In the company's quarterly conference call with financial analysts, Howard Lester, CEO, commented that for 2007, the company will focus on "strategic initiatives that can transform the financial performance of the company over the next few years." These include the revitalization of the Pottery Barn brand along with operational and cost-containment initiatives "to offset the impact of a difficult macro-economic environment in the home furnishings sector," Lester said.

He said that results for the fourth quarter and fiscal year ended Jan. 28 "were not where we expected them to be when we entered the year," but he indicated that the company did turn in a good enough performance that it demonstrated an "ability to aggressively react to a rapidly changing business climate" along with a commitment to optimizing profitability, "even in difficult times." Other than the changing conditions wrought by the housing-related changes in the economy, the company's chief challenge during the year was in the Pottery Barn brand, where "revitalizing its performance is our highest priority as we enter fiscal 2007," Lester said.

"How quickly can we react? Immediately," the Williams-Sonoma CEO said. But the execution will take some time, he added, explaining that the company is already testing several new merchandising, marketing and store execution strategies. These initiatives need to be proven, however, and the company is saddled with increased inventory levels that "will need to be worked through" before the chain can gain traction.