May 31, 2006, 12:00 AM

Eclipsing the catalog

A strong multi-channel program helped Williams-Sonoma Inc. drive web sales to almost $800 million in 2005.

In its recently released annual report, Williams-Sonoma says about 60% of its annual e-commerce revenue, which totaled $766 million in 2005, up 36% from $561.2 billion in 2004, is driven by customers receiving catalogs. In the fourth quarter Williams-Sonoma posted web sales of $242.5 million vs. $178.7 million in the fourth quarter of 2004, an increase of 35.7%.

To drive sales in 2006, Williams-Sonoma plans to publish almost 400 million catalogs. “During 2005 we mailed over 385 million catalogs, significantly expanded our electronic direct marketing and continued to enhance the functionality of our e-commerce site,” Williams-Sonoma says. “E-commerce revenue, for the first time in our history, exceeded catalog revenue due to the successful multi-channel impact of these growth initiatives.”

In the third quarter, the company plans to launch Williams-Sonoma Home, a new e-commerce initiative aimed at the housewares and home furnishings market. Overall the web represented about 22% of Williams-Sonoma’s total sales of $3.5 billion in 2005 compared with 18% on sales of $3.1 billion in 2004.

While e-commerce is helping Williams-Somona to grow, the company also is consolidating its Hold Everything brand, which sells home décor, storage and home accessories products via a web site, stores and a catalog. Hold Everything was one of Williams-Sonoma’s oldest multi-channel brands but a relative newcomer to e-commerce.

The company mailed the first Hold Everything catalog in 1983 and opened the first store in 1985, but only launched in 2004. “We intend to begin transitioning Hold Everything`s merchandising strategies into our other brands while we wind down our current Hold Everything retail and direct-to-customer operations,” said Williams-Sonoma chairman Howard Lester. “We expect to cease all marketing under the Hold Everything brand name by the end of 2006.”

Williams-Sonoma took a pre-tax charge of $13.5 million in the fourth quarter to close and consolidate Hold Everything into its other operations, the company says.

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