Williams-Sonoma Plans Aggressive 2006

San Francisco —Williams-Sonoma has a full agenda this year for its nameplates, all backed by a powerhouse e-commerce operation that has become the most profitable part of total business.

During the Lehman Brothers Ninth Annual Retail Seminar earlier this month, Williams-Sonoma executive vp and chief marketing officer Patrick Connolly told analysts that the company's “biggest opportunity is to use the Internet to drive comp-store sales in retail stores.”

The e-commerce business currently exceeds in revenue its older sister, catalogs.

“It is our fastest-growing part of our business and the most profitable part of our business,” Connolly said. By the end of this year, Williams-Sonoma expects to have more than 20 million e-mail addresses of its customers, all who opted to receive the retailer's e-mails. For 80% of those customers the company also has their physical addresses, “so we know which of our stores they live by,” he noted.

Sharon McCollum, evp, cfo, added that the direct-to-customer channel is a catalyst for driving sales in the retail channel. “We do no other advertising as a company per se, than just mailing catalogs,” she said. “Remember that approximately 60% of our Internet sales are driven by a customer who recently received a catalog. In addition, we measure the level of sales that are driven to our retail channel by customers who receive the catalog.”

By division, the company projected these plans:

• Three test stores for Pottery Barn Bed and Bath will open this fall, locations undisclosed. “If [these stores] work, and we think they will because of the success we've had in direct, we see an opportunity to have as many as 40 or 50 of these stores over time,” Connolly said.
• The Pottery Barn brand, 188 stores, in April launched a catalog focused on outdoor living, but not furniture. It covers three PB nameplates: Kids, Teen and Pottery Barn main.
• Pottery Barn Kids, 89 stores, crossed the $500 million mark in revenue last year and this year will expand its nursery classification.
• The Pottery Barn Teen concept, with core categories of jewelry storage, beauty and bath merchandise, will build up its dorm-room collection, seasonal offerings and Internet assortments.
• Williams-Sonoma Home, three stores, will launch e-commerce this fall and accelerate new-store openings. The assortment will continue to grow in core areas — upholstery, case goods, dining and bedroom — with a particular focus on bath and bath textiles, “which are a great way to introduce new customers to the brand,” Connolly said.
• Williams-Sonoma, 254 stores, will introduce regionally tailored merchandise assortments in nine markets this year and will extend its remerchandising test to all of the brand's mid-size stores.
• West Elm, 12 stores, will expand in dining, upholstery and bedroom, “and everywhere the feel will be comfortable, clean and versatile,” Connolly said. It remains the company's fastest-growing emerging brand.