FORM 10-Q

0001193125-11-244225.txt : 20110909 0001193125-11-244225.hdr.sgml : 20110909 20110909120538 ACCESSION NUMBER: 0001193125-11-244225 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 20110731 FILED AS OF DATE: 20110909 DATE AS OF CHANGE: 20110909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILLIAMS SONOMA INC CENTRAL INDEX KEY: 0000719955 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES [5700] IRS NUMBER: 942203880 STATE OF INCORPORATION: CA FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14077 FILM NUMBER: 111082679 BUSINESS ADDRESS: STREET 1: 3250 VAN NESS AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94109 BUSINESS PHONE: 415-421-7900 MAIL ADDRESS: STREET 1: 3250 VAN NESS AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94109 10-Q 1 d212431d10q.htm FORM 10-Q FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2011.

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-14077

WILLIAMS-SONOMA, INC.

(Exact name of registrant as specified in its charter)


Delaware		94-2203880
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3250 Van Ness Avenue, San Francisco, CA		94109
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code: (415) 421-7900

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ü No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ü No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ü		Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)		Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ü

As of August 28, 2011, 103,678,962 shares of the registrant’s Common Stock were outstanding.

WILLIAMS-SONOMA, INC.

REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JULY 31, 2011

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION


		PAGE

Item 1.	Financial Statements		2

	Condensed Consolidated Balance Sheets as of July 31, 2011, January 30, 2011 and August 1, 2010		2

	Condensed Consolidated Statements of Earnings for the Thirteen and Twenty-Six Weeks Ended July 31, 2011 and August 1, 2010		3

	Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended July 31, 2011 and August 1, 2010		4

	Notes to Condensed Consolidated Financial Statements		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		21

Item 4.	Controls and Procedures		22

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		22

Item 1A.	Risk Factors		22

Item 2.	Unregistered Sales of Equity Securities And Use of Proceeds		35

Item 6.	Exhibits		36

ITEM 1. FINANCIAL STATEMENTS

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


Dollars and shares in thousands, except per share amounts	July 31, 2011		January 30, 2011		August 1, 2010
ASSETS
Current assets
Cash and cash equivalents	$	424,634	$	628,403	$	404,037
Restricted cash		14,721		12,512		12,502
Accounts receivable, net		51,406		41,565		37,888
Merchandise inventories, net		556,628		513,381		518,623
Prepaid catalog expenses		41,663		36,825		41,798
Prepaid expenses		39,697		21,120		42,165
Deferred income taxes		85,690		85,612		92,241
Other assets		7,626		8,176		7,718
Total current assets		1,222,065		1,347,594		1,156,972
Property and equipment, net		735,129		730,556		771,635
Non-current deferred income taxes		32,381		32,646		52,129
Other assets, net		20,549		20,966		14,757
Total assets	$	2,010,124	$	2,131,762	$	1,995,493
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	196,843	$	227,963	$	184,135
Accrued salaries, benefits and other		78,488		122,440		83,188
Customer deposits		191,889		192,450		190,347
Income taxes payable		13,190		41,997		17,507
Current portion of long-term debt		1,542		1,542		1,714
Other liabilities		25,731		25,324		25,279
Total current liabilities		507,683		611,716		502,170
Deferred rent and lease incentives		195,691		202,135		221,086
Long-term debt		7,064		7,130		7,197
Other long-term obligations		49,499		51,918		58,383
Total liabilities		759,937		872,899		788,836
Commitments and contingencies
Shareholders’ equity
Preferred stock, $.01 par value, 7,500 shares authorized, none issued		0		0		0
Common stock, $.01 par value, 253,125 shares authorized, issued and outstanding: 103,992, 104,888 and 106,483 shares at July 31, 2011, January 30, 2011 and August 1, 2010, respectively		1,040		1,049		1,065
Additional paid-in capital		478,024		466,885		462,106
Retained earnings		755,672		777,939		732,290
Accumulated other comprehensive income		15,451		12,990		11,196
Total shareholders’ equity		1,250,187		1,258,863		1,206,657
Total liabilities and shareholders’ equity	$	2,010,124	$	2,131,762	$	1,995,493

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
Dollars and shares in thousands, except per share amounts	July 31, 2011		August 1, 2010		July 31, 2011		August 1, 2010
Net revenues	$	814,750	$	775,554	$	1,585,575	$	1,493,191
Cost of goods sold		506,029		488,827		980,971		935,906
Gross margin		308,721		286,727		604,604		557,285
Selling, general and administrative expenses		244,636		235,530		488,819		473,627
Interest expense, net		69		123		70		251
Earnings before income taxes		64,016		51,074		115,715		83,407
Income tax expense		24,707		20,315		44,791		33,110
Net earnings	$	39,309	$	30,759	$	70,924	$	50,297
Basic earnings per share	$	0.38	$	0.29	$	0.68	$	0.47
Diluted earnings per share	$	0.37	$	0.28	$	0.66	$	0.46
Shares used in calculation of earnings per share:
Basic		104,467		107,668		104,795		107,370
Diluted		106,766		110,224		107,071		109,895

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011			August 1, 2010
Cash flows from operating activities:
Net earnings	$	70,924		$	50,297
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		65,899			73,882
(Gain)/loss on sale/disposal of assets		646			(2,033	)
Impairment of assets		172			2,032
Amortization of deferred lease incentives		(13,999	)		(19,709	)
Deferred income taxes		(4,830	)		(6,327	)
Tax benefit from exercise of stock-based awards		5,865			8,011
Stock-based compensation expense		12,256			15,269
Changes in:
Accounts receivable		(9,048	)		6,345
Merchandise inventories		(42,669	)		(52,160	)
Prepaid catalog expenses		(4,839	)		(9,021	)
Prepaid expenses and other assets		(17,262	)		(17,952	)
Accounts payable		(42,240	)		(2,561	)
Accrued salaries, benefits and other current and long-term liabilities		(46,523	)		(18,710	)
Customer deposits		(846	)		(4,991	)
Deferred rent and lease incentives		7,648			(743	)
Income taxes payable		(28,885	)		(30,740	)
Net cash used in operating activities		(47,731	)		(9,111	)
Cash flows from investing activities:
Purchases of property and equipment		(62,525	)		(30,889	)
Restricted cash deposits		(2,209	)		(12,502	)
Proceeds from sale of assets		41			10,715
Other		(200	)		0
Net cash used in investing activities		(64,893	)		(32,676	)
Cash flows from financing activities:
Repayments of long-term obligations		(66	)		(1,348	)
Net proceeds from exercise of stock-based awards		7,412			9,573
Tax withholdings related to stock-based awards		(8,181	)		(11,024	)
Excess tax benefit from exercise of stock-based awards		4,821			5,992
Payment of dividends		(33,617	)		(27,023	)
Repurchase of common stock		(62,496	)		(44,306	)
Other		(20	)		0
Net cash used in financing activities		(92,147	)		(68,136	)
Effect of exchange rates on cash and cash equivalents		1,002			17
Net decrease in cash and cash equivalents		(203,769	)		(109,906	)
Cash and cash equivalents at beginning of period		628,403			513,943
Cash and cash equivalents at end of period	$	424,634		$	404,037

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Twenty-Six Weeks Ended July 31, 2011 and August 1, 2010

(Unaudited)

NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION

These financial statements include Williams-Sonoma, Inc. and its wholly owned subsidiaries (“we,” “us” or “our”). The condensed consolidated balance sheets as of July 31, 2011 and August 1, 2010, the condensed consolidated statements of earnings for the thirteen and twenty-six weeks then ended and the condensed consolidated statements of cash flows for the twenty-six weeks then ended have been prepared by us, without audit. In our opinion, the financial statements include all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and twenty-six weeks then ended. Significant intercompany transactions and accounts have been eliminated. The balance sheet as of January 30, 2011, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011.

The results of operations for the thirteen and twenty-six weeks ended July 31, 2011 are not necessarily indicative of the operating results of the full year.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011.

NOTE B. BORROWING ARRANGEMENTS

Credit Facility

We have a credit facility that provides for a $300,000,000 unsecured revolving line of credit that may be used for loans or letters of credit. Prior to March 23, 2015, we may, upon notice to the lenders, request an increase in the credit facility of up to $200,000,000, to provide for a total of $500,000,000 of unsecured revolving credit. The credit facility contains certain financial covenants, including a maximum leverage ratio (funded debt adjusted for lease and rent expense to earnings before interest, income tax, depreciation, amortization and rent expense “EBITDAR”), and covenants limiting our ability to dispose of assets, make acquisitions, be acquired (if a default would result from the acquisition), incur indebtedness, grant liens and make investments. The credit facility contains events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default will increase the applicable rate of interest by 2.0% and could result in the acceleration of our obligations under the credit facility and an obligation of any or all of our U.S. subsidiaries that have guaranteed the credit facility to pay the full amount of our obligations under the credit facility. As of July 31, 2011, we were in compliance with our financial covenants under the credit facility and, based on current projections, we expect to be in compliance throughout fiscal 2011. The credit facility matures on September 23, 2015, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized.

We may elect interest rates calculated at (i) Bank of America’s prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio. During the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010, we had no borrowings under the credit facility, and no amounts were outstanding as of July 31, 2011 or August 1, 2010. Additionally, as of July 31, 2011, $9,420,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. The standby letters of credit were issued to secure the liabilities associated with workers’ compensation and other insurance programs.

Letter of Credit Facilities

As of July 31, 2011, we had three unsecured letter of credit reimbursement facilities for a total of $90,000,000. On September 2, 2011, we renewed the three unsecured commercial letter of credit reimbursement facilities, each of which matures on August 31, 2012. The letter of credit facilities contain covenants and provide for events of default that are consistent with our unsecured revolving line of credit. Interest on unreimbursed amounts under the letter of credit facilities accrues at the lender’s prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0%. As of July 31, 2011, an aggregate of $30,184,000 was outstanding under the letter of credit facilities, which represent only a future commitment to fund inventory purchases to which we had not taken legal title. The latest expiration possible for any future letters of credit issued under the facilities is now January 28, 2013.

Long-Term Debt

As of July 31, 2011, we had $8,606,000 of long-term debt obligations, consisting primarily of the bond-related debt associated with one of our Memphis-based distribution facilities, which accrues interest based on a variable rate. As of July 31, 2011, the carrying value of our long-term debt approximates fair value.

NOTE C. STOCK-BASED COMPENSATION

Equity Award Programs

On May 25, 2011, our shareholders approved an amendment and restatement of our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) to, among other things, increase the shares issuable by 7,300,000 shares and extend the term to 2021. The Plan provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, “option awards”), restricted stock awards, restricted stock units, deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate of 25,759,903 shares. As of July 31, 2011, there were 9,112,108 shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee Board members of the company or any parent or subsidiary. Annual grants are limited to 1,000,000 shares covered by option awards and 400,000 shares covered by stock awards on a per person basis. All grants of option awards made under the Plan have a maximum term of seven years. Incentive stock options that may be issued to 10% shareholders, however, have a maximum term of five years. The exercise price of these option awards is not less than 100% of the closing price of our stock on the day prior to the grant date or not less than 110% of such closing price for an incentive stock option granted to a 10% shareholder. Option awards granted to employees generally vest over a period of four to five years. Stock awards granted to employees generally vest over a period of three to five years for service based awards. Certain option awards, stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a similar corporate event. Option and stock awards granted to non-employee Board members generally vest in one year. Non-employee Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of shareholders (so long as they continue to serve as a non-employee Board member). Shares issued as a result of award exercises will be funded with the issuance of new shares.

Stock-Based Compensation Expense

We measure and record stock-based compensation expense in our consolidated financial statements for all employee stock-based awards using a fair value method. During the thirteen and twenty-six weeks ended July 31, 2011, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses, of $7,029,000 and $12,256,000, respectively. During the thirteen and twenty-six weeks ended August 1, 2010, we recognized total stock-based compensation expense of $6,513,000 and $15,269,000, respectively (including stock-based compensation expense of approximately $815,000 and $4,042,000, respectively, associated with the retirement of our former Chairman and Chief Executive Officer).

Stock Options

The following table summarizes our stock option activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		1,367,629
Granted		0
Exercised		(336,158	)
Canceled		(700	)
Balance at July 31, 2011 (100% vested)		1,030,771

Stock-Settled Stock Appreciation Rights

The following table summarizes our stock-settled stock appreciation right activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		3,429,200
Granted		1,387,460
Converted		(372,365	)
Canceled		(155,705	)
Balance at July 31, 2011		4,288,590
Vested at July 31, 2011		1,004,079
Vested plus expected to vest at July 31, 2011		3,780,800

Restricted Stock Units

The following table summarizes our restricted stock unit activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		2,050,898
Granted		589,933
Released		(266,096	)
Canceled		(81,741	)
Balance at July 31, 2011		2,292,994
Vested plus expected to vest at July 31, 2011		1,904,731

NOTE D. COMPREHENSIVE INCOME

Comprehensive income for the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010 was as follows:


	Thirteen Weeks Ended					Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		August 1, 2010			July 31, 2011		August 1, 2010
Net earnings	$	39,309	$	30,759		$	70,924	$	50,297
Other comprehensive income
Foreign currency translation adjustment		73		(885	)		2,460		807
Comprehensive income	$	39,382	$	29,874		$	73,384	$	51,104

NOTE E. EARNINGS PER SHARE

Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of our common stock for the period, to the extent their inclusion would be dilutive.

The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:


Dollars and amounts in thousands, except per share amounts	Net Earnings		Weighted Average Shares		Earnings Per Share
Thirteen weeks ended July 31, 2011
Basic	$	39,309		104,467	$	0.38
Effect of dilutive stock-based awards				2,299
Diluted	$	39,309		106,766	$	0.37
Thirteen weeks ended August 1, 2010
Basic	$	30,759		107,668	$	0.29
Effect of dilutive stock-based awards				2,556
Diluted	$	30,759		110,224	$	0.28
Twenty-six weeks ended July 31, 2011
Basic	$	70,924		104,795	$	0.68
Effect of dilutive stock-based awards				2,276
Diluted	$	70,924		107,071	$	0.66
Twenty-six weeks ended August 1, 2010
Basic	$	50,297		107,370	$	0.47
Effect of dilutive stock-based awards				2,525
Diluted	$	50,297		109,895	$	0.46

Stock-based awards of 1,530,000 and 1,995,000 for the thirteen weeks ended and 1,697,000 and 2,008,000 for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, were not included in the computation of diluted earnings per share, as their inclusion would be anti-dilutive.

NOTE F. ASSET IMPAIRMENT AND LEASE TERMINATION CHARGES

We review the carrying value of all long-lived assets for impairment, primarily at a store level, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We review for impairment all stores for which current or projected cash flows from operations are not sufficient to recover the carrying value of the assets. Impairment results when the carrying value of the assets exceeds the estimated undiscounted future cash flows over the remaining life of the lease. Our estimate of undiscounted future cash flows over the store lease term (generally 5 to 22 years) is based upon our experience, historical operations of the stores and estimates of future store profitability and economic conditions. The future estimates of store profitability and economic conditions require estimating such factors as sales growth, gross margin, employment rates, lease escalations, inflation on operating expenses and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the net carrying value and the asset’s fair value. Long-lived assets are measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. The fair value is estimated based upon future cash flows (discounted at a rate that is commensurate with the risk and approximates our weighted average cost of capital).

For any store or facility closure where a lease obligation still exists, we record the estimated future liability associated with the rental obligation on the cease use date.

During the thirteen and twenty-six weeks ended July 31, 2011, we recorded expense of approximately $787,000 (of which $518,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold) and $2,309,000 (of which $2,040,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold), respectively, associated with asset impairment and early lease termination charges for underperforming retail stores.

During the thirteen and twenty-six weeks ended August 1, 2010, we recorded expense of approximately $4,280,000 (of which $4,110,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold) and $10,317,000 (of which $9,689,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold), respectively, associated with asset impairment and early lease termination charges for underperforming retail stores. We also recorded a net benefit in selling, general and administrative expenses of $403,000 during the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity.

NOTE G. SEGMENT REPORTING

We have two reportable segments, direct-to-customer and retail. The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home) and sells our products through our six e-commerce websites (williams-sonoma.com, potterybarn.com, potterybarnkids.com, pbteen.com, westelm.com and wshome.com) and six direct mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen and West Elm). The retail segment has four merchandising concepts which sell products for the home (Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm). The four retail merchandising concepts are operating segments, which have been aggregated into one reportable segment, retail. Management’s expectation is that the overall economic characteristics of each of our major concepts within each reportable segment will be similar over time based on management’s judgment that the operating segments have had similar historical economic characteristics and are expected to have similar long-term financial performance in the future.

These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management’s best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group.

We use earnings before unallocated corporate overhead, interest and taxes to evaluate segment profitability. Unallocated costs before income taxes include corporate employee-related costs, occupancy expenses (including depreciation expense), administrative costs and third party service costs, primarily in our corporate systems, corporate facilities and other administrative departments. Unallocated assets include the net book value of corporate facilities and related information systems, deferred income taxes, other corporate long-lived assets and corporate cash and cash equivalents.

Income tax information by segment has not been included as taxes are calculated at a company-wide level and are not allocated to each segment.

Segment Information


Dollars in thousands	Direct-to- Customer		Retail		Unallocated			Total
Thirteen weeks ended July 31, 2011
Net revenues¹	$	368,041	$	446,709	$	0		$	814,750
Depreciation and amortization expense		4,951		19,791		8,279			33,021
Earnings (loss) before income taxes²		83,348		38,275		(57,607	)		64,016
Capital expenditures		8,873		13,860		17,556			40,289
Thirteen weeks ended August 1, 2010
Net revenues¹	$	325,678	$	449,876	$	0		$	775,554
Depreciation and amortization expense		5,313		21,870		7,697			34,880
Earnings (loss) before income taxes^2,3,4		68,344		34,446		(51,716	)		51,074
Capital expenditures		3,065		5,718		4,675			13,458
Twenty-six weeks ended July 31, 2011
Net revenues¹	$	712,162	$	873,413	$	0		$	1,585,575
Depreciation and amortization expense		10,063		39,401		16,435			65,899
Earnings (loss) before income taxes²		158,262		68,754		(111,301	)		115,715
Assets⁵		315,176		882,388		812,560			2,010,124
Capital expenditures		13,227		20,723		28,575			62,525
Twenty-six weeks ended August 1, 2010
Net revenues¹	$	631,535	$	861,656	$	0		$	1,493,191
Depreciation and amortization expense		10,697		47,942		15,243			73,882
Earnings (loss) before income taxes^2,3,4		136,955		57,026		(110,574	)		83,407
Assets⁵		282,213		896,831		816,449			1,995,493
Capital expenditures		6,821		13,652		10,416			30,889

Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.

Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores.

³	Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer.

⁴	Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity.

⁵	Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.

NOTE H. MEMPHIS-BASED DISTRIBUTION FACILITY

Our Memphis-based distribution facilities include an operating lease entered into in July 1983 for a distribution facility in Memphis, Tennessee. The lessor is a general partnership (“Partnership 1”) comprised of the estate of W. Howard Lester (“Mr. Lester”), our former Chairman of the Board of Directors and Chief Executive Officer, and the estate of James A. McMahan, a former Director Emeritus and significant shareholder. Partnership 1 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The terms of the lease automatically renewed until the bonds were fully repaid in December 2010. We are currently operating the distribution center on a month-to-month lease.

Our other Memphis-based distribution facility includes an operating lease entered into in August 1990 for another distribution facility that is adjoined to the Partnership 1 facility in Memphis, Tennessee. The lessor is a general partnership (“Partnership 2”) comprised of the estate of Mr. Lester, the estate of James A. McMahan and two unrelated parties. Partnership 2 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The term of the lease automatically renews on an annual basis until these bonds are fully repaid in August 2015.

Prior to December 2010, the two partnerships described above qualified as variable interest entities and were consolidated by us due to their related party relationship and our obligation to renew the leases until the bonds were fully repaid. As of December 2010, however, the bonds on the distribution center leased from Partnership 1 were fully repaid and, accordingly, this facility is no longer consolidated by us. As such, as of July 31, 2011, our consolidated balance sheet includes $12,195,000 in assets (primarily buildings), $8,338,000 in debt and $3,857,000 in other long-term liabilities related solely to the consolidation of the Partnership 2 distribution facility.

NOTE I. RELATED PARTY TRANSACTION

On May 16, 2008, we entered into an Aircraft Lease Agreement (the “Lease Agreement”) with a limited liability company (the “LLC”) owned by Mr. Lester for use of a Bombardier Global 5000 aircraft owned by the LLC. Under the terms of the Lease Agreement, in exchange for use of the aircraft, we were required to pay the LLC $375,000 for each of the 36 months of the lease term through May 2011. We were also responsible for all use-related costs associated with the aircraft, including fixed costs such as crew salaries and benefits, insurance and hangar costs, and all direct operating costs.

In conjunction with a retirement and consulting agreement entered into between us and Mr. Lester on January 25, 2010, Mr. Lester agreed to give us an option to purchase this aircraft at the end of the lease term for its then estimated fair value of $32,000,000. On January 3, 2011, we provided the LLC with notice under the agreement of our intent to exercise our option to purchase the aircraft at the end of the lease term. Immediately prior to the end of the lease term, we assigned our rights to purchase the aircraft to Wells Fargo Equipment Finance, Inc. (“Wells Fargo”). We then entered into a Master Lease Agreement (the “Master Lease”) with Wells Fargo to lease the aircraft. The Master Lease commenced on May 16, 2011, has a term of 10 years and is classified as an operating lease.

NOTE J. COMMITMENTS AND CONTINGENCIES

We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, are increasing in number as our business expands and our company grows larger. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our consolidated financial statements taken as a whole.

NOTE K. STOCK REPURCHASE PROGRAM

In January 2011, our Board of Directors authorized a stock repurchase program to purchase up to $125,000,000 of our common stock through open market and privately negotiated transactions, at times and in such amounts as management deems appropriate. During the thirteen weeks ended July 31, 2011, we repurchased 806,282 shares under this program at a weighted average cost of $38.75 per share and a total cost of approximately $31,246,000. During the twenty-six weeks ended July 31, 2011, we repurchased 1,566,508 shares under this program at a weighted average cost of $39.90 per share and a total cost of approximately $62,496,000. There remains an aggregate of approximately $62,504,000 available for repurchases under this stock repurchase program.

The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions. This stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or are proven incorrect, could cause our business and results of operations to differ materially from those expressed or implied by such forward-looking statements. Such forward-looking statements include statements related to: our expectations regarding the overall economic characteristics of each of our major concepts within each reportable segment; our beliefs regarding the resolution of current lawsuits, claims and proceedings; the expansion of our international business, including expectations regarding the opening of additional franchised locations; our expectations regarding our international e-commerce sites; our expectations regarding demand for our products; our plans to gain market share and improve profitability; our plans to leverage our multi-channel business model and grow our direct-to-customer business; our planned investment in the next phase of growth for e-commerce; our plans to explore new geographies for global expansion and find white space in the marketplace; our plans and strategies for attracting new customers to our brands; our plans to implement new efficiencies in our worldwide supply chain; our plans to drive increased traffic and higher sales per square foot in our retail stores; our plans to expand e-commerce; our expectations regarding our cash flow; our ability to return excess capital to shareholders; our plans to use our cash resources to fund our inventory and inventory-related purchases, advertising and marketing initiatives, purchases of property and equipment, stock repurchases and dividend payments; our projected earnings, revenues and sales; our stock repurchase program; the future payment of dividends; our expected effective tax rate and the variability in our quarterly tax rates; our plans for using our cash resources; our compliance with our bank covenants; our belief that our cash on-hand, in addition to our available credit facilities, will provide adequate liquidity for our business operations over the next 12 months; our planned investments and purchases; our planned investments for the purchase of property and equipment; our estimates and assumptions in preparing our condensed consolidated financial statements; our beliefs regarding seasonal patterns associated with the retail and direct-to-customer industries; our plans to enter into foreign currency contracts; the fluctuation of comparable store sales; and the implementation of certain new processes that may subject us to additional regulations and laws, as well as statements of belief and statements of assumptions underlying any of the foregoing. You can identify these and other forward-looking statements by the use of words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "continue," or the negative of such terms, or other comparable terminology.

The risks, uncertainties and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include those discussed under the heading “Risk Factors” in this document and the risks, uncertainties and assumptions discussed from time to time in our other public filings and public announcements. All forward-looking statements included in this document are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

OVERVIEW

We are a specialty retailer of products for the home. The direct-to-customer segment of our business sells our products through our six e-commerce websites (williams-sonoma.com, potterybarn.com, potterybarnkids.com, pbteen.com, westelm.com and wshome.com) and six direct-mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen and West Elm). The retail segment of our business sells similar products through our four retail store concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm). Based on their contribution to our net revenues, the core brands in both the direct-to-customer and retail channels are: Pottery Barn, which sells casual home furnishings; Williams-Sonoma, which sells cooking and entertaining essentials; and Pottery Barn Kids, which sells stylish children’s furnishings.

The following discussion and analysis of financial condition, results of operations, and liquidity and capital resources for the thirteen weeks ended July 31, 2011 (“second quarter of fiscal 2011”), as compared to the thirteen weeks ended August 1, 2010 (“second quarter of fiscal 2010”) and the twenty-six weeks ended July 31, 2011 (“year-to-date 2011”), as compared to the twenty-six weeks ended August 1, 2010 (“year-to-date 2010”), should be read in conjunction with our condensed consolidated financial statements and the notes thereto. All explanations of changes in operational results are discussed in order of their magnitude.

Second Quarter of Fiscal 2011 Financial Results

The second quarter was another strong quarter. Net revenues increased 5.1% to $814,750,000 and diluted earnings per share increased 32.1% to $0.37 per share. Comparable brand revenues increased 6.5% as innovative merchandising, targeted marketing and a quality customer experience continued to attract customers to our brands.

Direct-to-customer net revenues in the second quarter of fiscal 2011 increased $42,363,000, or 13.0%, compared to the second quarter of fiscal 2010. This increase was driven by growth across all brands. In e-commerce, net revenues increased 18.4% to $316,715,000 in the second quarter of fiscal 2011, compared to $267,470,000 in the second quarter of fiscal 2010, and now represent 86.1% of direct-to-customer net revenues as compared to 82.1% in the second quarter of fiscal 2010.

Retail net revenues in the second quarter of fiscal 2011 decreased $3,167,000, or 0.7%, compared to the second quarter of fiscal 2010. This decrease was primarily driven by a 4.6% decline in retail leased square footage, including the closure of our Williams-Sonoma Home stores at the end of fiscal 2010. This decrease was partially offset by net revenue growth in the West Elm brand and international franchise operations, as well as comparable store sales growth of 1.4%.

In our core brands, comparable brand revenues increased 3.5%. Pottery Barn Kids saw the greatest increase, followed by Pottery Barn and Williams-Sonoma. In Pottery Barn Kids, comparable brand revenues increased 8.0% with particular strength in e-commerce. This increase was driven by strong growth across all key categories. In Pottery Barn, comparable brand revenues increased 3.6%. An innovative merchandise assortment, a strong value proposition and a strategic promotional calendar in our top performing categories drove these results. In Williams-Sonoma, planned traffic-generating promotions helped drive a comparable brand revenue increase of 0.7%.

In our emerging brands, West Elm and PBteen, comparable brand revenues increased 25.3%. In West Elm, comparable brand revenues increased 28.6%, resulting from new product introductions, an enhanced value proposition and new targeted multi-channel marketing strategies in our key merchandising categories. In PBteen, comparable brand revenues increased 20.4%. Planned promotions, expanded assortments, and successful e-marketing initiatives drove growth across all key categories.

Second Quarter of Fiscal 2011 Operational Results

Throughout the second quarter of fiscal 2011, we continued to invest in our key growth initiatives, including increasing our penetration in e-commerce, expanding the reach of the West Elm brand, and extending our international presence.

In e-commerce, net revenues increased 18.4% to 38.9% of total company revenues. Several key initiatives drove these strong results, including the ongoing optimization of natural search, increased paid search, and improved relevance of event-triggered marketing.

In international, we completed the launch of our new international shipping websites across all brands, which now allow us to ship from the U.S. to customers in over 75 countries around the world. We also continued to aggressively explore profitable opportunities for retail expansion in other regions of the world, as our eight

franchised stores in Dubai, Kuwait, and Saudi Arabia continue to introduce new customers to our brands. In the back half of the year, we expect to add five additional franchised locations in Saudi Arabia, including two Pottery Barn and three Pottery Barn Kids stores.

In our supply chain, we are continuing to see ongoing customer service and cost reduction benefits from our distribution, transportation, and packaging initiatives. These initiatives include: optimizing our inbound and outbound packaging costs; further in-sourcing our home furniture delivery operations; and expanding our company-managed Asian sourcing operations. We also significantly expanded our North Carolina upholstered furniture operations into a new facility as the demand for our exclusive assortments continues to grow.

Fiscal 2011

For the remainder of fiscal 2011, our focus remains on gaining market share and further improving profitability.

To achieve this, we will continue to leverage our multi-channel business model and grow our direct-to-customer business as a percentage of our mix. At the same time, we will invest in the next phase of growth for e-commerce, explore new geographies for global expansion and find white space in the marketplace that a new brand or small acquisition could fill.

To gain market share, we will continue to attract new customers to our brands through: creative, innovative and relevant product offerings, including exclusive e-commerce assortments; increased investment in e-commerce; highly targeted multi-channel marketing, including the expansion of our in-store clienteling services; and the expansion of our brands into new categories.

To further improve profitability in fiscal 2011, we plan to implement new efficiencies in our worldwide supply chain; drive increased traffic and higher sales per square foot in our retail stores by reinventing the customer experience; and continue to expand e-commerce.

Results of Operations

NET REVENUES

Net revenues consist of direct-to-customer revenues and retail revenues. Direct-to-customer revenues include sales of merchandise to customers through our e-commerce websites and our catalogs, as well as shipping fees. Retail revenues include sales of merchandise to customers at our retail stores, as well as shipping fees on any retail products shipped to our customers’ homes. Shipping fees consist of revenue received from customers for delivery of merchandise to their homes. Revenues are presented net of sales returns and other discounts.

The following table summarizes our net revenues for the second quarter of fiscal 2011 and fiscal 2010, and year-to-date 2011 and 2010:


	Thirteen Weeks Ended								Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		% Total		August 1, 2010		% Total		July 31, 2011		% Total		August 1, 2010		% Total
Direct-to-customer net revenues	$	368,041		45.2%	$	325,678		42.0%	$	712,162		44.9%	$	631,535		42.3%
Retail net revenues		446,709		54.8%		449,876		58.0%		873,413		55.1%		861,656		57.7%
Net revenues	$	814,750		100.0%	$	775,554		100.0%	$	1,585,575		100.0%	$	1,493,191		100.0%

Net revenues in the second quarter of fiscal 2011 increased by $39,196,000, or 5.1%, compared to the second quarter of fiscal 2010. This increase was driven by growth in the West Elm, Pottery Barn Kids, PBteen and Pottery Barn brands. Comparable brand revenue increased 6.5% in the second quarter of fiscal 2011, including growth of 18.4% in our e-commerce net revenues (primarily driven by increased Internet advertising) and a 1.4%

increase in our comparable store sales. This increase was partially offset by a 4.6% year-over-year reduction in retail leased square footage, including 23 net fewer stores.

Net revenues for year-to date 2011 increased by $92,384,000, or 6.2%, compared to year-to-date 2010. This increase was driven by growth in the West Elm, Pottery Barn and Pottery Barn Kids brands. Comparable brand revenue increased 7.7% for year-to-date 2011, including growth of 19.5% in our e-commerce net revenues (primarily driven by increased Internet advertising) and a 4.0% increase in our comparable store sales. This increase was partially offset by a 4.6% year-over-year reduction in retail leased square footage, including 23 net fewer stores.

Comparable Brand Revenue Growth

Comparable brand revenue includes retail comparable store sales and direct-to-customer sales, as well as shipping fees, sales returns and other discounts associated with current period sales. Outlet comparable store net revenues are also included in their respective brands. Sales related to our international franchisee stores have been excluded as these stores are not operated by us.

Comparable stores are defined as permanent stores in which gross square footage did not change by more than 20% in the previous 12 months and which have been open for at least 12 consecutive months without closure for seven or more consecutive days.

Percentages represent growth in comparable brand revenue compared to the same period in the prior year.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended
Comparable brand revenue growth	July 31, 2011		August 1, 2010		July 31, 2011		August 1, 2010
Pottery Barn		3.6%		19.1%		5.7%		21.2%
Williams-Sonoma		0.7%		6.6%		1.8%		6.8%
Pottery Barn Kids		8.0%		24.9%		9.5%		24.6%
West Elm		28.6%		19.0%		29.8%		14.7%
PBteen		20.4%		22.0%		14.3%		21.8%
Total		6.5%		16.5%		7.7%		17.3%

DIRECT-TO-CUSTOMER NET REVENUES


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011			August 1, 2010			July 31, 2011			August 1, 2010
Direct-to-customer net revenues	$	368,041		$	325,678		$	712,162		$	631,535
Direct-to-customer net revenue growth		13.0%			19.8%			12.8%			20.0%
E-commerce revenue growth		18.4%			27.6%			19.5%			25.7%
E-commerce revenues as a percent of direct-to-customer net revenues		86.1%			82.1%			85.2%			80.4%
Percent increase (decrease) in number of catalogs circulated		(1.2%	)		1.2%			(1.5%	)		(0.9%	)
Percent decrease in number of pages circulated		(3.7%	)		(0.9%	)		(1.2%	)		(2.5%	)

Direct-to-customer net revenues for year-to-date 2011 increased $80,627,000, or 12.8%, compared to year-to-date 2010 driven by growth in the Pottery Barn, Pottery Barn Kids and West Elm brands. E-commerce net revenues for year-to-date 2011 increased 19.5% to $606,523,000 versus $507,459,000 for year-to-date 2010.

RETAIL NET REVENUES AND OTHER DATA


	Thirteen Weeks Ended						Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011			August 1, 2010			July 31, 2011			August 1, 2010
Retail net revenues	$	446,709		$	449,876		$	873,413		$	861,656
Retail net revenue growth (decline)		(0.7%	)		12.4%			1.4%			13.7%
Comparable store sales growth		1.4%			13.6%			4.0%			15.2%
Number of stores - beginning of period		589			610			592			610
Number of new stores		3			-			3			3
Number of new stores due to remodeling¹		3			1			8			5
Number of closed stores due to remodeling¹		(4	)		(1	)		(7	)		(3	)
Number of permanently closed stores		(5	)		(1	)		(10	)		(6	)
Number of stores - end of period		586			609			586			609
Store selling square footage at period-end		3,558,000			3,742,000			3,558,000			3,742,000
Store leased square footage (“LSF”) at period-end		5,767,000			6,047,000			5,767,000			6,047,000

¹	Remodeled stores are defined as those stores temporarily closed and subsequently reopened during the period due to square footage expansion, store modification or relocation.


	Store Count											Avg. LSF Per Store
	May 1, 2011		Openings		Closings			July 31, 2011		August 1, 2010		July 31, 2011¹		August 1, 2010
Williams-Sonoma		268		1		(1	)		268		260		6,500		6,300
Pottery Barn		201		4		(5	)		200		197		13,700		13,000
Pottery Barn Kids		85		1		(3	)		83		85		8,200		8,100
West Elm²		35		-		-			35		37		17,200		17,000
Williams-Sonoma Home		-		-		-			-		11		-		13,200
Outlets¹		-		-		-			-		19		-		19,100
Total		589		6		(9	)		586		609		9,800		9,900

¹	Beginning in fiscal 2011, Outlet stores and their leased square footage have been reclassified into their respective brands.

²	Short-term “pop-up” stores, whose lease terms are typically less than one year, are not included in the totals above as they are not considered permanent stores.

Retail net revenues for year-to-date 2011 increased $11,757,000, or 1.4%, compared to year-to-date 2010. This increase was primarily driven by growth in the West Elm brand, comparable store sales growth of 4.0% and international franchise operations, partially offset by a 4.6% decrease in retail leased square footage, including the closure of our Williams-Sonoma Home stores at the end of fiscal 2010.

