Pottery Barn 2014 Annual Report Download - page 7

Fellow Stockholders,
Back in early October, I was in Sonoma, California. We were opening (or shall I say re-opening) a
Williams-Sonoma store in the original location of Chuck Williams’ first store – opened in 1956. We
went to great lengths to replicate the original store, including much of the merchandise assortment. The
look and feel, and the customer experience, was surprisingly relevant today. The next morning, we
cooked breakfast, inviting the entire town of Sonoma to join us in the Plaza. About 2,000 people showed
up to show their appreciation – of us returning to our roots, and of course, to eat the pancakes.
This experience was very emotional for all of us who were there, and made me realize, once again, how
far this company has come in its 58-year life and in the 20 years since I first joined. We have been so
fortunate to attract such outstanding associates and supplier partners, who have accepted the
responsibility of stewardship of this great brand, while constantly seeking ways to be relevant to the
needs and desires of today’s consumer. The experience reinforced for me the importance, and the
rewards, of staying true to our values, and of always placing the customer at the center of everything we
do.
Today, we have a strong portfolio of brands. In each brand, we have passionate stewards who anticipate
and respond to customers’ needs with products and services that exceed their expectations.
And we believe that the growth opportunities we see ahead of us are greater than any in our history.
What makes us think that, and why do we believe that we will continue to produce growth in revenues
and earnings while delivering greater value to our customers and to you, our stockholders, in an
increasingly competitive and rapidly changing retail environment?
The results that we have achieved over the past several years, including 2014, reinforce our confidence.
We delivered strong performance in 2014, with net revenues growing 7% to $4.7 billion and diluted
earnings per share growing 15% to $3.24. We experienced growth in all of our brands and across our
channels, highlighted by our highly profitable e-commerce business, which now accounts for over 50%
of total revenues. At the same time, we continued to invest in building our brands and the multi-channel
platform supporting them.
Our Williams-Sonoma brand continues to post improving results. We see excellent growth ahead for our
Pottery Barn brands based on our “One Home” strategy. And the West Elm brand grew in excess of
20% for the fifth year in a row. Our newer “emerging” brands, Mark and Graham and Rejuvenation,
achieved key milestones, increasing our confidence that they can be significant contributors to future
growth. In addition, we invested in our longer-term objective of expanding our global presence with our
franchise partners and company-owned stores.
We have big plans for the future, and we remain committed to creating sustainable stockholder value
along the way. The rush of brick-and-mortar and e-commerce “pure-plays” to embrace multi-channel
retailing further validates our longstanding approach to our business and places us at the forefront of
retail innovation.
We have been a multi-channel retailer for over four decades. We know that achieving excellence in
multi-channel does not come easily. Our senior leadership team averages almost fifteen years with the
company. We believe that multi-channel retailing is both art and science. We began with a catalog
business, and then, over the past fifteen years, have developed an e-commerce expertise that is one of
the most advanced in our category and one of the best in all of retail. E-commerce penetration in our
categories, as a percent of total sales, is expected to grow over the next decade, which provides us the
opportunity to further increase our market share and our operating margins.
Stockholders Letters