Pottery Barn kids around

Housewares and home decor cataloger/retailer Williams-Sonoma doesn’t break out sales of its five divisions: Pottery Barn, Gardener’s Eden, Chambers, Hold Everything, and the namesake catalog/retail chain. But sources within the San Francisco-based company and on Wall Street say the Pottery Barn has been the prize performer over the past several years. To leverage that success, in January, Williams-Sonoma tested Pottery Barn Kids, a spin-off of bedding, rugs, and other home furnishings for children.

Sales were so solid that a March mailing was postponed for a month because the new catalog was practically out of stock, says Patrick Wynhoff, director of Pottery Barn Kids. And Barbara Miller, a former retail analyst with B.T. Alex. Brown, says response was “three to five times the usual Pottery Barn catalog response-which means it was 6%-8%.”

Nearly 500,000 books mailed to “cream of the crop” Pottery Barn buyers who the company determined (through overlays) were parents of young children. The second book mailed in April to more than 1 million Williams-Sonoma customers, as well as to a small portion of prospects.

The spin-off had been discussed internally for several years, Wynhoff says, since the company felt that the market was underserved. “Then last year, we noticed that four of our staff were pregnant. That was really the catalyst.” The overall children’s market is growing now that the baby boomers are having children. The Juvenile Furniture Association reports that sales of children’s products increased 26% between 1993 and ’97, from $3.5 billion to $4.42 billion.

Turnover at the top The spin-off didn’t figure into the sales figures for the Williams-Sonoma fiscal year ended Jan. 31, but the company did just fine nonetheless. Total sales were $1.1 billion, up 18.3% from the previous year, while catalog sales jumped 15.7%, to $383.6 million.

All the same, when chief administrative officer/chief financial officer Dennis Chantland announced on March 17 that he would resign on July 1, investors panicked. Williams-Sonoma’s stock plunged 24% that day, to $29 a share.

Wall Street suspects “there’s more than meets the eye” to the resignation, says Brian Postol, retail analyst for St. Louis brokerage firm A.G. Edwards. “We’ve been hearing that [president/ CEO] Howard Lester’s health isn’t up to snuff and that the company is looking for someone to take over. But Chantland wasn’t offered the job.” That could be why Chantland resigned, Postol reasons, leaving investors nervous about the company’s future. Company sources would only confirm Chantland’s resignation.

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