COST OF GOODS SOLD


	Thirteen Weeks Ended								Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		% Net Revenues		August 1, 2010		% Net Revenues		July 31, 2011		% Net Revenues		August 1, 2010		% Net Revenues
Cost of goods sold¹	$	506,029		62.1%	$	488,827		63.0%	$	980,971		61.9%	$	935,906		62.7%

¹	Includes total occupancy expenses of $123,193,000 and $124,947,000 for the second quarter of fiscal 2011 and fiscal 2010, respectively, and $247,829,000 and $250,087,000 for year-to-date 2011 and year-to-date 2010, respectively.

Cost of goods sold includes cost of goods, occupancy expenses and shipping costs. Cost of goods consists of cost of merchandise, inbound freight expenses, freight-to-store expenses and other inventory related costs such as shrinkage, damages and replacements. Occupancy expenses consist of rent, depreciation and other occupancy costs, including common area maintenance and utilities. Shipping costs consist of third party delivery services and shipping materials.

Our classification of expenses in cost of goods sold may not be comparable to other public companies, as we do not include non-occupancy related costs associated with our distribution network in cost of goods sold. These costs, which include distribution network employment, third party warehouse management and other distribution-related administrative expenses, are recorded in selling, general and administrative expenses.

Within our reportable segments, the direct-to-customer channel does not incur freight-to-store or store occupancy expenses, and typically operates with lower markdowns and inventory shrinkage than the retail channel. However, the direct-to-customer channel incurs higher customer shipping, damage and replacement costs than the retail channel.

Second Quarter of Fiscal 2011 vs. Second Quarter of Fiscal 2010

Cost of goods sold increased by $17,202,000, or 3.5%, in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. Cost of goods sold as a percentage of net revenues decreased to 62.1% in the second quarter of fiscal 2011 from 63.0% in the second quarter of fiscal 2010. This decrease was primarily driven by the leverage of fixed occupancy expenses due to increasing net revenues, a decrease in occupancy expense dollars and higher selling margins, partially offset by the cost of goods sold impact of international franchise operations.

In the direct-to-customer channel, cost of goods sold as a percentage of net revenues decreased 10 basis points in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. This decrease as a percentage of net revenues was primarily driven by the leverage of fixed occupancy expenses due to increasing net revenues and ongoing benefits from supply chain, partially offset by higher promotional activity compared to last year.

In the retail channel, cost of goods sold as a percentage of net revenues decreased 60 basis points in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. This decrease as a percentage of net revenues was primarily driven by a decrease in occupancy expense dollars and higher selling margins, partially offset by the cost of goods sold impact of international franchise operations.

Year-to-Date 2011 vs. Year-to-Date 2010

Cost of goods sold for year-to-date 2011 increased by $45,065,000, or 4.8%, compared to year-to-date 2010. Cost of goods sold as a percentage of net revenues decreased to 61.9% for year-to-date 2011 from 62.7% for year-to-date 2010. This decrease was primarily driven by the leverage of fixed occupancy expenses due to increasing net revenues and a decrease in occupancy expense dollars, partially offset by higher promotional activity, including shipping fees, compared to last year, and the cost of goods sold impact of international franchise operations.

In the direct-to-customer channel, cost of goods sold as a percentage of net revenues increased 20 basis points for year-to-date 2011 compared to year-to-date 2010. This increase as a percentage of net revenues was primarily driven by higher promotional activity, including shipping fees, compared to last year, partially offset by the leverage of fixed occupancy expenses due to increasing net revenues and ongoing benefits from supply chain.

In the retail channel, cost of goods sold as a percentage of net revenues decreased 80 basis points for year-to-date 2011 compared to year-to-date 2010. This decrease as a percentage of net revenues was primarily driven by a decrease in occupancy expense dollars, the leverage of fixed occupancy expenses due to increasing net revenues and higher selling margins, partially offset by the cost of goods sold impact of international franchise operations.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


	Thirteen Weeks Ended								Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		% Net Revenues		August 1, 2010		% Net Revenues		July 31, 2011		% Net Revenues		August 1, 2010		% Net Revenues
Selling, general and administrative expenses	$	244,636		30.0%	$	235,530		30.4%	$	488,819		30.8%	$	473,627		31.7%

Selling, general and administrative expenses consist of non-occupancy related costs associated with our retail stores, distribution warehouses, customer care centers, supply chain operations (buying, receiving and inspection), and corporate administrative functions. These costs include employment, advertising, third party credit card processing and other general expenses.

We experience differing employment and advertising costs as a percentage of net revenues within the retail and direct-to-customer channels due to their distinct distribution and marketing strategies. Store employment costs represent a greater percentage of retail net revenues than employment costs as a percentage of net revenues within the direct-to-customer channel. However, advertising expenses are higher within the direct-to-customer channel than in the retail channel.

Second Quarter of Fiscal 2011 vs. Second Quarter of Fiscal 2010

Selling, general and administrative expenses increased by $9,106,000, or 3.9%, in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. Including expense of approximately $518,000 from early lease termination charges for underperforming retail stores, selling, general and administrative expenses as a percentage of net revenues decreased to 30.0% in the second quarter of fiscal 2011 from 30.4% in the second quarter of fiscal 2010 (which included $4,110,000 from asset impairment and early lease termination charges for underperforming retail stores and $972,000 associated with the retirement of our former Chairman and Chief Executive Officer). This decrease as a percentage of net revenues was primarily driven by a reduction in year-over-year asset impairment and early lease termination charges for underperforming retail stores, a decrease in advertising costs, leverage from international franchise operations, and fiscal 2010 expenses associated with the retirement of our former Chairman and Chief Executive Officer that did not recur in fiscal 2011. This decrease was partially offset by higher employment expenses, reflective of our planned incremental investment to support our e-commerce, international and business development growth strategies, as well as a gain on the sale of assets in the second quarter of 2010 that did not recur in the second quarter of 2011.

In the direct-to-customer channel, selling, general and administrative expenses as a percentage of net revenues decreased 150 basis points in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. This decrease was primarily driven by increased productivity on our advertising spend, partially offset by higher employment expenses.

In the retail channel, selling, general and administrative expenses as a percentage of net revenues decreased 30 basis points in the second quarter of fiscal 2011 compared to the second quarter of fiscal 2010. This decrease was

primarily driven by a reduction in asset impairment and early lease termination charges for underperforming retail stores and leverage from international franchise operations, partially offset by higher employment expenses.

Year-to-Date 2011 vs. Year-to-Date 2010

Selling, general and administrative expenses for year-to-date 2011 increased by $15,192,000, or 3.2%, compared to year-to-date 2010. Including expense of approximately $2,040,000 from early lease termination charges for underperforming retail stores, selling, general and administrative expenses as a percentage of net revenues decreased to 30.8% for year-to-date 2011 from 31.7% for year-to-date 2010 (which included $9,689,000 from asset impairment and early lease termination charges for underperforming retail stores and $4,319,000 associated with the retirement of our former Chairman and Chief Executive Officer). This decrease as a percentage of net revenues was primarily driven by a reduction in year-over-year asset impairment and early lease termination charges for underperforming retail stores, lower incentive compensation costs, fiscal 2010 expenses associated with the retirement of our former Chairman and Chief Executive Officer that did not recur in fiscal 2011 and leverage from international franchise operations. This decrease was partially offset by higher employment expenses, reflective of our planned incremental investment to support our e-commerce, international and business development growth strategies, as well as a gain on the sale of assets in the second quarter of 2010 that did not recur in the second quarter of 2011.

In the direct-to-customer channel, selling, general and administrative expenses as a percentage of net revenues decreased 70 basis points for year-to-date 2011 compared to year-to-date 2010. This decrease was primarily driven by increased productivity on our advertising spend, partially offset by higher employment expenses.

In the retail channel, selling, general and administrative expenses as a percentage of net revenues decreased 50 basis points for year-to-date 2011 compared to year-to-date 2010. This decrease was primarily driven by a reduction in asset impairment and early lease termination charges for underperforming retail stores and leverage from international franchise operations, partially offset by higher employment expenses.

INCOME TAXES

The effective rate was 38.7% for year-to-date 2011 and 39.7% for year-to-date 2010.

We expect the effective tax rate to be in the range of 37% to 39% in fiscal 2011. Throughout the year, we expect that there could be ongoing variability in our quarterly tax rates due to volatility in earnings in addition to taxable events that occur and tax exposures that are re-evaluated.

LIQUIDITY AND CAPITAL RESOURCES

As of July 31, 2011, we held $424,634,000 in cash and cash equivalent funds, the majority of which are held in money market funds and highly liquid U.S. Treasury bills. As is consistent within our industry, our cash balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of cash than other periods.

Throughout the fiscal year, we utilize our cash balances to build our inventory levels in preparation for our fourth quarter holiday sales. In fiscal 2011, we plan to use our cash resources to fund our inventory and inventory-related purchases, advertising and marketing initiatives, purchases of property and equipment, stock repurchases and dividend payments. In addition to the current cash balances on hand, we have a credit facility that provides for a $300,000,000 unsecured revolving line of credit that may be used for loans or letters of credit. Prior to March 23, 2015, we may, upon notice to the lenders, request an increase in the credit facility of up to $200,000,000 to provide for a total of $500,000,000 of unsecured revolving credit. During the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010, we had no borrowings under the credit facility, and no amounts were outstanding as of July 31, 2011 or August 1, 2010. However, as of July 31, 2011, $9,420,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. Additionally, as of July 31, 2011, we

had three unsecured letter of credit reimbursement facilities for a total of $90,000,000, of which an aggregate of $30,184,000 was outstanding. On September 2, 2011, we renewed all three of our letter of credit facilities for the same amount and for an additional one year term. These letter of credit facilities represent only a future commitment to fund inventory purchases to which we had not taken legal title. We are currently in compliance with all of our bank covenants and, based on our current projections, we expect to remain in compliance throughout fiscal 2011. We believe our cash on hand, in addition to our available credit facilities, will provide adequate liquidity for our business operations over the next 12 months.

For year-to-date 2011, net cash used in operating activities was $47,731,000 compared to net cash used in operating activities of $9,111,000 for year-to-date 2010. For year-to-date 2011, net cash used in operating activities was primarily attributable to a decrease in accrued salaries, benefits and other expenses and accounts payable due to the timing of expenditures, as well as an increase in merchandise inventories. This represents an increase compared to year-to-date 2010 primarily due to a decrease in accounts payable and accrued salaries, benefits and other expenses.

For year-to-date 2011, net cash used in investing activities was $64,893,000 compared to net cash used in investing activities of $32,676,000 for year-to-date 2010. For year-to-date 2011, net cash used in investing activities was primarily attributable to purchases of property and equipment of $62,525,000, comprised of $26,703,000 for systems development projects (including e-commerce websites), $18,755,000 for distribution, facility infrastructure and other projects and $17,067,000 for stores. This represents an increase compared to year-to-date 2010 primarily due to an increase in the purchase of property and equipment.

For fiscal 2011, we anticipate investing $150,000,000 in the purchase of property and equipment, primarily for the construction of 7 new stores and 8 remodeled or expanded stores, systems development projects (including e-commerce websites) and distribution, facility infrastructure and other projects.

For year-to-date 2011, net cash used in financing activities was $92,147,000 compared to net cash used in financing activities of $68,136,000 for year-to-date 2010. Net cash used in financing activities for year-to-date 2011 and compared to year-to-date 2010 was primarily attributable to the repurchase of common stock and the payment of dividends.

Stock Repurchase Program

In January 2011, our Board of Directors authorized a stock repurchase program to purchase up to $125,000,000 of our common stock through open market and privately negotiated transactions, at times and in such amounts as management deems appropriate. During the second quarter of fiscal 2011, we repurchased 806,282 shares under this program at a weighted average cost of $38.75 per share and a total cost of approximately $31,246,000. During year-to-date 2011, we repurchased 1,566,508 shares under this program at a weighted average cost of $39.90 per share and a total cost of approximately $62,496,000. There remains an aggregate of approximately $62,504,000 available for repurchases under this stock repurchase program.

Dividend Policy

Our quarterly cash dividend is $0.17 per common share. The indicated annual cash dividend, subject to capital availability, is $0.68 per common share, or approximately $71,000,000. Our quarterly cash dividend may be limited or terminated at any time.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The estimates and assumptions are evaluated on an ongoing basis and are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ significantly from these estimates. During the second quarter of fiscal 2011, there have been no significant changes to the critical accounting policies discussed in our Annual Report on Form 10-K for the year ended January 30, 2011.

Impact of Inflation

The impact of inflation on results of operations was not significant for year-to-date 2011 or year-to-date 2010.

Seasonality

Our business is subject to substantial seasonal variations in demand. Historically, a significant portion of our revenues and net earnings have been realized during the period from October through December, and levels of net revenues and net earnings have generally been significantly lower during the period from January through September. We believe this is the general pattern associated with the retail and direct-to-customer industries. In anticipation of our peak season, we hire a substantial number of additional temporary employees in our retail stores, customer care centers and distribution centers, and incur significant fixed catalog production and mailing costs.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks, which include significant deterioration of the U.S. and foreign markets, changes in U.S. interest rates, foreign currency exchange rates, including the devaluation of the U.S. dollar, and the effects of uncertain economic forces which may affect the prices we pay our vendors in the foreign countries in which we do business. We do not engage in financial transactions for trading or speculative purposes.

Interest Rate Risk

As of July 31, 2011, our line of credit facility was the only instrument we held with a variable interest rate which could, if drawn upon, subject us to risks associated with changes in that interest rate. As of July 31, 2011, there were no amounts outstanding under our credit facility. If the interest rate on this existing variable rate debt instrument rose 10%, our results from operations and cash flows would not be materially affected.

In addition, we have fixed and variable income investments consisting of short-term investments classified as short-term cash and cash equivalents, which are also affected by changes in market interest rates. As of July 31, 2011, our investments, made primarily in money market funds and highly liquid U.S. Treasury bills, are stated at cost and approximate their fair values.

Foreign Currency Risks

We purchase a significant amount of inventory from vendors outside of the U.S. in transactions that are denominated in U.S. dollars, however, only approximately 3% of our international purchase transactions are in currencies other than the U.S. dollar, primarily the euro. Any currency risks related to these international purchase transactions were not significant to us during year-to-date 2011 and year-to-date 2010. Since we pay for the majority of our international purchases in U.S. dollars, however, a decline in the U.S. dollar relative to other foreign currencies would subject us to risks associated with increased purchasing costs from our vendors in their

effort to offset any lost profits associated with any currency devaluation. We cannot predict with certainty the effect these increased costs may have on our financial statements or results of operations.

In addition, as of July 31, 2011, we have 14 retail stores in Canada and limited operations in Europe and Asia, each of which exposes us to market risk associated with foreign currency exchange rate fluctuations. Although these exchange rate fluctuations have not been material to us in the past, we may enter into foreign currency contracts in the future to minimize any currency remeasurement risk associated with the intercompany assets and liabilities of our subsidiaries. We did not enter into any foreign currency contracts during year-to-date 2011 or year-to-date 2010.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of July 31, 2011, an evaluation was performed by management, with the participation of our Chief Executive Officer (“CEO”) and our Executive Vice President, Chief Operating and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely discussions regarding required disclosures, and that such information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information required by this Item is contained in Note J to our Condensed Consolidated Financial Statements within Part I of this Form 10-Q.

ITEM 1A. RISK FACTORS

A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider such risks and uncertainties, together with the other information contained in this report and in our other public filings. If any of such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our other public filings. In addition, if any of the following risks and uncertainties, or if any other risks and uncertainties, actually occurs, our business, financial condition or operating results could be harmed substantially, which could cause the market price of our stock to decline, perhaps significantly.

The changes in general economic conditions over the past few years, and the resulting impact on consumer confidence and consumer spending, could adversely impact our results of operations.

Our financial performance is subject to changes in general economic conditions and the impact of such economic conditions on levels of consumer confidence and consumer spending. Consumer confidence and consumer spending may deteriorate significantly, and could remain depressed for an extended period of time. Consumer

purchases of discretionary items, including our merchandise, generally decline during periods when disposable income is adversely affected, unemployment rates increase or there is economic uncertainty. The recent uncertain economic environment could cause our vendors to go out of business or our banks to discontinue lending to us or our vendors, or it could cause us to undergo additional restructurings, any of which would adversely impact our business and operating results.

We are unable to control many of the factors affecting consumer spending, and declines in consumer spending on home furnishings in general could reduce demand for our products.

Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer spending, including general economic conditions, consumer disposable income, fuel prices, recession and fears of recession, unemployment, war and fears of war, inclement weather, availability of consumer credit, consumer debt levels, conditions in the housing market, interest rates, sales tax rates and rate increases, inflation, consumer confidence in future economic conditions and political conditions, and consumer perceptions of personal well-being and security. In particular, the recent economic downturn has led to decreased discretionary spending, which has adversely impacted our business in the past. In addition, a decrease in home purchases has led and may continue to lead to decreased consumer spending on home products. These factors have affected our various brands and channels differently. Adverse changes in factors affecting discretionary consumer spending have reduced and may continue to further reduce consumer demand for our products, thus reducing our sales and harming our business and operating results.

If we are unable to identify and analyze factors affecting our business, anticipate changing consumer preferences and buying trends, and manage our inventory commensurate with customer demand, our sales levels and profit margin may decline.

Our success depends, in large part, upon our ability to identify and analyze factors affecting our business and to anticipate and respond in a timely manner to changing merchandise trends and customer demands. For example, in the specialty home products business, style and color trends are constantly evolving. Consumer preferences cannot be predicted with certainty and may change between selling seasons. Changes in customer preferences and buying trends may also affect our brands differently. We must be able to stay current with preferences and trends in our brands and address the customer tastes for each of our target customer demographics. We must also be able to identify and adjust the customer offerings in our brands to cater to customer demands. For example, a change in customer preferences for children’s room furnishings may not correlate to a similar change in buying trends for other home furnishings. If we misjudge either the market for our merchandise or our customers’ purchasing habits, our sales may decline significantly, and we may be required to mark down certain products to sell the resulting excess inventory or to sell such inventory through our outlet stores or other liquidation channels at prices which are significantly lower than our retail prices, either of which would negatively impact our business and operating results.

