Williams-Sonoma, Inc.

3250 Van Ness Avenue
San Francisco, California 94109
U.S.A.
Telephone: (415) 421-7900
Toll Free: (800) 840-2591
Web site: http://www.williams-sonomainc.com/

Public Company
Founded: 1956
Incorporated: 1972
Employees: 27,800
Sales: $5.29 billion (2017)
Stock Exchanges: New York
Ticker Symbol: WSM
NAICS: 454110 Electronic Shopping and Mail-Order Houses; 442299 All Other Home Furnishings Stores

Williams-Sonoma, Inc., is a multichannel specialty retailer with a wide range of products for the home. Beginning with gourmet kitchen utensils and appliances, the company has steadily expanded its offerings to include home furnishings for adults, teens, and children, as well as personalized giftware, including leather accessories, jewelry, and home decor goods for men and women. The company also runs online bridal and gift registries and has long harnessed the power of catalog and online sales in addition to brick-and-mortar stores. Williams-Sonoma operates more than 580 stores in 43 states, Washington, DC, and Puerto Rico, plus another 45 stores in Canada, Australia, and the United Kingdom. More than 90 franchised locations extend the company's presence in Mexico, South Korea, the Philippines, and the Middle East. Williams-Sonoma remains one of the largest and most popular home furnishing and accessories retailers in the United States.

After serving as an air force mechanic in North Africa and India during World War II, Charles Williams moved to Sonoma, California, where he worked as a self-taught carpenter. A passionate cook, Williams made a trip to Paris in the early 1950s aboard the famed Ile de France cruise ship. While in Paris he discovered a range of cookware and accessories unknown to the rather bland U.S. kitchen of the period. In 1956, tired of his carpentry career, Williams bought and began to renovate a building in Sonoma that included a failed hardware store. He proceeded to dispose of the store's traditional hardware supplies and stock it with the professional-quality cooking equipment he had discovered overseas.

The store caught on quickly, becoming popular with many professional and serious cooks. Encouraged by friends such as Julia Child and James Beard, who would be instrumental in sparking an interest in fine cooking in the United States, Williams moved his store to San Francisco, renaming it Williams-Sonoma in honor of its original location. Throughout the next decade, the store prospered, attracting customers from around the country. Williams continued making trips to Europe, discovering new products to bring back to his store.

By the late 1960s the nature of houseware sales in the United States had changed. The popularity of international cuisine was on the rise, generating interest in professional-quality cooking equipment. Department stores such as Macy's began expanding their kitchenware departments, but none could compete with Williams-Sonoma. In the early 1970s, Williams, exhausted from shouldering the burden of stocking and operating his store, and running every aspect of the business, began to look for help.

One frequent customer and close friend was Edward Marcus of Neiman Marcus retail fame. Marcus suggested Williams either sell his company or expand it into a chain. Williams decided to expand, and in 1972, Marcus and Williams formed Williams-Sonoma, Inc. Williams continued to handle purchasing and merchandising, while Marcus brought in a team of executives to guide the company's business end. A second store was opened in Beverly Hills by 1973, the same year the company issued its first mail-order catalog. Williams soon learned that products that did not sell well in the store often sold very well in the catalog, due to descriptions and stories about unusual products. The company's “cook's catalog” featured photographs of each product in use. The first mailing went to 5,000 people. Sales took off, and the cook's catalog mailing list quickly went nationwide.

By 1977 the Williams-Sonoma chain had grown to five stores. The following year Marcus, who held one-third of the company, died, and a change in management led the company into trouble. With $4.9 million in sales, the company carried a debt of $700,000 and posted a net loss of $173,000. Williams made the difficult decision to sell.

In 1978 Williams sold the company for $100,000 to W. Howard Lester, a former IBM salesman and founder of several computer services firms, and his partner, James McMahan. With the sale came the requirement that Williams remain in charge of selecting merchandise and running the catalog.

Williams-Sonoma turned around quickly under Lester. Within five years the retail chain grew to 19 stores. In 1982 its catalog sales expanded with the acquisition of the Gardeners Eden catalog, then posting about $100,000 in annual sales. By 1983 catalog mailings reached 30 million customers, with sales accounting for more than 75 percent of the company's overall $35 million annual revenues. To finance further expansion, Lester took the company public in 1983, with an initial public offering (IPO) of 1 million shares at $23 per share. Lester retained about 22 percent of the company; Williams, who continued to lead the company's catalog division, held about 1.9 percent of the company's stock.

