Sonoma gets credit for new biz

SAN FRANCISCO — Customers' response to Williams-Sonoma's Pottery Barn and Pottery Barn Kids proprietary credit card, launched during the third quarter, has exceeded expectations, the company said during its recent quarterly conference call. The average transaction on the card has been higher than that of other payment methods.

Of the 148,000 accounts opened on the card, some 19 percent are believed to be from new customers, said Laura Alber, president, Pottery Barn brands. Total sales charged on the card during the quarter totalled $75 million.

Overall in the Pottery Barn brand, textiles, furniture and lighting were the key sales drivers during the quarter, she added, and the reads on the holiday assortment have been positive. "We are very excited with our seasonal merchandising strategy and are confident in our ability to drive the business."

The company's direct-to-customer segment grew sales by 6.5 percent to $187.7 million, driven by increased revenue in the Pottery Barn, Williams-Sonoma and Pottery Barn Kids brands, as well as incremental sales in its West Elm catalog. However, that figure was lower than expected because of softness in the catalogs, which were affected by the shift in mailing dates into the fourth quarter, a significant increase in prospecting and a lower response rate in store areas. However, its Internet business offset the catalog softness, with a 35.4 percent spike in sales for the third quarter to $48.0 million.

The Pottery Barn and Williams-Sonoma catalogs saw modest growth, said Pat Cowell, president, Williams-Sonoma brand. The Pottery Barn Kids catalog experienced a decline because of the rapid expansion of its store base. However, a significant part of the growth of the Internet business comes from those who receive the Pottery Barn catalog, he added, and people who shop both channels generally spend 15 percent to 20 percent more. "We're very encouraged about the fourth quarter," he said.

The company continues to be pleased with its West Elm catalog's performance, and if the trend continues, it plans to significantly increase the current circulation of four million and add a website in 2003 and stores in 2004.