In addition, we must manage our inventory effectively and commensurate with customer demand. Much of our inventory is sourced from vendors located outside of the United States. Thus, we usually must order merchandise, and enter into contracts for the purchase and manufacture of such merchandise, up to twelve months in advance of the applicable selling season and frequently before trends are known. The extended lead times for many of our purchases may make it difficult for us to respond rapidly to new or changing trends. Our vendors also may not have the capacity to handle our demands or may go out of business in times of economic crisis. In addition, the seasonal nature of the specialty home products business requires us to carry a significant amount of inventory prior to peak selling season. As a result, we are vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of merchandise purchases. If we do not accurately predict our customers’ preferences and acceptance levels of our products, our inventory levels will not be appropriate, and our business and operating results may be negatively impacted.

Our sales may be negatively impacted by increasing competition from companies with brands or products similar to ours.

The specialty direct-to-customer and retail business is highly competitive. Our e-commerce websites, direct mail catalogs and specialty retail stores compete with other e-commerce websites, other direct mail catalogs and other retail stores that market lines of merchandise similar to ours. We compete with national, regional and local businesses utilizing a similar retail store strategy, as well as traditional furniture stores, department stores and specialty stores. The substantial sales growth in the direct-to-customer industry within the last decade has encouraged the entry of many new competitors and an increase in competition from established companies. In addition, the decline in the global economic environment has led to increased competition from discount retailers selling similar products at reduced prices. The competitive challenges facing us include:

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anticipating and quickly responding to changing consumer demands or preferences better than our competitors;

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maintaining favorable brand recognition and achieving customer perception of value;

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effectively marketing and competitively pricing our products to consumers in several diverse market segments;

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developing innovative, high-quality products in colors and styles that appeal to consumers of varying age groups and tastes, and in ways that favorably distinguish us from our competitors; and

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effectively managing our supply chain and distribution strategies in order to provide our products to our consumers on a timely basis and minimize returns, replacements, and damaged products.

In light of the many competitive challenges facing us, we may not be able to compete successfully. Increased competition could reduce our sales and harm our operating results and business.

We depend on key domestic and foreign agents and vendors for timely and effective sourcing of our merchandise, and we may not be able to acquire products in sufficient quantities and at acceptable prices to meet our needs, which would impact our operations and financial results.

Our performance depends, in part, on our ability to purchase our merchandise in sufficient quantities at competitive prices. We purchase our merchandise from numerous foreign and domestic manufacturers and importers. We have no contractual assurances of continued supply, pricing or access to new products, and any vendor could change the terms upon which it sells to us, discontinue selling to us, or go out of business at any time. We may not be able to acquire desired merchandise in sufficient quantities on terms acceptable to us in the future. Better than expected sales demand may also lead to customer backorders and lower in-stock positions of our merchandise, which could negatively affect our business and operating results.

Any inability to acquire suitable merchandise on acceptable terms or the loss of one or more of our key agents or vendors could have a negative effect on our business and operating results because we would be missing products that we felt were important to our assortment, unless and until alternative supply arrangements are secured. We may not be able to develop relationships with new agents or vendors, and products from alternative sources, if any, may be of a lesser quality and/or more expensive than those we currently purchase.

In addition, we are subject to certain risks, including risks related to the availability of raw materials, labor disputes, union organizing activities, vendor financial liquidity, inclement weather, natural disasters, general economic and political conditions and regulations to address climate change that could limit our vendors’ ability to provide us with quality merchandise on a timely basis and at prices that are commercially acceptable. For these or other reasons, one or more of our vendors might not adhere to our quality control standards, and we might not identify the deficiency before merchandise ships to our stores or customers. In addition, our vendors may have difficulty adjusting to our changing demands and growing business. Our vendors’ failure to manufacture or import quality merchandise in a timely and effective manner could damage our reputation and brands, and could lead to an increase in customer litigation against us and an increase in our routine litigation costs. Further, any merchandise that we receive, even if it meets our quality standards, could become subject to a recall, which could

damage our reputation and brands, and harm our business. Recently enacted legislation has given the U.S. Consumer Product Safety Commission increased regulatory and enforcement power, particularly with regard to children’s safety, among other areas. As a result, companies like ours may be subject to more product recalls and incur higher recall-related expenses. Any recalls or other safety issues could harm our brands’ images and negatively affect our business and operating results.

Our dependence on foreign vendors and our increased overseas operations subject us to a variety of risks and uncertainties that could impact our operations and financial results.

In fiscal 2010, we sourced our products from vendors in 44 countries outside of the United States. Approximately 60% of our merchandise purchases were foreign-sourced, predominantly from Asia. Our dependence on foreign vendors means that we may be affected by changes in the value of the U.S. dollar relative to other foreign currencies. For example, any upward valuation in the Chinese yuan, the euro, or any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Although approximately 97% of our foreign purchases of merchandise are negotiated and paid for in U.S. dollars, declines in foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of our foreign vendors. This, in turn, might cause such foreign vendors to demand higher prices for merchandise in their effort to offset any lost profits associated with any currency devaluation, delay merchandise shipments to us, or discontinue selling to us, any of which could ultimately reduce our sales or increase our costs. In addition, an increase in the cost of living in the foreign countries in which our vendors operate may result in an increase in our costs or in our vendors going out of business.

We are also subject to other risks and uncertainties associated with changing economic and political conditions in foreign countries. These risks and uncertainties include import duties and quotas, compliance with anti-dumping regulations, work stoppages, economic uncertainties and adverse economic conditions (including inflation and recession), foreign government regulations, employment matters, wars and fears of war, political unrest, natural disasters, regulations to address climate change and other trade restrictions. We cannot predict whether any of the countries in which our raw materials are sourced from, or our products are currently manufactured or may be manufactured in the future will be subject to trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions. Any event causing a disruption or delay of imports from foreign vendors, including the imposition of additional import restrictions, restrictions on the transfer of funds and/or increased tariffs or quotas, or both, could increase the cost or reduce the supply of merchandise available to us and adversely affect our business, financial condition and operating results. Furthermore, some or all of our foreign vendors’ operations may be adversely affected by political and financial instability resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds and/or other trade disruptions. In addition, an economic downturn in or failure of foreign markets may result in financial instabilities for our foreign vendors, which may cause our foreign vendors to decrease production, discontinue selling to us, or cease operations altogether. Our overseas operations in Europe and Asia could also be affected by changing economic and political conditions in foreign countries, any of which could have a negative effect on our business, financial condition and operating results.

Although we continue to improve our global compliance program, there remains a risk that one or more of our foreign vendors will not adhere to our global compliance standards, such as fair labor standards and the prohibition on child labor. Non-governmental organizations might attempt to create an unfavorable impression of our sourcing practices or the practices of some of our vendors that could harm our image. If either of these events occurs, we could lose customer goodwill and favorable brand recognition, which could negatively affect our business and operating results.

In addition, as we continue to expand our overseas operations, we are subject to certain U.S. laws, including the Foreign Corrupt Practices Act, in addition to the laws of the foreign countries in which we operate. We must ensure that our employees comply with these laws. If any of our overseas operations, or our employees or agents, violates such laws, we could become subject to sanctions or other penalties that could negatively affect our reputation, business and operating results.

A number of factors that affect our ability to successfully open new stores or close existing stores are beyond our control, and these factors may harm our ability to expand or contract our retail operations and harm our ability to increase our sales and profits.

Historically, the majority of our net revenues have been generated by our retail stores. Our ability to open additional stores or close existing stores successfully will depend upon a number of factors, including:

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general economic conditions;

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our identification of, and the availability of, suitable store locations;

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our success in negotiating new leases and amending or terminating existing leases on acceptable terms;

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the success of other retail stores in and around our retail locations;

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our ability to secure required governmental permits and approvals;

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our hiring and training of skilled store operating personnel, especially management;

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the availability of financing on acceptable terms, if at all; and

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the financial stability of our landlords and potential landlords.

Many of these factors are beyond our control. For example, for the purpose of identifying suitable store locations, we rely, in part, on demographic surveys regarding the location of consumers in our target market segments. While we believe that the surveys and other relevant information are helpful indicators of suitable store locations, we recognize that these information sources cannot predict future consumer preferences and buying trends with complete accuracy. In addition, changes in demographics, in the types of merchandise that we sell and in the pricing of our products may reduce the number of suitable store locations. Further, time frames for lease negotiations and store development vary from location to location and can be subject to unforeseen delays. We may not be able to open new stores or, if opened, operate those stores profitably. Construction and other delays in store openings could have a negative impact on our business and operating results. Additionally, in these economic times, we may not be able to renegotiate the terms of our current leases or close our underperforming stores, either of which could negatively impact our operating results.

Our business and operating results may be harmed if we are unable to timely and effectively deliver merchandise to our stores and customers.

The success of our business depends, in part, on our ability to timely and effectively deliver merchandise to our stores and customers. We cannot control all of the various factors that might affect our fulfillment rates in direct-to-customer sales and timely and effective merchandise delivery to our stores. We rely upon third party carriers for our merchandise shipments and reliable data regarding the timing of those shipments, including shipments to our customers and to and from all of our stores. In addition, we are heavily dependent upon two carriers for the delivery of our merchandise to our customers. Accordingly, we are subject to risks, including labor disputes, union organizing activity, inclement weather, natural disasters, the closure of such carriers’ offices or a reduction in operational hours due to an economic slowdown, possible acts of terrorism associated with such carriers’ ability to provide delivery services to meet our shipping needs and disruptions or increased fuel costs associated with any regulations to address climate change. Failure to deliver merchandise in a timely and effective manner could damage our reputation and brands. In addition, fuel costs have been volatile and airline and other transportation companies continue to struggle to operate profitably, which could lead to increased fulfillment expenses. Any rise in fulfillment costs could negatively affect our business and operating results by increasing our transportation costs and decreasing the efficiency of our shipments.

Our failure to successfully manage our order-taking and fulfillment operations could have a negative impact on our business and operating results.

Our direct-to-customer business depends, in part, on our ability to maintain efficient and uninterrupted order-taking and fulfillment operations in our customer care centers and on our e-commerce websites. Disruptions or slowdowns in these areas could result from disruptions in telephone service or power outages, inadequate system capacity, system issues, computer viruses, security breaches, human error, changes in programming, union

organizing activity, disruptions in our third party labor contracts, natural disasters or adverse weather conditions. Industries that are particularly seasonal, such as the home furnishings business, face a higher risk of harm from operational disruptions during peak sales seasons. These problems could result in a reduction in sales as well as increased selling, general and administrative expenses.

In addition, we face the risk that we cannot hire enough qualified employees to support our direct-to-customer operations, or that there will be a disruption in the labor we hire from our third party providers, especially during our peak season. The need to operate with fewer employees could negatively impact our customer service levels and our operations.

Our facilities and systems, as well as those of our vendors, are vulnerable to natural disasters and other unexpected events, any of which could result in an interruption in our business and harm our operating results.

Our retail stores, corporate offices, distribution centers, infrastructure projects and direct-to-customer operations, as well as the operations of our vendors from which we receive goods and services, are vulnerable to damage from earthquakes, tornadoes, hurricanes, fires, floods, power losses, telecommunications failures, hardware and software failures, computer viruses and similar events. If any of these events result in damage to our facilities or systems, or those of our vendors, we may experience interruptions in our business until the damage is repaired, resulting in the potential loss of customers and revenues. In addition, we may incur costs in repairing any damage beyond our applicable insurance coverage.

If we are unable to effectively manage our e-commerce business, our reputation and operating results may be harmed.

E-commerce has been our fastest growing business over the last several years and continues to be a significant part of our sales success. The success of our e-commerce business depends, in part, on factors over which we have limited control. We must successfully respond to changing consumer preferences and buying trends relating to e-commerce usage. We are also vulnerable to certain additional risks and uncertainties associated with our e-commerce websites, including: changes in required technology interfaces; website downtime and other technical failures; costs and technical issues as we upgrade our website software; computer viruses; changes in applicable federal and state regulations; security breaches; and consumer privacy concerns. In addition, we must keep up to date with competitive technology trends, including the use of improved technology, creative user interfaces and other Internet marketing tools such as paid search, which may increase our costs and which may not succeed in increasing sales or attracting customers. Our failure to successfully respond to these risks and uncertainties might adversely affect the sales in our e-commerce business, as well as damage our reputation and brands.

Our failure to successfully manage the costs and performance of our catalog mailings might have a negative impact on our business.

Catalog mailings are an important component of our business. Postal rate increases, paper costs, printing costs and other catalog distribution costs affect the cost of our catalog mailings. We rely on discounts from the basic postal rate structure, which could be changed or discontinued at any time. Paper costs have fluctuated significantly during the past and may continue to fluctuate in the future. Future increases in postal rates, paper costs or printing costs would have a negative impact on our operating results to the extent that we are unable to offset such increases: by raising prices; by implementing more efficient printing, mailing, delivery and order fulfillment systems; or through the use of alternative direct-mail formats. In addition, if the performance of our catalogs declines, if we misjudge the correlation between our catalog circulation and net sales, or if our catalog circulation optimization strategy overall does not continue to be successful, our results of operations could be negatively impacted.

We have historically experienced fluctuations in our customers’ response to our catalogs. Customer response to our catalogs is substantially dependent on merchandise assortment, merchandise availability and creative presentation, as well as the selection of customers to whom the catalogs are mailed, changes in mailing strategies,

the size of our mailings, timing of delivery of our mailings, as well as the general retail sales environment and current domestic and global economic conditions. In addition, environmental organizations and other consumer advocacy groups may attempt to create an unfavorable impression of our paper use in catalogs and our distribution of catalogs generally, which may have a negative effect on our sales and our reputation. In addition, we depend upon external vendors to print our catalogs. The failure to effectively produce or distribute our catalogs could affect the timing of catalog delivery. The timing of catalog delivery has been and can be affected by postal service delays. Any delays in the timing of catalog delivery could cause customers to forego or defer purchases, negatively impacting our business and operating results.

Declines in our comparable brand revenue may harm our operating results and cause a decline in the market price of our common stock.

Various factors affect comparable store sales within our comparable brand revenue metric, including the number, size and location of stores we open, close, remodel or expand in any period, the overall economic and general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, our ability to efficiently source and distribute products, changes in our merchandise mix, competition (including competitive promotional activity and discount retailers), current local and global economic conditions, the timing of our releases of new merchandise and promotional events, the success of marketing programs, the cannibalization of existing store sales by our new stores, changes in catalog circulation and in our direct-to-customer business and fluctuations in foreign exchange rates. Among other things, weather conditions can affect comparable store sales because inclement weather can alter consumer behavior or require us to close certain stores temporarily and thus reduce store traffic. Even if stores are not closed, many customers may decide to avoid going to stores in bad weather. These factors have caused and may continue to cause our comparable store sales results to differ materially from prior periods and from earnings guidance we have provided. For example, the overall economic and general retail sales environment, as well as local and global economic conditions, has caused a significant decline in our comparable store sales results in the recent past.

Our comparable store sales have fluctuated significantly in the past on an annual, quarterly and monthly basis, and we expect that comparable store sales will continue to fluctuate in the future. However, past comparable store sales are not necessarily an indication of future results and comparable store sales may decrease in the future. Our ability to improve our comparable store sales results depends, in large part, on maintaining and improving our forecasting of customer demand and buying trends, selecting effective marketing techniques, effectively driving traffic to our stores through marketing and various promotional events, providing an appropriate mix of merchandise for our broad and diverse customer base and using effective pricing strategies. Any failure to meet the comparable store sales expectations of investors and securities analysts in one or more future periods could significantly reduce the market price of our common stock.

Our failure to successfully anticipate merchandise returns might have a negative impact on our business.

We record a reserve for merchandise returns based on historical return trends together with current product sales performance in each reporting period. If actual returns are greater than those projected and reserved for by management, additional sales returns might be recorded in the future. In addition, to the extent that returned merchandise is damaged, we often do not receive full retail value from the resale or liquidation of the merchandise. Further, the introduction of new merchandise, changes in merchandise mix, changes in consumer confidence, or other competitive and general economic conditions may cause actual returns to exceed merchandise return reserves. In particular, the recent adverse economic conditions resulted and may result in increased merchandise returns. Any significant increase in merchandise returns that exceeds our reserves could harm our business and operating results.

If we are unable to manage successfully the complexities associated with a multi-channel and multi-brand business, we may suffer declines in our existing business and our ability to attract new business.

With the expansion of our e-commerce business, new brands and brand extensions, our overall business has become substantially more complex. The changes in our business have forced us to develop new expertise and face new challenges, risks and uncertainties. For example, we face the risk that our e-commerce business might cannibalize a significant portion of our retail and catalog businesses, and we face the risk of catalog circulation cannibalizing our retail sales. While we recognize that our e-commerce sales cannot be entirely incremental to sales through our retail and catalog channels, we seek to attract as many new customers as possible to our e-commerce websites. We continually analyze the business results of our three channels and the relationships among the channels in an effort to find opportunities to build incremental sales.

If we are unable to introduce new brands and brand extensions successfully, or to reposition or close existing brands, our business and operating results may be negatively impacted.

We have in the past and may in the future introduce new brands and brand extensions, or reposition or close existing brands. Our newest brands – West Elm and PBteen – and any other new brands, may not grow as we project and plan for. Further, if we devote time and resources to new brands, brand extensions or brand repositioning, and those businesses are not as successful as we planned, then we risk damaging our overall business results. Alternatively, if our new brands, brand extensions or repositioned brands prove to be very successful, we risk hurting our other existing brands through the potential migration of existing brand customers to the new businesses. In addition, we may not be able to introduce new brands and brand extensions, or to reposition brands, in a manner that improves our overall business and operating results and may therefore be forced to close the brands.

Our inability to obtain commercial insurance at acceptable rates or our failure to adequately reserve for self-insured exposures might increase our expenses and have a negative impact on our business.

We believe that commercial insurance coverage is prudent in certain areas of our business for risk management. Insurance costs may increase substantially in the future and may be affected by natural catastrophes, fear of terrorism, financial irregularities and other fraud at publicly-traded companies, intervention by the government and a decrease in the number of insurance carriers. In addition, the carriers with which we hold our policies may go out of business, or may be otherwise unable to fulfill their contractual obligations. In addition, for certain types or levels of risk, such as risks associated with earthquakes, hurricanes or terrorist attacks, we may determine that we cannot obtain commercial insurance at acceptable rates, if at all. Therefore, we may choose to forego or limit our purchase of relevant commercial insurance, choosing instead to self-insure one or more types or levels of risks. We are primarily self-insured for workers’ compensation, employee health benefits and product and general liability claims. If we suffer a substantial loss that is not covered by commercial insurance or our self-insurance reserves, the loss and related expenses could harm our business and operating results. In addition, exposures exist for which no insurance may be available and for which we have not reserved.

