
As we look to the future, we believe that we are uniquely positioned to capitalize on the recent shift in consumer
buying behavior that is disrupting the retail landscape. Our unique advantages include:
• Our multi-channel advantage, with over 40 percent of our revenue coming from our direct-to-customer
channel, of which the vast majority is through our e-commerce websites;
• Our strong brands, with the ability to address the design and entertaining needs of a multitude of
demographics, aesthetics, life stages, and lifestyles;
• Our proprietary design capabilities and strong lifestyle merchandising expertise;
• Our world-class supply-chain organization; and
• Our strong financial position.
Our strong brands are at the core of our performance. Each of our brands—Pottery Barn, Williams-Sonoma,
Pottery Barn Kids, West Elm, PBteen and Rejuvenation—has built strategies that will allow it to continue to
attract new customers and engage more deeply with existing customers.
The Pottery Barn brand saw growth in all key categories in 2011. We achieved strong results by offering a
compelling and integrated product line supported by strong marketing and world-class service across all
channels. We see opportunities to achieve new levels of sales and profitability by continuing to design exclusive,
authentic and artisanal product at a great value, introducing new product categories, expanding assortments, and
elevating customer service in every channel.
In the Williams-Sonoma brand, exclusive products performed particularly well in 2011. As we look forward, we
will increase the overall percentage of products that are either vendor-branded exclusives or Williams-Sonoma-
branded, and we will launch innovative product lines that respond to our customers’ evolving lifestyles. We will
also leverage the power of our retail presence to deepen customer engagement through programs such as
individual clienteling and events that reflect the local communities in which our stores are located.
Pottery Barn Kids continues to be the leading specialty retailer of baby and children’s home furnishings, and
achieved growth in 2011 through new and innovative customer engagement programs, a compelling value
proposition and great products. We will continue to build on these strengths, with a particular focus on new-
customer acquisition.
Our West Elm brand delivered a record year, and we believe its prospects for further growth are significant.
Earnings and profitability reached new highs, demonstrating our success in repositioning the brand and the
advantages of our multi-channel experience. West Elm’s high-quality products, strategic collaboration efforts and
innovative customer engagement programs have been recognized by the design community and customers. To
Stockholders Letters