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

He said that results for the fourth quarter and fiscal yearended Jan. 28 "were not where we expected them to be when weentered the year," but he indicated that the company did turn in agood enough performance that it demonstrated an "ability toaggressively react to a rapidly changing business climate" alongwith a commitment to optimizing profitability, "even in difficulttimes." Other than the changing conditions wrought by thehousing-related changes in the economy, the company's chiefchallenge during the year was in the Pottery Barn brand, where"revitalizing its performance is our highest priority as we enterfiscal 2007," Lester said.

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