Our inability or failure to protect our intellectual property would have a negative impact on our brands, goodwill and operating results.

We may not be able to adequately protect our intellectual property. Our trademarks, service marks, copyrights, trade dress rights, trade secrets, domain names and other intellectual property are valuable assets that are critical to our success. The unauthorized reproduction or other misappropriation of our intellectual property could diminish the value of our brands or goodwill and cause a decline in our sales. Protection of our intellectual property and maintenance of distinct branding are particularly important as they distinguish our products and services from our competitors who may sell similar products and services. In addition, the costs of defending our intellectual property may adversely affect our operating results.

We may be subject to legal proceedings that could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources.

We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. There have been a growing number of e-commerce-related patent infringement lawsuits in recent years. There has also been a rise in lawsuits against companies that gather information in order to market to consumers, online or through the mail. In addition, there has been an increase in employment-related lawsuits. From time to time, we have been subject to these types of lawsuits. The cost of defending claims against us or the ultimate resolution of such claims may harm our business and operating results. In addition, the increasingly regulated business environment may result in a greater number of enforcement actions and private litigation. This could subject us to increased exposure to shareholder lawsuits.

Our operating results may be harmed by unsuccessful management of our employment, occupancy and other operating costs, and the operation and growth of our business may be harmed if we are unable to attract qualified personnel.

To be successful, we need to manage our operating costs and continue to look for opportunities to reduce costs. We recognize that we may need to increase the number of our employees, especially during peak sales seasons, and incur other expenses to support new brands and brand extensions, as well as the opening of new stores and the direct-to-customer growth of our existing brands. Alternatively, if we are unable to make substantial adjustments to our cost structure during times of uncertainty, such as the recent economic environment, we may incur unnecessary expenses, we may have too few resources to properly run our business, or our business and operating results may be negatively impacted. From time to time, we may also experience union organizing activity in currently non-union facilities. Union organizing activity may result in work slowdowns or stoppages and higher labor costs. In addition, there appears to be a growing number of wage-and-hour lawsuits and other employment-related lawsuits against retail companies, especially in California.

We contract with various agencies to provide us with qualified personnel for our workforce. Any negative publicity regarding these agencies, such as in connection with immigration issues or employment practices, could damage our reputation, disrupt our ability to obtain needed labor or result in financial harm to our business, including the potential loss of business-related financial incentives in the jurisdictions where we operate. Although we strive to secure long-term contracts on favorable terms with our service providers and other vendors, we may not be able to avoid unexpected operating cost increases in the future. Further, we incur substantial costs to warehouse and distribute our inventory. Significant increases in our inventory levels may result in increased warehousing and distribution costs in addition to potential increases in costs associated with inventory that is lost, damaged or aged. Higher than expected costs, particularly if coupled with lower than expected sales, would negatively impact our business and operating results. In addition, in times of economic uncertainty, these long-term contracts may make it difficult to quickly reduce our fixed operating costs, which could negatively impact our business and operating results.

We are undertaking certain systems changes that might disrupt our business operations.

Our success depends, in part, on our ability to source and distribute merchandise efficiently through appropriate systems and procedures. We are in the process of substantially modifying our information technology systems, which involves updating or replacing legacy systems with successor systems over the course of several years. There are inherent risks associated with replacing our core systems, including supply chain and merchandising systems disruptions, that could affect our ability to get the correct products into the appropriate stores and delivered to customers. We may not successfully launch these new systems, or the launch of such systems may result in disruptions to our business operations. In addition, changes to any of our software implementation strategies could result in the impairment of software-related assets. We are also subject to the risks associated

with the ability of our vendors to provide information technology solutions to meet our needs. Any disruptions could negatively impact our business and operating results.

We outsource certain aspects of our business to third party vendors and are in the process of insourcing certain business functions from third party vendors, both of which subject us to risks, including disruptions in our business and increased costs.

We outsource certain aspects of our business to third party vendors that subject us to risks of disruptions in our business as well as increased costs. For example, we utilize outside vendors for such things as payroll processing and various distribution center services. Accordingly, we are subject to the risks associated with their ability to successfully provide the necessary services to meet our needs. If our vendors are unable to adequately protect our data and information is lost, our ability to deliver our services is interrupted, or our vendors’ fees are higher than expected, then our business and operating results may be negatively impacted.

In addition, we are in the process of insourcing certain aspects of our business, including the management of certain infrastructure technology, furniture manufacturing, furniture delivery to our customers and the management of our international vendors, each of which were previously outsourced to third party providers. This may cause disruptions in our business and result in increased cost to us. In addition, if we are unable to perform these functions better than, or at least as well as, our third party providers, our business may be harmed.

Our efforts to expand internationally through franchising and other arrangements may not be successful and could negatively impact the value of our brands.

We are currently evaluating several opportunities to grow our business through international expansion. In fiscal 2009, we entered into a franchise agreement with the M.H. Alshaya Company (“M.H. Alshaya”), an unaffiliated franchisee to operate stores in the Middle East. Under this agreement, M.H. Alshaya operates stores that sell goods purchased from us under our brand names. We had no prior experience operating through these types of third party arrangements, and this arrangement may not be successful. The administration of this relationship may divert management attention and require more resources than we expect. While this relationship has to date been a small part of our business, we plan to continue to increase the number of stores and countries in which these franchises operate as part of our efforts to expand internationally. The effect of these arrangements on our business and results of operations is uncertain and will depend upon various factors, including the demand for our products in new markets internationally. In addition, certain aspects of these arrangements are not directly within our control, such as the ability of M.H. Alshaya to meet its projections regarding store openings and sales. Moreover, while the agreement we have entered into may provide us with certain termination rights, to the extent that M.H. Alshaya does not operate its stores in a manner consistent with our requirements regarding our brand identities and customer experience standards, the value of our brands could be impaired. In addition, in connection with this franchise agreement, we have and will continue to implement certain new processes that may subject us to additional regulations and laws, such as U.S. export regulations. Failure to comply with any applicable laws or regulations could have an adverse effect on our results of operations.

If our operating and financial performance in any given period does not meet the extensive guidance that we have provided to the public, our stock price may decline.

We provide extensive public guidance on our expected operating and financial results for future periods. Although we believe that this guidance provides investors and analysts with a better understanding of management’s expectations for the future and is useful to our shareholders and potential shareholders, such guidance is comprised of forward-looking statements subject to the risks and uncertainties described in this report and in our other public filings and public statements. Our actual results may not always be in line with or exceed the guidance we have provided, especially in times of economic uncertainty. In the past, when we have reduced our previously provided guidance, the market price of our common stock has declined. If, in the future, our operating or financial results for a particular period do not meet our guidance or the expectations of investment

analysts or if we reduce our guidance for future periods, the market price of our common stock may decline as well.

A variety of factors, including seasonality and the economic environment, may cause our quarterly operating results to fluctuate, leading to volatility in our stock price.

Our quarterly results have fluctuated in the past and may fluctuate in the future, depending upon a variety of factors, including shifts in the timing of holiday selling seasons, including Valentine’s Day, Easter, Halloween, Thanksgiving and Christmas, as well as changes in economic conditions. A significant portion of our revenues and net earnings has typically been realized during the period from October through December each year. In anticipation of increased holiday sales activity, we incur certain significant incremental expenses prior to and during peak selling seasons, particularly October through December, including fixed catalog production and mailing costs and the costs associated with hiring a substantial number of temporary employees to supplement our existing workforce.

We may require external funding sources for operating funds, which may cost more than we expect, or not be available at the levels we require and, as a consequence, our expenses and operating results could be negatively affected.

We regularly review and evaluate our liquidity and capital needs. We currently believe that our available cash, cash equivalents and cash flow from operations will be sufficient to finance our operations and expected capital requirements for at least the next 12 months. However, we might experience periods during which we encounter additional cash needs and we might need additional external funding to support our operations. Although we were able to amend our line of credit facility during fiscal 2010 on acceptable terms, in the event we require additional liquidity from our lenders, such funds may not be available to us or may not be available to us on acceptable terms in the future. For example, in the event we were to breach any of our financial covenants, our banks would not be required to provide us with additional funding, or they may require us to renegotiate our existing credit facility on less favorable terms. In addition, we may not be able to renew our letters of credit that we use to help pay our suppliers on terms that are acceptable to us, or at all, as the availability of letter of credit facilities may continue to be limited. Further, the providers of such credit may reallocate the available credit to other borrowers. If we are unable to access credit at the levels we require, or the cost of credit is greater than expected, it could adversely affect our operating results.

Disruptions in the financial markets may adversely affect our liquidity and capital resources and our business.

Disruptions in the global financial markets and banking systems have made credit and capital markets more difficult for companies to access, even for some companies with established revolving or other credit facilities. We have access to capital through our revolving line of credit facility. Each financial institution, which is part of the syndicate for our revolving line of credit facility, is responsible for providing a portion of the loans to be made under the facility. If any participant, or group of participants, with a significant portion of the commitments in our revolving line of credit facility fails to satisfy its obligations to extend credit under the facility and we are unable to find a replacement for such participant or group of participants on a timely basis (if at all), our liquidity and our business may be materially adversely affected.

If we are unable to pay quarterly dividends or repurchase our stock at intended levels, our reputation and stock price may be harmed.

In January 2011, our Board of Directors authorized the repurchase of up to $125,000,000 of our common stock. In addition, in March 2011, our Board of Directors authorized an increase in our quarterly cash dividend from $0.15 to $0.17 per common share. The indicated annual cash dividend, subject to capital availability, is approximately $71,000,000. The dividend and stock repurchase program may require the use of a significant portion of our cash earnings. As a result, we may not retain a sufficient amount of cash to fund

our operations or finance future growth opportunities, new product development initiatives and unanticipated capital expenditures. Further, our Board of Directors may, at its discretion, decrease the intended level of dividends or entirely discontinue the payment of dividends at any time. The stock repurchase program does not have an expiration date and may be limited at any time. Our ability to pay dividends and repurchase stock will depend on our ability to generate sufficient cash flows from operations in the future. This ability may be subject to certain economic, financial, competitive and other factors that are beyond our control. Any failure to pay dividends or repurchase stock after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired and our investors’ views of us could be harmed.

We have evaluated and tested our internal controls in order to allow management to report on, and our registered independent public accounting firm to attest to, our internal controls, as required by Section 404 of the Sarbanes-Oxley Act of 2002. If we are not able to continue to meet the requirements of Section 404 in a timely manner, or with adequate compliance, we would be required to disclose material weaknesses if they develop or are uncovered and we may be subject to sanctions or investigation by regulatory authorities, such as the Securities and Exchange Commission or the New York Stock Exchange. In addition, our internal controls may not prevent or detect all errors and fraud. A control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable assurance that the objectives of the control system will be met. If any of the above were to occur, our business and the perception of us in the financial markets could be negatively impacted.

Changes to accounting rules or regulations may adversely affect our operating results.

Changes to existing accounting rules or regulations may impact our future operating results. A change in accounting rules or regulations may even affect our reporting of transactions completed before the change is effective. The introduction of new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. Future changes to accounting rules or regulations, or the questioning of current accounting practices, may adversely affect our operating results.

Changes to estimates related to our property and equipment, including information technology systems, or operating results that are lower than our current estimates at certain store locations, may cause us to incur impairment charges.

We make estimates and projections in connection with impairment analyses for certain of our store locations and other property and equipment, including information technology systems. These impairment analyses require that we review for impairment all stores for which current or projected cash flows from operations are not sufficient to recover the carrying value of the asset. An impairment charge is required when the carrying value of the asset exceeds the undiscounted future cash flows over the remaining life of the lease. These calculations require us to make a number of estimates and projections of future results. If these estimates or projections change or prove incorrect, we may be, and have been, required to record impairment charges on certain store locations and other property and equipment, including information technology systems. These impairment charges have been significant in the past and may be in the future and, as a result of these charges, our operating results have been and may, in the future, be adversely affected.

If we do not properly account for our unredeemed gift certificates, gift cards and merchandise credits, our operating results will be harmed.

We maintain a liability for unredeemed gift cards, gift certificates and merchandise credits until the earlier of redemption, escheatment or four years. After four years, the remaining unredeemed gift cards, gift certificate or merchandise credit liability is relieved and recorded as a benefit within selling, general and administrative expenses. In the event that our historical redemption patterns change in the future, we might change the minimum time period for maintaining a liability for unredeemed gift certificates on our balance sheets, which would affect

our financial position or operating results. Further, in the event that a state or states were to require that the unredeemed amounts be escheated to that state or states, our business and operating results would be harmed.

We may be exposed to risks and costs associated with credit card fraud and identity theft that could cause us to incur unexpected expenses and loss of revenue.

A significant portion of our customer orders are placed through our e-commerce websites or through our customer care centers. In addition, a significant portion of sales made through our retail channel require the collection of certain customer data, such as credit card information. In order for our sales channel to function and develop successfully, we and other parties involved in processing customer transactions must be able to transmit confidential information, including credit card information, securely over public networks. Third parties may have the technology or knowledge to breach the security of customer transaction data. Although we take the security of our systems and the privacy of our customers’ confidential information seriously, we cannot guarantee that our security measures will effectively prevent others from obtaining unauthorized access to our information and our customers’ information. Any person who circumvents our security measures could destroy or steal valuable information or disrupt our operations. Any security breach could cause consumers to lose confidence in the security of our website or stores and choose not to purchase from us. Any security breach could also expose us to risks of data loss, litigation and liability and could seriously disrupt our operations and harm our reputation, any of which could harm our business.

In addition, states and the federal government are increasingly enacting laws and regulations to protect consumers against identity theft. We collect personal information from consumers in the course of doing business. These laws will likely increase the costs of doing business and, if we fail to implement appropriate safeguards or to detect and provide prompt notice of unauthorized access as required by some of these new laws, we could be subject to potential claims for damages and other remedies, which could harm our business.

Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results and stock price.

We are subject to income taxes in many U.S. and certain foreign jurisdictions. We record tax expense based on our estimates of future payments, which include reserves for estimates of probable settlements of foreign and domestic tax audits. At any one time, many tax years are subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. As a result, we expect that throughout the year there could be ongoing variability in our quarterly tax rates as taxable events occur and exposures are evaluated. In addition, our effective tax rate in a given financial statement period may be materially impacted by changes in the mix and level of earnings or by changes to existing accounting rules or regulations. Further, there is proposed tax legislation that may be enacted in the future, which could negatively impact our current or future tax structure and effective tax rates.

If we fail to attract and retain key personnel, our business and operating results may be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of key personnel in our senior management, whose vision for our company, knowledge of our business and expertise would be difficult to replace. If any of our key employees leaves, is seriously injured or is unable to work, and we are unable to find a qualified replacement, we may be unable to execute our business strategy.

In addition, our main offices are located in the San Francisco Bay Area, where competition for personnel with retail and technology skills can be intense. If we fail to identify, attract, retain and motivate these skilled personnel, especially in this challenging economic environment, our business may be harmed. Further, in the event we need to hire additional personnel, we may experience difficulties in attracting and successfully hiring such individuals due to competition for highly skilled personnel, as well as the significantly higher cost of living expenses in our market.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information as of July 31, 2011 with respect to shares of common stock we repurchased during the second quarter of fiscal 2011.


Fiscal period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Dollar Value of Shares that May Yet be Purchased Under the Program
May 2, 2011 to May 29, 2011		235,701		$ 42.09		235,701		$ 83,829,000
May 30, 2011 to June 26, 2011		254,159		$ 37.08		254,159		$ 74,405,000
June 27, 2011 to July 31, 2011		316,422		$ 37.61		316,422		$ 62,504,000
Total		806,282		$ 38.75		806,282		$ 62,504,000

ITEM 6. EXHIBITS

(a) Exhibits


Exhibit Number		Exhibit Description
2.1		Agreement and Plan of Merger of Williams-Sonoma, Inc., a Delaware corporation (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on May 25, 2011, File No. 001-14077)
3.1		Williams-Sonoma, Inc. Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 25, 2011, File No. 001-14077)
3.2		Amended and Restated Bylaws of Williams-Sonoma, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 25, 2011, File No. 001-14077)
10.1		Form of Williams-Sonoma, Inc. Indemnification Agreement
10.2+		Williams-Sonoma, Inc. 2001 Long-Term Incentive Plan, as amended (incorporated by reference to Exhibit D to the definitive proxy statement on Schedule 14A as filed on April 7, 2011, File No. 001-14077)
31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended
32.1		Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

Indicates a management contract or compensatory plan or arrangement.

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


WILLIAMS-SONOMA, INC.

By:		/s/ Sharon L. McCollam
		Sharon L. McCollam
		Executive Vice President,
		Chief Operating and Chief Financial Officer

Date: September 9, 2011

EX-10.1 2 d212431dex101.htm FORM OF WILLIAMS-SONOMA, INC. INDEMNIFICATION AGREEMENT Form of Williams-Sonoma, Inc. Indemnification Agreement

Exhibit 10.1

FORM OF

WILLIAMS-SONOMA, INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is dated as of , 2011, and is between Williams-Sonoma, Inc., a Delaware corporation (the “Company”), and (“Indemnitee”).

RECITALS

A. Indemnitee’s service to the Company substantially benefits the Company.

B. Individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with adequate protection through insurance or indemnification against the risks of claims and actions against them arising out of such service.

C. The certificate of incorporation and bylaws of the Company provide that the Company is authorized to indemnify directors, officers, employees and other agents of the Company to the fullest extent permitted by applicable law, and the Company’s certificate of incorporation limits the liability for monetary damages of directors of the Company to the fullest extent permitted by applicable law. In addition, Indemnitee may be entitled to indemnification pursuant to the Delaware General Corporation Law (the “DGCL”). The Company’s certificate of incorporation, bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive and thereby contemplate that contracts may be entered into between the Company and directors, officers and other persons with respect to indemnification.

D. Indemnitee does not regard the protection currently expressly provided by applicable law, the Company’s governing documents and any insurance as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection.