With the money raised in its IPO, the company established a new distribution and warehouse facility in Memphis, Tennessee. Over the next three years, the retail chain grew to 31 stores in 14 states, and in 1985 the company opened a second retail chain, Hold Everything, which would grow to five stores. The company also sought to expand its catalog business, introducing one catalog featuring table settings and another with more exotic cookware, both of which did poorly. Coupled with the catalog losses and the Memphis warehouse, profits fell to $445,000 in 1983 from a net of $1.5 million in 1982. By 1984, with sales reaching nearly $52 million, earnings had sunk to a mere $38,000.

Williams-Sonoma's setbacks proved short-lived, however. By 1985 sales climbed to $68 million, earning the company a net of $2.4 million in profit. The company continued to expand, adding 14 Williams-Sonoma stores by the end of the following year. Expansion also included the acquisition of the struggling Pottery Barn chain of 27 retail home furnishings stores, bought for $6 million from The Gap in 1986. The Pottery Barn brand also was added to the company's growing line of catalogs, along with Hold Everything and Gardeners Eden. Meanwhile, the retail end of the business was contributing a growing percentage of the company's sales, up to 36 percent of fiscal 1986 sales of just over $100 million.

The company continued to grow aggressively, raising the number of Williams-Sonoma stores to 64 in 1988. A joint venture with Tokyo Department Store brought the first Williams-Sonoma store, along with the Catalog for Cooks, to Japan. Sales surged to $136.8 million, and net earnings reached $3.4 million by year-end 1987. To guide the burgeoning empire, Lester brought in former Pillsbury Company President Kent Larson as president of Williams-Sonoma.

During the late 1980s the company added an average of 12 stores per year, bringing the total number of Williams-Sonoma, Pottery Barn, and Hold Everything retail units to 102 U.S. stores and 1 unit in Japan. Not all of Williams-Sonoma's ventures were successful, however. After one year the company and Ralph Lauren agreed to dissolve their joint-venture partnership. An attempt to establish a Gardeners Eden retail chain also failed, in part because of the inherently seasonal nature of that market. Nevertheless, the company's revenues, led by its growing retail chain, continued to make steady gains, rising from $174 million in 1988 to $287 million in 1990.

The onset of a recession and William-Sonoma's rapid expansion left the company vulnerable in the early 1990s. While revenues were relatively solid, earnings were significantly affected: The company's $11.2 million net profit in 1990 fell to $1.6 million and $1.8 million in the next two years, while revenues increased slowly, to $312 million in 1991 and $344 million in 1992, the latter helped by a partnership with Time-Life Books to create a series of Williams-Sonoma Kitchen Library cookbooks.

To prevent further earnings slippage, Williams-Sonoma's management was restructured, new merchandising strategies and catalog designs were introduced, and catalog production was brought inhouse. Retail expansion was slowed, focusing instead on improving store design and increasing store square footage.

By year-end 1993 the company had experienced a strong turnaround, with revenues of $410 million and earnings topping $11 million. Chief architect of the transformation was Executive Vice President Gary Friedman, who revamped the company's Catalog for Cooks from digest to full size, spurring an increase of 40 percent in sales. Friedman also initiated monthly themed promotions for Williams-Sonoma stores, added professional demonstration kitchens, larger cookbook libraries, tasting bars, and a line of high-quality private-label foods.

For the Pottery Barn division, which had lost more than $5 million in 1992, Friedman introduced even more dramatic changes, including replacing more than 80 percent of the retail stores' merchandise, while increasing square footage in new and future stores. The new format included an average of more than 10,000 square feet, about triple the size of older Pottery Barn stores, featuring a design studio, a lighting gallery, and interior finishings products. The newly designed Pottery Barn reflected Friedman's own frustration when trying to furnish his home, as he told Maria Halkias in the Dallas Morning News in July 1995: “I wanted a store that would sell me window treatments, lamps, sofas and chairs.” The Pottery Barn redesign proved immediately successful and helped spark the division's growth from combined store and catalog sales of $103 million in 1992 to $165 million in 1993.

