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Fixing Pottery Barn is Priority at Williams-Sonoma

Williams-Sonoma Inc. is looking to breathe fresh air into Pottery Barn with new brand positioning, expanded product offerings, and a new "value" price bracket this year, as the 190-store division did not meet expectations during the second half of 2006.

Speaking at the Bear Stearns 13th Annual Retail, Restaurants & Consumer Conference, Williams-Sonoma evp and chief marketing officer Pat Connolly described the effort as "revitalizing" Pottery Barn, which represents almost half of the company's total revenue, making it the largest brand under $3.7 billion Williams-Sonoma Inc.

This effort is three-pronged, he said. First, the company is reinforcing the brand's position as a style authority through marketing projects, including new decorating books.

Second, the merchandising initiative will be "extensive," Connolly said. Categories in focus are decorative accessories, tabletop, and furniture pieces.

"This initiative is to re-fixture and re-assort some of the smaller stores," which include units measuring less than 11,000 square feet, said Sharon McCollam, evp, coo and cfo, noting that 40% of the Pottery Barn stores fall under this smaller unit classification. Added Connolly: "As we have built bigger stores and grown our assortment over time, our smaller stores have become over-assorted ... we see a significant opportunity to rationalize the assortment and SKU count, by store, to optimize sales per square foot." Bed and bath goods will also be part of the focus, McCollam said.

Third, the new "value" aspect encompasses entry-level price points across the brand's departments. Connolly said, "We believe this is very strategic for the brand. In fact, it is how we built Pottery Barn."

McCollam added that there are no plans to close any existing Pottery Barn stores. There are plans to potentially add jumbo stores that measure about 30,000 square feet. The company is testing such units this year and in 2008. "And in addition to that, where we can't get that kind of space, we are testing stand-alone Bed and Bath stores," McCollam noted. Two were opened during last year's fourth quarter. Only bed and bath assortments are displayed in these stores.

In other remarks, the executives said they plan to:

  • Extend the Williams-Sonoma brand bridal program;

  • Expand assortments in nursery, seasonal and holiday categories at 97-unit, $500 million Pottery Barn Kids;

  • Tune up merchandising at Williams-Sonoma Home with a more causal point of view and more focus on bed and bath, decorative accessories, and tabletop;

  • Build on the "secret changes" at the direct-to-consumer Pottery Barn Teen concept;

  • Open five or six new West Elm stores in 2007, and add dining room and home office products;

  • Significantly ramp up direct mail and launch an advanced e-mail platform this summer.

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