E. In order to induce Indemnitee to continue to provide services to the Company, it is reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee to the extent permitted by applicable law.

F. This Agreement is a supplement to and in furtherance of the indemnification provided in the Company’s certificate of incorporation and bylaws, and any resolutions adopted pursuant thereto, and this Agreement shall not be deemed a substitute therefor, nor shall this Agreement be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder.

The parties therefore agree as follows:

1. Indemnity in Third-Party Proceedings. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) (other than an action by or in the right of the Company to procure a judgment in its favor) by reason of the fact that Indemnitee is or was a director, officer, employee or other agent of the Company or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against Expenses (as defined below), judgments, fines, settlements and other amounts actually and reasonably incurred by Indemnitee in connection with the Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the Company, and, in the case of any criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful. The termination of any Proceeding by judgment, order,

settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that (i) Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or (ii) Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

2. Indemnity in Proceedings by or in the Right of the Company. The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was a director, officer, employee or other agent of the Company or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against Expenses actually and reasonably incurred by Indemnitee in connection with the defense or settlement of such action if Indemnitee acted in good faith, in a manner Indemnitee believed to be in the best interests of the Company and its stockholders.

3. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the extent that Indemnitee has been successful on the merits in defense of any Proceeding referred to in Section 1 or 2 or in defense of any claim, issue or matter therein, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by Indemnitee in connection therewith.

4. Indemnification for Expenses of a Witness. To the extent that Indemnitee is, by reason of his or her position as a director, officer, employee or agent of the Company, a witness in any action, suit or proceeding to which Indemnitee is not a party, he or she shall be indemnified to the extent permitted by applicable law against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

5. Additional Indemnification Rights. Subject to Section 7 and any other provision of this Agreement that prohibits, limits or conditions indemnification by the Company, the Company agrees to indemnify Indemnitee to the fullest extent permitted by law for any acts, omissions or transactions while acting in the capacity of, or that are otherwise related to the fact that Indemnitee was or is serving as, a director, officer, employee or other agent of the Company or, to the extent Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, such other corporation, partnership, joint venture, trust or other enterprise, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s certificate of incorporation, the Company’s bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute or rule that expands the right of a Delaware corporation to indemnify a director, officer or other corporate agent beyond that currently permitted under this Agreement, the applicable changes shall be, ipso facto, within the purview of Indemnitee’s rights and Company’s obligations under this Agreement, subject to the restrictions expressly set forth herein or therein. In the event of any change in any applicable law, statute or rule that narrows the right of a Delaware corporation to indemnify a director, officer or other corporate agent, it is the intent of the parties hereto that the rights of the parties in effect prior to such change shall remain in effect to the extent permitted by applicable law.

6. Partial Indemnification. If Indemnitee is entitled under this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines, settlements or other amounts actually and reasonably incurred by Indemnitee in connection with any Proceeding, but not, however, for the total amount thereof, the Company shall indemnify Indemnitee for such portion of the Expenses, judgments, fines, settlements or other amounts to which Indemnitee is entitled in connection with each successfully resolved matter. For purposes of this section and without limitation, the termination of any discrete claim,

-2-

issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

7. Exceptions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any Proceeding (or any part of any Proceeding):

(a) for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, indemnity provision, vote or otherwise, except with respect to any excess beyond the amount paid;

(b) initiated by Indemnitee prior to a Change in Control, , including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees, unless (i) the Company’s board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation; (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; (iii) indemnification is required to be made under Section 10(e); (iv) otherwise required by applicable law; or (v) indemnification is in connection with actions or Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other agreement or insurance policy or under the Company’s certificate of incorporation or bylaws now or hereafter in effect relating to such Proceeding;

(c) for any acts or omissions or transactions from which a director may not be relieved of liability as set forth in the exception to Section 102(b)(7) of the DGCL or as to circumstances in which indemnity is expressly prohibited by Section 317 of the DGCL;

(d) for an accounting or disgorgement of profits pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state or local statutory law or common law, if Indemnitee is held liable therefor (including pursuant to any settlement arrangements);

(e) for Expenses incurred by Indemnitee with respect to any action in which Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company;

(f) for any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, to the extent required in each case under the Securities Exchange Act of 1934, as amended (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act), if Indemnitee is held liable therefor (including pursuant to any settlement arrangements); or

(g) if otherwise prohibited by applicable law.

8. Advancement of Expenses. The Company shall advance, to the extent not prohibited by law, all Expenses actually and reasonably incurred by Indemnitee in defending any Proceeding referenced in Sections 1 or 2 prior to the final disposition of the Proceeding (but not amounts actually paid in settlement of any such Proceeding) upon receipt of a written request therefor (together with documentation reasonably evidencing such Expenses). Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Indemnitee hereby undertakes to repay such amounts advanced if it shall be determined ultimately that Indemnitee is not entitled to be indemnified by the Company as

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authorized hereby or by Section 145 of the DGCL. The advances to be made hereunder shall be made as soon as reasonably practicable, but in any event no later than 30 days, after the receipt by the Company of a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice). This Section 8 shall not apply to any claim for which indemnity is not permitted under this Agreement or applicable law.

9. Procedures for Notification and Defense of a Claim.

(a) Notice. Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses as soon as reasonably practicable following the receipt by Indemnitee of notice thereof. The written notification to the Company shall include, in reasonable detail, a description of the nature of the Proceeding and the facts underlying the Proceeding. The failure by Indemnitee to notify the Company will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices the Company.

(b) Notice to Insurers. If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of the Proceeding to the insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all commercially-reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies; provided, however, that nothing in this subsection (b) shall relieve the Company of its obligations hereunder (or allow the Company to delay in its performance of its obligations hereunder) to provide indemnification for or advance any Expenses with respect to any Proceeding referenced in Sections 1 or 2, between the time that it so notifies its insurers and the time that its insurers actually pay any such amounts payable as a result of any such Proceeding to the Company.

(c) Selection of Counsel. The Company shall be entitled to assume the defense of the Proceeding at its own expense. Indemnitee agrees to consult with the Company and to consider in good faith the advisability and appropriateness of joint representation in the event that either the Company or other indemnitees in addition to Indemnitee require representation in connection with any Proceeding. The Company will not be liable to Indemnitee for any fees or expenses of separate counsel subsequently employed by or on behalf of Indemnitee with respect to the same Proceeding; provided, however, that (i) Indemnitee shall have the right to employ Indemnitee’s separate counsel in any such Proceeding at Indemnitee’s expense, and (ii) if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain counsel to defend such Proceeding, then the fees and expenses of Indemnitee’s separate counsel will be expenses for which Indemnitee may receive indemnification or advancement of expenses.

(d) Cooperation by Indemnitee. Indemnitee shall give the Company such information and cooperation in connection with the Proceeding as may be reasonably appropriate.

(e) Settlements. Indemnitee shall not settle any Proceeding (or any part thereof) which would impose any Expense, judgment, fine, penalty or limitation on the Company without the Company’s prior written consent, which shall not be unreasonably withheld.

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(f) Right to Settle Proceedings. The Company shall not settle any Proceeding (or any part thereof) which would impose any Expense, judgment, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent, which shall not be unreasonably withheld.

10. Procedures upon Application for Indemnification.

(a) Notice. To obtain indemnification, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Proceeding. The Company shall, as soon as reasonably practicable after receipt of such a request for indemnification, advise the board of directors that Indemnitee has requested indemnification. Any delay in providing the request will not relieve the Company from its obligations under this Agreement.

(b) Determination. Following a written request by Indemnitee for indemnification pursuant to Section 10(a), a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by (i) a majority vote of a quorum consisting of directors who are not parties to the Proceeding; (ii) if such a quorum of directors is not obtainable, by Independent Legal Counsel (as defined below) in a written opinion; (iii) approval by the stockholders in accordance with Section 153 of the DGCL, with the shares owned by Indemnitee not being entitled to vote thereon; or (iv) the court in which the proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the Company; provided, however, that if a Change in Control (as defined below) shall have occurred, by Independent Legal Counsel selected by Indemnitee and approved by the Company (which approval will not be unreasonably withheld) in a written opinion to the Company’s board of directors, a copy of which shall be delivered to Indemnitee. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 30 days after such determination. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company, to the extent permitted by applicable law.

(c) Disputes. Subject to Section 10(f), if (i) a determination is made that Indemnitee is not entitled to indemnification under this Agreement, (ii) no determination of entitlement to indemnification shall have been made pursuant to this Agreement within 90 days after the later of the receipt by the Company of the request for indemnification or the final disposition of the Proceeding, (iii) payment of indemnification pursuant to this Agreement is not made (A) within 30 days after a determination has been made that Indemnitee is entitled to indemnification, or (B) with respect to indemnification pursuant to Sections 3, 4 or 10(e) of this Agreement, within 30 days after receipt by the Company of a written request therefor, (iv) advancement of Expenses is not timely made pursuant to Section 8 or 10(e) of this Agreement, or (v) the Company or any other person or entity takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration with respect to his or her entitlement to such indemnification or advancement of Expenses, to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration in accordance with this Agreement.

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(d) Presumptions. Neither (i) the failure of the Company, its board of directors, any committee or subgroup of the board of directors, Independent Legal Counsel or stockholders to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company, its board of directors, any committee or subgroup of the board of directors, Independent Legal Counsel or stockholders that Indemnitee has not met the applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has or has not met the applicable standard of conduct. In the event that a determination shall have been made pursuant to this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to Section 10(c) shall be conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to Section 10(c), the Company shall, to the fullest extent not prohibited by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Agreement that the procedures and presumptions in this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before such arbitrator that the Company is bound by all the provisions of this Agreement.

(e) Expenses Incurred to Enforce this Agreement. In the event that any action is instituted by Indemnitee under this Agreement or under any liability insurance policies maintained by the Company to enforce or interpret any of the terms hereof or thereof, Indemnitee shall be entitled to be indemnified for all Expenses incurred by Indemnitee with respect to such action, regardless of whether Indemnitee is ultimately successful in such action, unless as a part of such action a court having jurisdiction over such action makes a final judicial determination; provided, however, that until such final judicial determination is made, Indemnitee shall be entitled to receive advancement of Expenses hereunder with respect to such action. In the event of an action instituted by or in the name of the Company under this Agreement to enforce or interpret any of the terms of this Agreement, Indemnitee shall be entitled to be indemnified for all Expenses incurred by Indemnitee in defense of such action (including without limitation Expenses incurred with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless as a part of such action a court having jurisdiction over such action makes a final judicial determination (as to which all rights of appeal therefrom have been exhausted or lapsed) that each of the material defenses asserted by Indemnitee in such action was made in bad faith or was frivolous; provided, however, that until such final judicial determination is made, Indemnitee shall be entitled to receive advancement of Expenses hereunder with respect to such action.

(f) Timing of Determination of Entitlement to Indemnification. Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification shall be required to be made prior to the final disposition of the Proceeding.

11. Mutual Acknowledgement. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers and other corporate agents or advancing Expenses under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify Indemnitee.

12. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in connection with any claim relating to an indemnifiable event

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under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding, and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions.

13. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

14. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received payment for such amounts under any insurance policy, contract, agreement or otherwise.

15. Directors’ and Officers’ Liability Insurance. The Company will make commercially reasonable efforts to obtain and maintain liability insurance applicable to directors, officers or fiduciaries in an amount determined by the Company’s board of directors; provided, however, that nothing in this Section 15 shall relieve the Company of its obligations hereunder (or allow the Company to delay in its performance of its obligations hereunder) to provide indemnification for or advance any Expenses with respect to any claim. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general partners, managing members, officers, employees, agents or fiduciaries of the Company or any other enterprise, Indemnitee shall be covered by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.

16. Duration. The indemnification and the advancement of Expenses provided under this Agreement will continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though subsequent thereto Indemnitee may have ceased to serve in such capacity.

17. Services to the Company. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any other corporation, partnership, joint venture, trust or enterprise) and Indemnitee.

18. Enforcement. The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

19. Nonexclusivity. The rights of indemnification and to receive advancement of Expenses provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s certificate of incorporation, its bylaws, any agreement, any vote of stockholders or disinterested directors, the DGCL or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

20. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability,

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pursuant to court order or other applicable law, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (i) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

21. Effectiveness of the Agreement. This Agreement shall be effective as of the date set forth in the introductory sentence of this Agreement and may apply to acts or omissions of Indemnitee that occurred prior to such date if Indemnitee was a director, officer, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred.

22. Construction of Certain Phrases.

(a) For purposes of this Agreement, references to the “Company” shall also include, in addition to the resulting or surviving corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(b) For purposes of this agreement, a “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

(i) Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities;

(ii) Change in Board Composition. During any one (1) year period (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Company’s board of directors, and any new directors (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 22(b)(i), 22(b)(iii) and 22(b)(iv)) whose election by the board of directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Company’s board of directors;

(iii) Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting

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securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

(iv) Asset Sale. All or substantially all of the assets of the Company are sold or disposed of in a transaction or series of related transactions;

(v) Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

(vi) Other Events. Any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended, whether or not the Company is then subject to such reporting requirement.

(c) For purposes of this Agreement, “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended. and shall include each member of the “group” as defined in such Sections; provided, however, that “Person” shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(d) For purposes of this Agreement, “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended; provided, however, that “Beneficial Owner” shall exclude any Person otherwise becoming a Beneficial Owner by reason of (i) the stockholders of the Company approving a merger of the Company with another entity or (ii) the Company’s board of directors approving a sale of securities by the Company to such Person.

(e) For purposes of this Agreement, references to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries.

(f) For purposes of this Agreement, Indemnitee shall be deemed to have acted in “good faith” if Indemnitee’s action is in good faith reliance or the records or books of account of the Company, including financial statements, or on information supplied to the Indemnitee by officers of the Company in the course of their duties, or on the advice of legal counsel for the Company or on information or records given or reports made to the Company by an independent certified public accountant or by an appraiser or other expert selected by the Company. The provisions of this Section 22(f) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

(g) For purposes of this Agreement, “Expenses” means all reasonable direct and indirect costs (including attorneys’ fees, retainers, court costs, transcription costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses) reasonably incurred in connection with (i) presenting, defending,

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preparing to present or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding, or (ii) establishing or enforcing a right to indemnification under this Agreement, the Company’s certificate of incorporation or bylaws or applicable law. Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding, including the premium, security for and other costs relating to any cost bond, or other appeal bond or its equivalent. For the avoidance of doubt, Expenses, however, shall not include any judgments, fines or settlements.

(h) For purposes of Section 10 of this Agreement, “Independent Legal Counsel” means a law firm or a lawyer that is experienced in matters of corporate law and neither currently is, nor in the three years previous to its selection or appointment has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceedings giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this agreement.

23. Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company, and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. The Company shall require and shall cause any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the assets of the Company, by written agreement with the Company expressly to assume and agree to perform this Agreement in the manner and to the same extent that the Company would be required to perform if no such succession had taken place.

24. Notice. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:

(a) if to Indemnitee, to Indemnitee’s address, facsimile number or electronic mail address as shown on the signature page of this Agreement or in the Company’s records, as may be updated in accordance with the provisions hereof; or

(b) if to the Company, to the attention of the Chief Executive Officer or Chief Financial Officer of the Company at 3250 Van Ness Avenue, San Francisco, CA 94109, or at such other current address as the Company shall have furnished to Indemnitee, with a copy (which shall not constitute notice) to Aaron J. Alter, Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, California 94304.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.

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25. Choice of Law. This Agreement shall be governed by and its provisions construed in accordance with the laws of the State of Delaware as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.

26. Consent to Jurisdiction. The Company and Indemnitee each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding that arises out of or relates to this Agreement and agree that any action or proceeding instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

27. Amendment and Waiver. No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing, signed by both parties hereto. No amendment, alteration or repeal of this Agreement shall adversely affect any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in an indemnified capacity prior to such amendment, alteration or repeal. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.

28. Integration and Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s certificate of incorporation and bylaws and applicable law.

29. Captions. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

30. Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original. This Agreement may also be executed and delivered by facsimile signature and in counterparts, each of which shall constitute an original.

(signature page follows)

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The parties are signing this Indemnification Agreement as of the date stated in the introductory sentence.


WILLIAMS-SONOMA, INC.

By:
		Name: Title:


Address:		3250 Van Ness Avenue
		San Francisco, CA 94109

Agreed to and accepted:

INDEMNITEE


(type or print name)
(signature)
(street address)
(city, state and zip code)

Signature Page to Indemnification Agreement

EX-31.1 3 d212431dex311.htm CERTIFICATION OF CEO PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) Certification of CEO pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Exhibit 31.1

CERTIFICATION

I, Laura J. Alber, certify that:

I have reviewed this quarterly report on Form 10-Q of Williams-Sonoma, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 9, 2011


By:		/s/ Laura J. Alber
		Laura J. Alber
		Chief Executive Officer

EX-31.2 4 d212431dex312.htm CERTIFICATION OF CFO PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) Certification of CFO pursuant to Rule 13a-14(a) and Rule 15d-14(a)

Exhibit 31.2

CERTIFICATION

I, Sharon L. McCollam, certify that:

I have reviewed this quarterly report on Form 10-Q of Williams-Sonoma, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 9, 2011


By:		/s/ Sharon L. McCollam
		Sharon L. McCollam
		Executive Vice President,
		Chief Operating and Chief Financial Officer

EX-32.1 5 d212431dex321.htm CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. SECTION 1350 Certification of CEO pursuant to 18 U.S.C. Section 1350

Exhibit 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended July 31, 2011 of Williams-Sonoma, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Laura J. Alber, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.


By:		/s/ Laura J. Alber
		Laura J. Alber
		Chief Executive Officer

Date: September 9, 2011

EX-32.2 6 d212431dex322.htm CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350 Certification of CFO pursuant to 18 U.S.C. Section 1350

Exhibit 32.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the period ended July 31, 2011 of Williams-Sonoma, Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sharon L. McCollam, Executive Vice President, Chief Operating and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.


By:		/s/ Sharon L. McCollam
		Sharon L. McCollam
		Executive Vice President,
		Chief Operating and Chief Financial Officer

Date: September 9, 2011

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NOTE J. COMMITMENTS AND CONTINGENCIES We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, are increasing in number as our business expands and our company grows larger. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our consolidated financial statements taken as a whole.