In 1998 Williams-Sonoma was listed on the New York Stock Exchange as annual sales reached $1.1 billion. Management began to focus on a multichannel marketing strategy that included its stores and catalogs, as well as the burgeoning power of the internet. The company began an extensive program to capture additional sales via a company website in 1998, followed by an online bridal registry in June 1999. The Gardeners Eden catalog was sold in 1999, as part of the firm's new strategy to focus on its core brands and internet business. The Williams-Sonoma catalog also was overhauled to include more product information, special features, and quick tips. By the end of the decade, there were more than 300 stores in operation across the United States.

Williams-Sonoma entered the new millennium determined to remain a leader in the specialty retail and home furnishings market. A new catalog, Pottery Barn Bed & Bath, with moderately priced bed and bath items, was launched in 2000, while eight Pottery Barn Kids stores were slated to open after the success of the brand's catalog the previous year.

A new magazine also debuted in 2000, Williams-Sonoma TASTE, adding another publication to the company's arsenal. The new lifestyle magazine focused on food, drink, travel, and entertaining. Plans were also set in motion to develop a concept called Elm Street, a new brand selling lower-end kitchen and housewares to complement the Williams-Sonoma and Pottery Barn brands.

In 2001 Lester, who had run daily operations of the company since 1979, turned over his CEO duties to Dale Hilpert while retaining his title as chairman of the board. Fiscal (January) 2001 was a year with record revenues ($1.8 billion) yet plummeting net income during the third quarter. The decline was attributed to a number of factors, including aggressive growth strategies, higher catalog and web costs, increasing advertising costs, and economic woes after the September 11 terrorist attacks on the United States.

In 2002 Williams-Sonoma seemed to rally somewhat under Hilpert's direction, moving forward with the new Elm Street brand and catalog that targeted young, hip homeowners bent on outdoing the Joneses at affordable prices. An Elm Street website debuted a year later, along with bricks-and-mortar stores, the first of which was located in Brooklyn, New York. The company followed the same pattern with another Pottery Barn brand, PBteen. Featuring home decor for teenagers, PBteen had a catalog and fully functional website. Revenues for 2002 reached just under $2.1 billion, with weak net earnings of $75.1 million.

In January 2003 Hilpert stepped down and was replaced by Edward A. Mueller, one of the board directors. Mueller's take-charge attitude led the company to a slight rise in revenues to $2.4 billion for 2003, but with a significant leap in net income to $124.4 million as the company workforce had grown to 32,000 employees worldwide. In 2004 the company expanded its home decor reach by replacing the older Chambers brand with Williams-Sonoma Home, featuring high-end, classic home furnishings and lifestyle accessories. The brand was introduced via an 80-page catalog and website.

As the company's online presence grew, it launched HoldEverything.com in 2004. The website featured organizational products for the home and office that had been sold in stores and in catalogs since 1983. Unfortunately for fans of the brand, Williams-Sonoma management soon determined that the brand could not generate the revenue necessary to maintain its e-commerce and retail presence. Hold Everything stores were closed in 2005 and early 2006, and its catalog and website operations ceased in mid-2006. Home organization merchandise was integrated into the Willams-Sonoma Home stores, which first opened in 2005 in California, Indiana, and Ohio, and into the Williams-Sonoma Home website, which launched in 2006.

Meanwhile, the Pottery Barn brands continued to grow, while the original Williams-Sonoma kitchen and cookware brand, with more than 250 stores in North America, remained a strong performer. Revenues for 2005 and 2006 were an impressive $3.1 and $3.5 billion, with net income climbing to $191.2 and $214.9 million, respectively.

The first Pottery Barn Bed & Bath stores opened in 2006. That year Williams-Sonoma celebrated its 50th anniversary. To honor founder Chuck Williams and the first Williams-Sonoma store's famous green awning, two popular products of the day were brought back: the KitchenAid Artisan Mixer and Le Creuset Round Dutch Oven in the company's signature green. Additionally, Williams was honored as a Visionary of Design at House Beautiful's seventh annual Giants of Design awards presentation in New York City.

