• Cecile Corral

Williams-Sonoma Braces for Tough '08

Williams-Sonoma Inc. is bracing for what it predicts as "one of the most difficult," if not "the worst" economic periods ever, by arming itself with new and enhanced product categories and shopping-level marketing initiatives.

The company now projects a 2008 revenue decline of 3.9% to 1.7%, and a same-store sales drop of 5.5% to 3.0%. Earnings per diluted share, projected at $1.42 to $1.56, will be down 19.3% to 11.4% from the $1.76 earned in fiscal 2007.

Williams-Sonoma Inc. posted full year 2007 revenues of $3.94 billion, up 5.6% — but net earnings of $195.8 million fell 6.3%.

"We are aggressively looking at our assortments to rationalize our skus, and this is really important because it allows us to put the investments in the things that drive the business and reduce those that just create noise for our customers, distribution and vendors," said Laura Alber, president.

The company is implementing a range of strategies for its six retail formats.

Williams Sonoma Home will open its sole new store — its tenth unit — this year in Scottsdale, Ariz. WSH will also boost marketing for its e-commerce segment, "our most profitable channel," said Dave DeMattei, group president of the WS, WSH and West Elm nameplates.

The 27-unit West Elm will expand its retail store base with 12 new stores in 2008, vs. the five openings in 2007.

Pottery Barn's ongoing softness in tabletop was the main culprit for the nameplate's poor performance over the period. Successes in furniture and home furnishings were "substantially offset" by tabletop's persisting weaknesses. "We do not believe it is a coincidence that our strongest performing categories — furniture and home furnishings — were also the categories that saw the greatest impact from our revitalization initiative," Alber said, "which was centered on specific opportunities within our control and successfully executed."

The 190-plus unit chain this year will introduce "a greater level of newness" via innovative product development and better visual merchandising, she said. It is also working to improve its direct marketing with "strategic changes" in catalog circulation, catalog versioning and paid search, and likewise improve its customer service levels at the stores.

The Pottery Barn Kids division will move to fill in "the gaps in the merchandising assortment across all categories" within the kids' bedroom aspect; grasp the "important opportunity" posed by the nursery category by further strengthening its vendor base; and improving direct-to-consumer marketing. It will also "revitalize and reinvent the top-of-bed category to create a meaningful differentiation between us and the competition," Alber said.

Finally, Pottery Barn Teen — like West Elm — turned in an "extremely" pleasing performance, with "strong growth" in all key merchandising categories, particularly furniture, textiles and decorative accessories, Alber said. The company is optimistic for the year ahead in this business unit.

Cecile CorralCecile Corral | Senior Product Editor, Home Textiles Today

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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