Pottery Barn 2011 Annual Report Download - page 8

drive growth, West Elm will engage with a broader base of customers, maintain a compelling value proposition,
deliver a truly immersive cross-channel brand experience, and opportunistically expand the brand’s retail
footprint.
The PBteen brand is the only home-furnishings brand in the marketplace dedicated solely to teens. We see an
opportunity to grow the brand further by broadening its aesthetic to engage a wider range of teens and by creating
new and exciting non-traditional retail experiences.
Technology underlies all of our strategies, and we are committed to making those investments that enhance our
ability to interact with our customers, deliver superior customer service and expand our reach to new customers
in new markets. We will also continue to invest in and leverage our multi-channel advantage—using the catalog
to inspire, the internet as our largest store and information resource, and our stores as the “face of the brand.”
Operationally in 2011, we made significant improvements in our supply chain, information technology and retail
operations. In supply chain, we saw customer-service and cost-reduction benefits from our ongoing
transportation, packaging and sourcing initiatives. We in-sourced our Vietnam and China furniture networks and
leveraged our U.S. engineering team to broaden our Asia-based quality-assurance operations. In the U.S., we
gained significant capacity and operational efficiency with the transition to our new upholstered furniture
manufacturing facility in North Carolina.
In real estate, for the third consecutive year, we reduced both retail leased square footage and retail occupancy
costs. During the year, we permanently closed 27 stores and achieved a net reduction of two percent of our leased
square footage.
We are focused on new business development as we see additional opportunities to fill “white space” in the
market. In November, we acquired Portland, Oregon-based Rejuvenation, Inc. Rejuvenation is America’s
leading manufacturer of authentic and exclusive, high-quality, custom-configured reproduction lighting and
house parts. Founded in 1977, Rejuvenation manufactures in its Portland factory and sells through its catalog,
website and retail stores in Portland, Seattle and Los Angeles. We are applying our multi-channel marketing and
supply-chain expertise to the brand to increase operating efficiency. Rejuvenation is an example of how we can
leverage our “platform”—our database, our analytic resources and our supply chain—to grow a business.
We see global expansion as our largest future opportunity. As we shop the world, it is evident to us that there is
no one doing what we do. We believe that there is a global demand for our brands. In 2011, we expanded our
international sourcing offices and built a strong team to focus on global expansion with a detailed roadmap. We
expect to open our first owned-and-operated stores outside North America in 2014. Until then, we will continue
to expand our international shipping capabilities, as well as our franchise presence in the Middle East. We are
committed to inspiring customers around the world with our brands and the same multi-channel experience we
offer only in North America today.
Sustainability and corporate citizenship have been on our collective radar screen for some time now. In 2006, we
became the first major catalog to achieve Forest Stewardship Council certification on 100 percent of our paper.
We currently maintain one of the largest solar arrays in the state of New Jersey on our east coast distribution
center, and we have been volunteering in teams and making grants to non-profit community organizations for
years. In 2011, we developed the company’s first Corporate Responsibility Report, which we are issuing
simultaneously with this Annual Report. It represents the beginning of an ongoing dialogue around our
responsible business practices. As with every area of our business, we are committed to continuous improvement
in sustainability and corporate citizenship, and our reporting will provide the framework against which we will
measure our progress.
We have learned the benefits of operating with an eye on our environmental and social impact. In addition to
earning goodwill in the communities in which we operate, viewing our business through a sustainability lens has
led to product and operational innovations that are resonating with our customers and helping to run our business
more efficiently. We believe that our financial success will continue to be linked to our performance on social