The year 2007 brought in another accolade for Williams and CEO/Chairman Lester when Inc. magazine honored them with Bernard A. Goldhirsh Lifetime Achievement Awards for their roles in furthering the values and virtues of U.S. entrepreneurship. The company, meanwhile, opened two new stores in Puerto Rico—one Pottery Barn, one West Elm—and a flagship Williams-Sonoma Home store in Midtown Manhattan. Revenues at the end of 2007 were a robust $3.9 billion, with net income of $195.8 million. Unfortunately, as the U.S. economy faltered during the next year, company figures for 2008 fell to $3.4 billion in sales, a 14.8 percent decline, with a sharp downturn in net income to only $30 million. The next year saw a decline of 7.7 percent in sales, to $3.1 billion, with net income of $77 million.

Despite these economic woes at the end of the decade, and a soft retail sector in general, Williams-Sonoma had become more about lifestyle than product, offering its growing clientele items for everyday or special occasions, with the added convenience of shopping in retail stores, by catalog, or online. By 2010 the company's sales had increased by nearly 13 percent, to $3.5 billion. Year-over-year percentage increases would continue well into the next decade, although the days of double-digit growth seemed to be in the past.

In 2010 Laura Alber was named CEO of Williams-Sonoma. She had joined Pottery Barn in 1995 as a senior buyer and was the director of the Pottery Barn catalog before becoming president of Pottery Barn in 2002. She initiated the creation of Pottery Barn Kids, based on her personal experience shopping for nursery furniture while pregnant with her first child in 1998, and was instrumental in launching Pottery Barn Bed & Bath and PBteen as well. Alber became president of Williams-Sonoma in 2006, overseeing the company's global supply chain and logistics and increasing the use of data analytics to anticipate, influence, and meet customer expectations.

Under Alber's leadership the company more closely integrated its information technology and e-commerce teams to enhance personalized marketing and shopping assistance to online, catalog, and in-store customers. In 2011 the company acquired Rejuvenation, a brand of history-inspired, made-to-order lighting and hardware, with manufacturing and distribution facilities in Portland, Oregon, and retail locations in the United States. In 2012 Williams-Sonoma launched Mark and Graham, an online brand focused on personalized gifts for the consumer and corporate market. The brand offered more than 100 monogram types and fonts to be applied to items ranging from leather goods and office accessories to jewelry and home decor accents.

Sales between 2011 and 2017 increased each year, with e-commerce accounting for more than 50 percent of revenues in 2015, 2016, and 2017. Charles Williams, founder of the original Williams-Sonoma store and catalog business, died in December 2015 at the age of 100. Although he had sold the company in 1978, he remained active in Williams-Sonoma well into his 90s, selecting merchandise and serving as writer and an editor of the company's popular cookbooks.

In November 2017 Williams-Sonoma acquired the technology startup Outward Inc., which specialized in high-quality three-dimensional printing and augmented reality for the home decor and furnishings industry. Outward's technology had been used since 2014 to help online customers see a piece of furniture in a 360-degree view and to envision each piece in multiple fabrics and finishes. Bringing the technology in-house was expected to lead to virtual reality shopping environments and other interactive applications to enhance the customer experience for all of the Williams-Sonoma brands.

The company's revenues reached $5.3 billion in fiscal 2017. In 2018 Alber spoke with CNBC's Jim Cramer about Williams-Sonoma's continuing success in a consumer economy increasingly challenged by online sellers such as Amazon.com . According to Elizabeth Gurdus, Alber noted that, although the company had been a pioneer in catalog and online shopping, the experiential, retail setting was an important part of the mix. She observed, “Even Amazon believes that they should have some real spaces.” Alber also discussed how the company uses multimedia channels to interact with customers, from the use of lifestyle blogger partnerships and YouTube how-to videos to the Recipe of the Day app that was launched in 2015. She revealed that recipes are among the “most clicked things on our site and they're out, of course, all over the internet.” Videos showing how to make popular dishes using Williams-Sonoma appliances, she explained, are “an example of bringing the brand to life and helping the customer with our products really celebrate.”

M. L. Cohen
Updated, Christina M. Stansell; Nelson Rhodes; Pamela Willwerth Aue

Williams-Sonoma Direct, Inc.; Williams-Sonoma DTC, Inc.; Williams-Sonoma Singapore Pte. Ltd.; Williams-Sonoma Stores, Inc.

Williams-Sonoma (Williams-Sonoma, Williams-Sonoma Home); Pottery Barn (Pottery Barn, PBteen; Pottery Barn Kids); West Elm; Rejuvenation; Mark and Graham.

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