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NOTE D. COMPREHENSIVE INCOME Comprehensive income for the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010 was as follows:   <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="55%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="6" nowrap="nowrap" align="right">Thirteen Weeks Ended          </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="6" nowrap="nowrap" align="right">Twenty-Six Weeks Ended          </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">Dollars in thousands</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">August 1, 2010</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">August 1, 2010</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Net earnings</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,309</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,759</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">70,924</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,297</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Other comprehensive income</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Foreign currency translation adjustment</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">73</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(885</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,460</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">807</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Comprehensive income</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">39,382</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">29,874</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">73,384</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">51,104</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>

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NOTE B. BORROWING ARRANGEMENTS Credit Facility We have a credit facility that provides for a $300,000,000 unsecured revolving line of credit that may be used for loans or letters of credit. Prior to March 23, 2015, we may, upon notice to the lenders, request an increase in the credit facility of up to $200,000,000, to provide for a total of $500,000,000 of unsecured revolving credit. The credit facility contains certain financial covenants, including a maximum leverage ratio (funded debt adjusted for lease and rent expense to earnings before interest, income tax, depreciation, amortization and rent expense "EBITDAR"), and covenants limiting our ability to dispose of assets, make acquisitions, be acquired (if a default would result from the acquisition), incur indebtedness, grant liens and make investments. The credit facility contains events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default will increase the applicable rate of interest by 2.0% and could result in the acceleration of our obligations under the credit facility and an obligation of any or all of our U.S. subsidiaries that have guaranteed the credit facility to pay the full amount of our obligations under the credit facility. As of July 31, 2011, we were in compliance with our financial covenants under the credit facility and, based on current projections, we expect to be in compliance throughout fiscal 2011. The credit facility matures on September 23, 2015, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized. We may elect interest rates calculated at (i) Bank of America's prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio.During the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010, we had no borrowings under the credit facility, and no amounts were outstanding as of July 31, 2011 or August 1, 2010. Additionally, as of July 31, 2011, $9,420,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. The standby letters of credit were issued to secure the liabilities associated with workers' compensation and other insurance programs.   <div> Letter of Credit Facilities As of July 31, 2011, we had three unsecured letter of credit reimbursement facilities for a total of $90,000,000. On September 2, 2011, we renewed the three unsecured commercial letter of credit reimbursement facilities, each of which matures on August 31, 2012. The letter of credit facilities contain covenants and provide for events of default that are consistent with our unsecured revolving line of credit. Interest on unreimbursed amounts under the letter of credit facilities accrues at the lender's prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0%. As of July 31, 2011, an aggregate of $30,184,000 was outstanding under the letter of credit facilities, which represent only a future commitment to fund inventory purchases to which we had not taken legal title. The latest expiration possible for any future letters of credit issued under the facilities is now January 28, 2013. </div>  Long-Term Debt As of July 31, 2011, we had $8,606,000 of long-term debt obligations, consisting primarily of the bond-related debt associated with one of our Memphis-based distribution facilities, which accrues interest based on a variable rate. As of July 31, 2011, the carrying value of our long-term debt approximates fair value.

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NOTE C. STOCK-BASED COMPENSATION Equity Award Programs On May 25, 2011, our shareholders approved an amendment and restatement of our Amended and Restated 2001 Long-Term Incentive Plan (the "Plan") to, among other things, increase the shares issuable by 7,300,000 shares and extend the term to 2021. The Plan provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, "option awards"), restricted stock awards, restricted stock units, deferred stock awards (collectively, "stock awards") and dividend equivalents up to an aggregate of 25,759,903 shares. As of July 31, 2011, there were 9,112,108 shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee Board members of the company or any parent or subsidiary. Annual grants are limited to 1,000,000 shares covered by option awards and 400,000 shares covered by stock awards on a per person basis. All grants of option awards made under the Plan have a maximum term of seven years. Incentive stock options that may be issued to 10% shareholders, however, have a maximum term of five years. The exercise price of these option awards is not less than 100% of the closing price of our stock on the day prior to the grant date or not less than 110% of such closing price for an incentive stock option granted to a 10% shareholder. Option awards granted to employees generally vest over a period of four to five years. Stock awards granted to employees generally vest over a period of three to five years for service based awards. Certain option awards, stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a similar corporate event. Option and stock awards granted to non-employee Board members generally vest in one year. Non-employee Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of shareholders (so long as they continue to serve as a non-employee Board member). Shares issued as a result of award exercises will be funded with the issuance of new shares. Stock-Based Compensation Expense We measure and record stock-based compensation expense in our consolidated financial statements for all employee stock-based awards using a fair value method. During the thirteen and twenty-six weeks ended July 31, 2011, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses, of $7,029,000 and $12,256,000, respectively. During the thirteen and twenty-six weeks ended August 1, 2010, we recognized total stock-based compensation expense of $6,513,000 and $15,269,000, respectively (including stock-based compensation expense of approximately $815,000 and $4,042,000, respectively, associated with the retirement of our former Chairman and Chief Executive Officer).   Stock Options The following table summarizes our stock option activity during the twenty-six weeks ended July 31, 2011:   <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">1,367,629</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Exercised</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(336,158</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(700</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011 (100% vested)</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">1,030,771</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table> Stock-Settled Stock Appreciation Rights The following table summarizes our stock-settled stock appreciation right activity during the twenty-six weeks ended July 31, 2011:   <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">3,429,200</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,387,460</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Converted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(372,365</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(155,705</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">4,288,590</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Vested at July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,004,079</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Vested plus expected to vest at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">3,780,800</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table> Restricted Stock Units The following table summarizes our restricted stock unit activity during the twenty-six weeks ended July 31, 2011:   <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,050,898</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">589,933</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Released</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(266,096</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(81,741</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">2,292,994</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Vested plus expected to vest at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">1,904,731</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap"> </td></tr></table>

0.47

0.29

0.68

0.38

0.46

0.28

0.66

0.37

NOTE E. EARNINGS PER SHARE Basic earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted average number of common shares outstanding for the period plus common stock equivalents consisting of shares subject to stock-based awards with exercise prices less than or equal to the average market price of our common stock for the period, to the extent their inclusion would be dilutive. The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:   <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="74%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">Dollars and amounts in thousands, except per share amounts</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> Net Earnings</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Weighted Average Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Earnings Per Share</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,309</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">104,467</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.38</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,299</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">39,309</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">106,766</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.37</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,759</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">107,668</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.29</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,556</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">30,759</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">110,224</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.28</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">70,924</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">104,795</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.68</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,276</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">70,924</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">107,071</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.66</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,297</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">107,370</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.47</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,525</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">50,297</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">109,895</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">0.46</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table> Stock-based awards of 1,530,000 and 1,995,000 for the thirteen weeks ended and 1,697,000 and 2,008,000 for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, were not included in the computation of diluted earnings per share, as their inclusion would be anti-dilutive.

17000

1002000

4300000

1000000

28100000

26000000

45600000

25200000

56600000

30300000

5992000

4821000

2033000

-646000

557285000

286727000

604604000

308721000

83407000

-110574000

136955000

57026000

51074000

-51716000

68344000

34446000

115715000

-111301000

158262000

68754000

64016000

-57607000

83348000

38275000

33110000

20315000

44791000

24707000

-6345000

9048000

-2561000

-42240000

-30740000

-28885000

-18710000

-46523000

-4991000

-846000

52160000

42669000

17952000

17262000

12502000

2209000

2525000

2556000

2276000

2299000

518623000

513381000

556628000

May 2011

30184000

788836000

872899000

759937000

1995493000

2131762000

2010124000

502170000

611716000

507683000

300000000

September 23, 2015

September 23, 2015

We may elect interest rates calculated at (i) Bank of America's prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio.

500000000

8606000

7197000

7130000

7064000

-68136000

-92147000

-32676000

-64893000

-9111000

-47731000

50297000

30759000

70924000

39309000

50297000

30759000

70924000

39309000

50297000

30759000

70924000

39309000

NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION These financial statements include Williams-Sonoma, Inc. and its wholly owned subsidiaries ("we," "us" or "our"). The condensed consolidated balance sheets as of July 31, 2011 and August 1, 2010, the condensed consolidated statements of earnings for the thirteen and twenty-six weeks then ended and the condensed consolidated statements of cash flows for the twenty-six weeks then ended have been prepared by us, without audit. In our opinion, the financial statements include all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and twenty-six weeks then ended. Significant intercompany transactions and accounts have been eliminated. The balance sheet as of January 30, 2011, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011. The results of operations for the thirteen and twenty-six weeks ended July 31, 2011 are not necessarily indicative of the operating results of the full year. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011.

7718000

8176000

7626000

14757000

20966000

20549000

807000

-885000

2460000

73000

51104000

29874000

73384000

39382000

25279000

25324000

25731000

58383000

51918000

49499000

200000

44306000

62496000

27023000

33617000

30889000

10416000

6821000

13652000

13458000

4675000

3065000

5718000

62525000

28575000

13227000

20723000

40289000

17556000

8873000

13860000

0.01

7500000

41798000

36825000

41663000

42165000

21120000

39697000

-20000

10715000

41000

9573000

7412000

771635000

730556000

735129000

37888000

41565000

51406000

NOTE I. RELATED PARTY TRANSACTION On May 16, 2008, we entered into an Aircraft Lease Agreement (the "Lease Agreement") with a limited liability company (the "LLC") owned by Mr. Lester for use of a Bombardier Global 5000 aircraft owned by the LLC. Under the terms of the Lease Agreement, in exchange for use of the aircraft, we were required to pay the LLC $375,000 for each of the 36 months of the lease term through May 2011. We were also responsible for all use-related costs associated with the aircraft, including fixed costs such as crew salaries and benefits, insurance and hangar costs, and all direct operating costs. In conjunction with a retirement and consulting agreement entered into between us and Mr. Lester on January 25, 2010, Mr. Lester agreed to give us an option to purchase this aircraft at the end of the lease term for its then estimated fair value of $32,000,000. On January 3, 2011, we provided the LLC with notice under the agreement of our intent to exercise our option to purchase the aircraft at the end of the lease term. Immediately prior to the end of the lease term, we assigned our rights to purchase the aircraft to Wells Fargo Equipment Finance, Inc. ("Wells Fargo"). We then entered into a Master Lease Agreement (the "Master Lease") with Wells Fargo to lease the aircraft. The Master Lease commenced on May 16, 2011, has a term of 10 years and is classified as an operating lease.

1348000

66000

12502000

12512000

14721000

732290000

777939000

755672000

1493191000

631535000

861656000

775554000

325678000

449876000

1585575000

712162000

873413000

814750000

368041000

446709000

<table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="55%"> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="5%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="6" nowrap="nowrap" align="right">Thirteen Weeks Ended          </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="6" nowrap="nowrap" align="right">Twenty-Six Weeks Ended          </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">Dollars in thousands</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">August 1, 2010</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">August 1, 2010</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Net earnings</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,309</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,759</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">70,924</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,297</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Other comprehensive income</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Foreign currency translation adjustment</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">73</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(885</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,460</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">807</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Comprehensive income</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">39,382</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">29,874</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">73,384</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">51,104</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>

<table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="74%"> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="4%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">Dollars and amounts in thousands, except per share amounts</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right"> Net Earnings</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Weighted Average Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Earnings Per Share</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">39,309</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">104,467</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.38</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,299</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">39,309</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">106,766</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.37</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,759</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">107,668</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.29</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,556</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">30,759</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">110,224</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.28</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">70,924</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">104,795</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.68</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,276</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">70,924</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">107,071</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">0.66</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Basic</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">50,297</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">107,370</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0.47</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Effect of dilutive stock-based awards</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,525</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Diluted</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">50,297</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">109,895</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">$</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">0.46</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>

<div class="MetaData"> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="65%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">Dollars in thousands</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Direct-to- Customer</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Retail</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Unallocated</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Total</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">  368,041</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">  446,709</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">814,750</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,951</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19,791</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">33,021</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">83,348</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">38,275</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(57,607</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">64,016</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">8,873</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,860</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">17,556</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">40,289</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Thirteen weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">325,678</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">449,876</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">775,554</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,313</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,870</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,697</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,880</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Earnings (loss) before income taxes2,3,4</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">68,344</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,446</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(51,716</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,074</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">3,065</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">5,718</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">4,675</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,458</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">712,162</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">873,413</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,585,575</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,063</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">39,401</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">16,435</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">65,899</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">158,262</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">68,754</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(111,301</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">115,715</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Assets5</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">315,176</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">882,388</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">812,560</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,010,124</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,227</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">20,723</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">28,575</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">62,525</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">631,535</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">861,656</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,493,191</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,697</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">47,942</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">15,243</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">73,882</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2,3,4</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">136,955</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,026</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(110,574</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">83,407</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Assets5</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">282,213</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">896,831</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">816,449</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,995,493</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">6,821</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">13,652</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">10,416</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">30,889</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>   <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">1</td> <td class="MetaData" valign="top" align="left"> Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">2 </td> <td class="MetaData" valign="top" align="left"> Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">3 </td> <td class="MetaData" valign="top" align="left"> Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">4</td> <td class="MetaData" valign="top" align="left"> Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">5 </td> <td class="MetaData" valign="top" align="left"> Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.</td></tr></table></div>

<table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">2,050,898</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">589,933</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Released</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(266,096</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(81,741</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">2,292,994</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Vested plus expected to vest at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">1,904,731</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap"> </td></tr></table>

<table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">3,429,200</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,387,460</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Converted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(372,365</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(155,705</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">4,288,590</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Vested at July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,004,079</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Vested plus expected to vest at July 31, 2011</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">3,780,800</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>

<table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="91%"> </td> <td valign="bottom" width="2%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" align="right">Shares</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Balance at January 30, 2011</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">1,367,629</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Granted</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Exercised</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(336,158</td> <td valign="bottom" nowrap="nowrap">) </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Canceled</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">(700</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">) </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 2px solid;" valign="top"> Balance at July 31, 2011 (100% vested)</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">1,030,771</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>

NOTE G. SEGMENT REPORTING We have two reportable segments, direct-to-customer and retail. The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home) and sells our products through our six e-commerce websites (williams-sonoma.com, potterybarn.com, potterybarnkids.com, pbteen.com, westelm.com and wshome.com) and six direct mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen and West Elm). The retail segment has four merchandising concepts which sell products for the home (Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm). The four retail merchandising concepts are operating segments, which have been aggregated into one reportable segment, retail. Management's expectation is that the overall economic characteristics of each of our major concepts within each reportable segment will be similar over time based on management's judgment that the operating segments have had similar historical economic characteristics and are expected to have similar long-term financial performance in the future. These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management's best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group. We use earnings before unallocated corporate overhead, interest and taxes to evaluate segment profitability. Unallocated costs before income taxes include corporate employee-related costs, occupancy expenses (including depreciation expense), administrative costs and third party service costs, primarily in our corporate systems, corporate facilities and other administrative departments. Unallocated assets include the net book value of corporate facilities and related information systems, deferred income taxes, other corporate long-lived assets and corporate cash and cash equivalents. Income tax information by segment has not been included as taxes are calculated at a company-wide level and are not allocated to each segment.   Segment Information   <div class="MetaData"> <table style="border-collapse: collapse;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr><td width="65%"> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td> <td valign="bottom" width="3%"> </td> <td> </td> <td> </td> <td> </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="bottom">Dollars in thousands</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Direct-to- Customer</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Retail</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Unallocated</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="right">Total</td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Thirteen weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">  368,041</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">  446,709</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">814,750</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,951</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19,791</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,279</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">33,021</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">83,348</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">38,275</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(57,607</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">64,016</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">8,873</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,860</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">17,556</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">40,289</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Thirteen weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">325,678</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">449,876</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">775,554</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,313</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,870</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,697</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,880</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Earnings (loss) before income taxes2,3,4</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">68,344</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">34,446</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(51,716</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51,074</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">3,065</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">5,718</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">4,675</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,458</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended July 31, 2011</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">712,162</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">873,413</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,585,575</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,063</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">39,401</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">16,435</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">65,899</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">158,262</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">68,754</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(111,301</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">115,715</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Assets5</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">315,176</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">882,388</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">812,560</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,010,124</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 1px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">13,227</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">20,723</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">28,575</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" align="right">62,525</td> <td style="border-bottom: #000000 1px solid;" valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Twenty-six weeks ended August 1, 2010</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td></tr> <tr><td valign="top"> Net revenues1</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">631,535</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">861,656</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">0</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,493,191</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Depreciation and amortization expense</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,697</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">47,942</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">15,243</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">73,882</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td valign="top"> Earnings (loss) before income taxes2,3,4</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">136,955</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">57,026</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(110,574</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">83,407</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr bgcolor="#cceeff"><td valign="top"> Assets5</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">282,213</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">896,831</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">816,449</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,995,493</td> <td valign="bottom" nowrap="nowrap">  </td></tr> <tr><td style="border-bottom: #000000 2px solid;" valign="top"> Capital expenditures</td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">6,821</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">13,652</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">10,416</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom"> </td> <td style="border-bottom: #000000 2px solid;" valign="bottom" align="right">30,889</td> <td style="border-bottom: #000000 2px solid;" valign="bottom" nowrap="nowrap">  </td></tr></table>   <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">1</td> <td class="MetaData" valign="top" align="left"> Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">2 </td> <td class="MetaData" valign="top" align="left"> Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">3 </td> <td class="MetaData" valign="top" align="left"> Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">4</td> <td class="MetaData" valign="top" align="left"> Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity. </td></tr></table> <table style="border-collapse: collapse;" class="MetaData" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td valign="top" width="1%" align="left">5 </td> <td class="MetaData" valign="top" align="left"> Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.</td></tr></table></div>

