Pottery Barn 2014 Annual Report Download - page 19

Detailed financial information about the retail channel is found in Note L to our Consolidated Financial
Statements.
SUPPLIERS
We purchase our merchandise from numerous foreign and domestic manufacturers and importers, the largest of
which accounted for approximately 4% of our purchases during fiscal 2014. Approximately 64% of our
merchandise purchases in fiscal 2014 were sourced from foreign vendors in 51 countries, predominantly in Asia
and Europe, of which approximately 98% were negotiated and paid for in U.S. dollars.
COMPETITION AND SEASONALITY
The specialty retail business is highly competitive. Our specialty retail stores, e-commerce websites and direct-
mail catalogs compete with other retailers, including large department stores, discount retailers, other specialty
retailers offering home-centered assortments, other e-commerce websites and other direct-mail catalogs. The
substantial sales growth in the direct-to-customer industry within the last decade, particularly in e-commerce, has
encouraged the entry of many new competitors and an increase in competition from established companies. In
addition, we face increased competition from discount retailers who, in the past, may not have competed with us
or to this degree. We compete on the basis of our brand authority, the quality of our merchandise, service to our
customers, our proprietary customer list, our e-commerce websites and our marketing capabilities, as well as the
location and appearance of our stores. We believe that we compare favorably with many of our current
competitors with respect to some or all of these factors.
Our business is subject to substantial seasonal variations in demand. Historically, a significant portion of our net
revenues and net earnings have been realized during the period from October through January, and levels of net
revenues and net earnings have typically been lower during the period from February through September. We
believe this is the general pattern associated with the retail industry. In anticipation of our holiday selling season,
we hire a substantial number of additional temporary employees in our retail stores, customer care centers and
distribution centers, and incur significant fixed catalog production and mailing costs.
EMPLOYEES
As of February 1, 2015, we had approximately 26,800 employees, of whom approximately 8,700 were full-time.
During the fiscal 2014 holiday selling season (defined as the period from October through December), we hired
approximately 8,800 temporary employees primarily in our retail stores, customer care centers and distribution
centers.
TRADEMARKS, COPYRIGHTS, PATENTS AND DOMAIN NAMES
We own and/or have applied to register 75 separate trademarks and service marks. We own and/or have applied
to register our key brand names as trademarks in the U.S. and 91 additional jurisdictions. Exclusive rights to the
trademarks and service marks are held by Williams-Sonoma, Inc. and are used by our subsidiaries and
franchisees under license. These marks include our core brand names as well as brand names for selected
products and services. The core brand names in particular, including “Williams-Sonoma,” the Williams-Sonoma
Grande Cuisine logo, “Pottery Barn,” “pottery barn kids,” “PBteen,” “west elm,” “Williams-Sonoma Home,”
“Rejuvenation” and “Mark and Graham” are of material importance to us. Trademarks are generally valid as long
as they are in use and/or their registrations are properly maintained, and they have not been found to have
become generic. Trademark registrations can generally be renewed indefinitely so long as the marks are in use.
We own numerous copyrights and trade dress rights for our products, product packaging, catalogs, books, house
publications, website designs and store designs, among other things, which are also used by our subsidiaries and
franchisees under license. We hold patents on certain product functions and product designs. Patents are
generally valid for 14 to 20 years as long as their registrations are properly maintained. In addition, we have
registered and maintain numerous Internet domain names, including “williams-sonoma.com,” “potterybarn.com,”
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Form 10-K