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Williams-Sonoma to expand new businesses

San Francisco — Though Williams-Sonoma will play it conservatively this year, it still plans to drive top-line sales growth, improve operating efficiencies and operating margins and enhance shareholder value, Dale Hilbert, ceo, told analysts in a conference call. Several new businesses that have performed well will also expand, including the store base of Pottery Barn Kids and the company's direct-to-customer channel.

Williams-Sonoma plans to open 50 new stores this year, including 25 new Pottery Barn Kids locations — a 93 percent increase over PBK's present total of 27 stores — 15 Williams-Sonomas, 11 Pottery Barns, and two clearance locations. Also included in the new store count are three additional locations in Toronto, Canada, a market it broke into last year.

The performance of Pottery Barn Kids has also been exceeding plans. "It's impressive to watch the profit rate in a business that's relatively new," Hilbert said, and "bedding continues to be a huge deal." He also mentioned that the target audience was younger than expected but it has adapted to that. "What's exciting to me is the profitability per dollar sale is right up there with the best of our businesses," he said. "In a new business that's quite unusual."

In addition, Hilbert added, it will expand the merchandise assortment to support the growing seasonal gift businesses, since the customer response to testing this concept has "consistently exceeded expectations."

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