Pottery Barn 2012 Annual Report Download - page 7

Dear Fellow Stockholders,
In an increasingly complex world, we believe our success rests on a singular focus—our customers. Our
customers love their homes, and everything we do revolves around our mission to enhance our customers’ lives
at home. By focusing on the customer, our brands—Pottery Barn, Williams-Sonoma, Pottery Barn Kids, West
Elm, PBteen, Rejuvenation, and Mark and Graham—grow stronger every year. Our brands may serve a variety
of demographics and lifestyles, but they are united by a common commitment to quality and service. Year after
year, consumers say that their homes say more about them than anything else. Decorating, entertaining and
cooking are high-touch activities, and our multi-channel, high-service model allows our customers to shop any
channel any time.
Over the last three decades, we have built a strong direct-to-customer infrastructure and a high-service, inspiring
retail experience. Our delivery platform capitalizes on economies of scale, and each brand in our company
benefits from the scale of the entire company. The success of our core brands, coupled with our entrepreneurial
mindset, has allowed us to invest in new businesses and global expansion while delivering record results.
We are proud of our fiscal 2012 results. For the year, we had record net revenues, which exceeded $4 billion,
with comparable brand revenues increasing 6%. Diluted earnings per share grew 14% to $2.54. These strong
earnings allowed us to end the year with $425 million in cash after returning $243 million to our stockholders
through stock repurchases and dividends.
These results were driven by:
• Our multi-channel operating model, with 46% 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.
I am pleased to report that we also made progress against each of our long-term initiatives that will continue to be
the focus of our efforts over the next several years. These initiatives are:
• To successfully execute our brand strategies and launch new businesses;
• To lay the foundation for the expansion of our brands’ global presence;
• To invest in our supply chain to reduce cost and improve service; and
• To invest in the technologies and infrastructure underlying all of these initiatives to enhance our leading,
multi-channel business.
The heritage of our company is one of internally generated growth. While our namesake brand, Williams-
Sonoma, has grown in size to almost $1 billion, 75% of our revenues now come from brands that our current
team developed. In 2012, we broadened the reach and relevance of each of our brands and invested in new
businesses.
Pottery Barn continued to deliver impressive growth over industry averages. The brand is focused on selling
innovative products at a great value, presented in an aspirational way across all of our channels. Our mantra is to
make decorating and entertaining fun, easy and affordable, and to help our customers turn their houses into
homes.
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