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19709000 13999000 10317000 10300000 9689000 4280000 4300000 4110000 2309000 2300000 2040000 787000 800000 518000 NOTE F. ASSET IMPAIRMENT AND LEASE TERMINATION CHARGES We review the carrying value of all long-lived assets for impairment, primarily at a store level, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We review for impairment all stores for which current or projected cash flows from operations are not sufficient to recover the carrying value of the assets. Impairment results when the carrying value of the assets exceeds the estimated undiscounted future cash flows over the remaining life of the lease. Our estimate of undiscounted future cash flows over the store lease term (generally 5 to 22 years) is based upon our experience, historical operations of the stores and estimates of future store profitability and economic conditions. The future estimates of store profitability and economic conditions require estimating such factors as sales growth, gross margin, employment rates, lease escalations, inflation on operating expenses and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the net carrying value and the asset's fair value. Long-lived assets are measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. The fair value is estimated based upon future cash flows (discounted at a rate that is commensurate with the risk and approximates our weighted average cost of capital).   For any store or facility closure where a lease obligation still exists, we record the estimated future liability associated with the rental obligation on the cease use date. During the thirteen and twenty-six weeks ended July 31, 2011, we recorded expense of approximately $787,000 (of which $518,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold) and $2,309,000 (of which $2,040,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold), respectively, associated with asset impairment and early lease termination charges for underperforming retail stores. During the thirteen and twenty-six weeks ended August 1, 2010, we recorded expense of approximately $4,280,000 (of which $4,110,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold) and $10,317,000 (of which $9,689,000 is recorded within selling, general and administrative expenses and the remainder within cost of goods sold), respectively, associated with asset impairment and early lease termination charges for underperforming retail stores. We also recorded a net benefit in selling, general and administrative expenses of $403,000 during the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity. 935906000 488827000 980971000 506029000 221086000 202135000 195691000 32000000 1.10 1.00 -743000 7648000 9021000 4839000 375000 May 16, 2008 May 16, 2011 lender's prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0% August 31, 2012 90000000 September 2, 2011 January 28, 2013 200000000 9420000 0.020 5 7 251000 123000 70000 69000 0.10 155705 3429200 4288590 1004079 1904731 3780800 7300000 1000000 400000 1.00 22 5 8011000 5865000 11024000 8181000 36 months 10 years NOTE K. STOCK REPURCHASE PROGRAM In January 2011, our Board of Directors authorized a stock repurchase program to purchase up to $125,000,000 of our common stock through open market and privately negotiated transactions, at times and in such amounts as management deems appropriate. During the thirteen weeks ended July 31, 2011, we repurchased 806,282 shares under this program at a weighted average cost of $38.75 per share and a total cost of approximately $31,246,000. During the twenty-six weeks ended July 31, 2011, we repurchased 1,566,508 shares under this program at a weighted average cost of $39.90 per share and a total cost of approximately $62,496,000. There remains an aggregate of approximately $62,504,000 available for repurchases under this stock repurchase program. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions. This stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.   NOTE H. MEMPHIS-BASED DISTRIBUTION FACILITY Our Memphis-based distribution facilities include an operating lease entered into in July 1983 for a distribution facility in Memphis, Tennessee. The lessor is a general partnership ("Partnership 1") comprised of the estate of W. Howard Lester ("Mr. Lester"), our former Chairman of the Board of Directors and Chief Executive Officer, and the estate of James A. McMahan, a former Director Emeritus and significant shareholder. Partnership 1 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The terms of the lease automatically renewed until the bonds were fully repaid in December 2010. We are currently operating the distribution center on a month-to-month lease. Our other Memphis-based distribution facility includes an operating lease entered into in August 1990 for another distribution facility that is adjoined to the Partnership 1 facility in Memphis, Tennessee. The lessor is a general partnership ("Partnership 2") comprised of the estate of Mr. Lester, the estate of James A. McMahan and two unrelated parties. Partnership 2 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The term of the lease automatically renews on an annual basis until these bonds are fully repaid in August 2015.   Prior to December 2010, the two partnerships described above qualified as variable interest entities and were consolidated by us due to their related party relationship and our obligation to renew the leases until the bonds were fully repaid. As of December 2010, however, the bonds on the distribution center leased from Partnership 1 were fully repaid and, accordingly, this facility is no longer consolidated by us. As such, as of July 31, 2011, our consolidated balance sheet includes $12,195,000 in assets (primarily buildings), $8,338,000 in debt and $3,857,000 in other long-term liabilities related solely to the consolidation of the Partnership 2 distribution facility. 8338000 3857000 2021 Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations. Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores. Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer. Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity. Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.

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Document and Entity Information [Abstract] Document And Entity Information Statement [Table] Statement [Line Items] Document Type Amendment Flag Document Period End Date Document Fiscal Year Focus Document Fiscal Period Focus Trading Symbol Entity Registrant Name Entity Central Index Key Current Fiscal Year End Date Entity Filer Category Entity Common Stock, Shares Outstanding Condensed Consolidated Balance Sheets ASSETS Current assets Cash and cash equivalents Cash and cash equivalents at end of period Cash and cash equivalents at beginning of period Cash and Cash Equivalents, at Carrying Value, Total Restricted cash Accounts receivable, net Receivables, Net, Current, Total Merchandise inventories, net Inventory, Net, Total Prepaid catalog expenses Prepaid expenses Prepaid Expense, Current, Total Deferred Tax Assets, Net, Current Deferred Tax Assets, Net, Current, Ending Balance Deferred Tax Assets, Net, Current, Beginning Balance Deferred Tax Assets, Net, Current, Total Deferred income taxes Other assets, net Other assets Total current assets Total current assets Property and equipment, net Property, Plant and Equipment, Net, Ending Balance Property, Plant and Equipment, Net, Beginning Balance Property, Plant and Equipment, Net, Total Non-current deferred income taxes Deferred Tax Assets, Net, Noncurrent, Total Other assets Other assets, net Other Assets, Noncurrent, Total Total assets Assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts Payable, Current Accounts Payable, Current, Total Accounts payable Accrued salaries, benefits and other Accrued Liabilities, Current, Total Deferred Revenue and Credits, Current Deferred Revenue and Credits, Current, Total Customer deposits Accrued Income Taxes, Current Income taxes payable Current portion of long-term debt Debt, Current, Total Other liabilities Other Liabilities, Current, Total Total current liabilities Total current liabilities For a classified balance sheet, the aggregate of 1) the cumulative difference between the rental income or payments required by a lease agreement and the rental income or expense recognized on a straight-line basis, or other systematic and rational basis more representative of the time pattern in which use or benefit is granted or derived from the leased property, expected to be recognized in income or expense, by the lessor or lessee, respectively, more than one year after the balance sheet date and 2) The deferred credit for an incentive or inducement received by a lessee from a lessor, in order to motivate the lessee to enter the lease agreement, which is to be recognized as a reduction of rental expense over the lease term. 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Cost Of Goods Sold And Occupancy Expenses Cost of goods sold Gross margin Gross margin Selling, general and administrative expenses Selling, General and Administrative Expense, Total Net, Interest Income and Expense. Net, Interest Income and Expense Interest expense, net Earnings (loss) before income taxes Earnings before income taxes Earnings (loss) before income taxes Income tax expense (benefit) Income Tax Expense (Benefit), Total Total Income tax expense Net earnings (loss) Net earnings Net earnings Net earnings Basic earnings (loss) per share Earnings Per Share, Basic Earnings Per Share, Basic, Total Basic earnings per share Diluted earnings (loss) per share Earnings Per Share, Diluted Earnings Per Share, Diluted, Total Diluted earnings per share Shares used in calculation of earnings (loss) per share: Shares used in calculation of earnings per share: Basic Weighted Average Shares, Basic Weighted Average Number of Shares Outstanding, Basic, Total Diluted Weighted Average Shares, Diluted Condensed Consolidated Statements Of Cash Flows Cash flows from operating activities: Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities: Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization Depreciation and amortization expense Depreciation and amortization expense (Gain) loss on sale/disposal of assets (Gain)/loss on sale/disposal of assets Cost of goods sold Gain (Loss) on Sale of Property Plant Equipment, Total Impairment of assets Asset Impairment Charges, Total The amount of deferred credit for an incentive or inducement received by a lessee from a lessor recognized as a reduction of rental expense during the period. As a noncash item, it is deducted from net income when calculating cash provided by (used in) operations using the indirect method. Amortization Of Lease Incentives Amortization of deferred lease incentives Amortization of deferred lease incentives Deferred Income Tax Expense (Benefit) Deferred income tax expense (benefit), total Deferred income taxes Reductions in the entity's income taxes that arise when compensation cost (from share-based compensation awards) recognized on the entity's tax return exceeds compensation cost from share based compensation awards recognized on the income statement. This element increases net cash provided by operating activities. Tax Benefit From Exercise Of Share-Based Awards Tax benefit from exercise of stock-based awards Stock-based compensation expense Share-based Compensation, Total Changes in: Accounts receivable Accounts receivable Merchandise inventories Merchandise inventories Increase (Decrease) in Inventories, Total The increase (decrease) during the reporting period in capitalized deferred costs associated with direct response advertising. 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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data	Jul. 31, 2011	Jan. 30, 2011	Aug. 01, 2010
Condensed Consolidated Balance Sheets
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized	7,500	7,500	7,500
Preferred stock, issued	0	0	0
Common stock, par value	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized	253,125	253,125	253,125
Common stock, shares issued	103,992	104,888	106,483
Common stock, shares outstanding	103,992	104,888	106,483

- Definition

Total number of shares of common stock held by shareholders. May be all or portion of the number of common shares authorized. These shares represent the ownership interest of the common shareholders. Shares outstanding equals shares issued minus shares held in treasury and other adjustments, if any.

+ References+ Details

- Definition

Face amount or stated value per share of nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer); generally not indicative of the fair market value per share.

+ References+ Details

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Condensed Consolidated Statements Of Earnings (USD $)
In Thousands, except Per Share data

3 Months Ended

6 Months Ended

Jul. 31, 2011

Aug. 01, 2010

Jul. 31, 2011

Aug. 01, 2010

Condensed Consolidated Statements Of Earnings

Net revenues

$ 814,750

^[1]

$ 775,554

^[1]

$ 1,585,575

^[1]

$ 1,493,191

^[1]

Cost of goods sold

506,029

488,827

980,971

935,906

Gross margin

308,721

286,727

604,604

557,285

Selling, general and administrative expenses

244,636

235,530

488,819

473,627

Interest expense, net

123

251

Earnings before income taxes

64,016

^[2]

51,074

^[2],[3],[4]

115,715

^[2]

83,407

^[2],[3],[4]

Income tax expense

24,707

20,315

44,791

33,110

Net earnings

$ 39,309

$ 30,759

$ 70,924

$ 50,297

Basic earnings per share

$ 0.38

$ 0.29

$ 0.68

$ 0.47

Diluted earnings per share

$ 0.37

$ 0.28

$ 0.66

$ 0.46

Shares used in calculation of earnings per share:

Basic

104,467

107,668

104,795

107,370

Diluted

106,766

110,224

107,071

109,895

[1]	Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.
[2]	Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores.
[3]	Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer.
[4]	Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity.

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Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended
Stock-Based Compensation (Narrative) (Details) (USD $)	Jul. 31, 2011	Aug. 01, 2010	Jul. 31, 2011	Aug. 01, 2010
Stock-based compensation expense	$ 7,029,000	$ 6,513,000	$ 12,256,000	$ 15,269,000
Equity Award Programs [Member]
Aggregate number of shares under the plan	25,759,903		25,759,903
Shares available for future grant	9,112,108		9,112,108
Increase in the number of shares issuable under the plan	7,300,000		7,300,000
Year of expiration of Long-Term Incentive Plan			2021
Incentive Stock Options [Member]
Percent ownership each shareholder must have in order to be granted incentive stock options			10.00%
Maximum term of grants of incentive stock options, years			5
Incentive Stock Options [Member] \| Minimum [Member]
Exercise price as a percentage of closing price on the day prior to the grant date			110.00%
Option Awards [Member]
Awards annual grants limit			1,000,000
Maximum term of grants of option awards, years			7
Minimum vesting period of awards granted to employees, years			four
Maximum vesting period of awards granted to employees, years			five
Option Awards [Member] \| Minimum [Member]
Exercise price as a percentage of closing price on the day prior to the grant date			100.00%
Stock Awards [Member]
Awards annual grants limit			400,000
Minimum vesting period of awards granted to employees, years			three
Maximum vesting period of awards granted to employees, years			five
Chief Executive Officer [Member]
Stock-based compensation expense		$ 815,000		$ 4,042,000
Non-Employee [Member]
Minimum vesting period of awards granted to employees, years			one

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Document And Entity Information	6 Months Ended
Document And Entity Information	Jul. 31, 2011	Aug. 28, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jul. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	wsm
Entity Registrant Name	WILLIAMS SONOMA INC
Entity Central Index Key	0000719955
Current Fiscal Year End Date	--01-29
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		103,678,962

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Stock-Based Compensation (Summary Of Restricted Stock Units) (Details) (Restricted Stock Units (RSUs) [Member])	6 Months Ended
	Jul. 31, 2011
Restricted Stock Units (RSUs) [Member]
Balance at January 30, 2011	2,050,898
Granted	589,933
Released	(266,096)
Canceled	(81,741)
Balance at July 31, 2011	2,292,994
Vested plus expected to vest at July 31, 2011	1,904,731

- Definition

The number of non-vested equity-based payment instruments, excluding stock (or unit) options, that validly exist and are outstanding as of the balance sheet date.

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Segment Reporting

6 Months Ended

Jul. 31, 2011

Segment Reporting

Segment Reporting

NOTE G. SEGMENT REPORTING

We have two reportable segments, direct-to-customer and retail. The direct-to-customer segment has six merchandising concepts (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home) and sells our products through our six e-commerce websites (williams-sonoma.com, potterybarn.com, potterybarnkids.com, pbteen.com, westelm.com and wshome.com) and six direct mail catalogs (Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Bed and Bath, PBteen and West Elm). The retail segment has four merchandising concepts which sell products for the home (Williams-Sonoma, Pottery Barn, Pottery Barn Kids and West Elm). The four retail merchandising concepts are operating segments, which have been aggregated into one reportable segment, retail. Management's expectation is that the overall economic characteristics of each of our major concepts within each reportable segment will be similar over time based on management's judgment that the operating segments have had similar historical economic characteristics and are expected to have similar long-term financial performance in the future.

These reportable segments are strategic business units that offer similar home-centered products. They are managed separately because the business units utilize two distinct distribution and marketing strategies. Based on management's best estimate, our operating segments include allocations of certain expenses, including advertising and employment costs, to the extent they have been determined to benefit both channels. These operating segments are aggregated at the channel level for reporting purposes due to the fact that our brands are interdependent for economies of scale and we do not maintain fully allocated income statements at the brand level. As a result, material financial decisions related to the brands are made at the channel level. Furthermore, it is not practicable for us to report revenue by product group.

Income tax information by segment has not been included as taxes are calculated at a company-wide level and are not allocated to each segment.

Segment Information


Dollars in thousands	Direct-to- Customer		Retail		Unallocated			Total
Thirteen weeks ended July 31, 2011
Net revenues¹	$	368,041	$	446,709	$	0		$	814,750
Depreciation and amortization expense		4,951		19,791		8,279			33,021
Earnings (loss) before income taxes²		83,348		38,275		(57,607	)		64,016
Capital expenditures		8,873		13,860		17,556			40,289
Thirteen weeks ended August 1, 2010
Net revenues¹	$	325,678	$	449,876	$	0		$	775,554
Depreciation and amortization expense		5,313		21,870		7,697			34,880
Earnings (loss) before income taxes^2,3,4		68,344		34,446		(51,716	)		51,074
Capital expenditures		3,065		5,718		4,675			13,458
Twenty-six weeks ended July 31, 2011
Net revenues¹	$	712,162	$	873,413	$	0		$	1,585,575
Depreciation and amortization expense		10,063		39,401		16,435			65,899
Earnings (loss) before income taxes²		158,262		68,754		(111,301	)		115,715
Assets⁵		315,176		882,388		812,560			2,010,124
Capital expenditures		13,227		20,723		28,575			62,525
Twenty-six weeks ended August 1, 2010
Net revenues¹	$	631,535	$	861,656	$	0		$	1,493,191
Depreciation and amortization expense		10,697		47,942		15,243			73,882
Earnings (loss) before income taxes^2,3,4		136,955		57,026		(110,574	)		83,407
Assets⁵		282,213		896,831		816,449			1,995,493
Capital expenditures		6,821		13,652		10,416			30,889

³	Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer.

⁴	Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity.

⁵	Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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Comprehensive Income (Summary Of Comprehensive Income) (Details) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Aug. 01, 2010	Jul. 31, 2011	Aug. 01, 2010
Comprehensive Income
Net earnings	$ 39,309	$ 30,759	$ 70,924	$ 50,297
Foreign currency translation adjustment	73	(885)	2,460	807
Comprehensive income	$ 39,382	$ 29,874	$ 73,384	$ 51,104

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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-Name Accounting Standards Codification
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-SubTopic 225
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-Paragraph 1
-Subparagraph (SX 210.7-04.22)
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-Paragraph 38
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-Paragraph A7
-Appendix A

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-Paragraph 10, 15
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-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

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-URI http://asc.fasb.org/extlink&oid=6518256

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-Paragraph 1
-Subparagraph (SX 210.7-04.19)
-URI http://asc.fasb.org/extlink&oid=6879464&loc=d3e573970-122913

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-Number 210
-Article 5
-Section 03
-Paragraph 19

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-Number 210
-Section 04
-Paragraph 20
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+ Details

- Definition

Adjustment that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency of the reporting entity, net of tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Paragraph 20
-Subparagraph (b),(c)
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-Number 130
-Paragraph 24
-Subparagraph b
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+ Details

- Definition

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

+ References

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-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 22, 23, 24, 25
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Accounting Principles Board Opinion (APB)
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-Paragraph 10
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Stock-Based Compensation (Summary Of Stock-Settled Stock Appreciation Rights) (Details) (Stock Appreciation Rights (SARs) [Member])	6 Months Ended
	Jul. 31, 2011
Stock Appreciation Rights (SARs) [Member]
Balance at January 30, 2011	3,429,200
Granted	1,387,460
Converted	(372,365)
Canceled	(155,705)
Balance at July 31, 2011	4,288,590
Vested at July 31, 2011	1,004,079
Vested plus expected to vest at July 31, 2011	3,780,800

XML 22 R17.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Tables)

6 Months Ended

Jul. 31, 2011

Stock-Based Compensation

Summary Of Stock Options


	Shares
Balance at January 30, 2011		1,367,629
Granted		0
Exercised		(336,158	)
Canceled		(700	)
Balance at July 31, 2011 (100% vested)		1,030,771

Summary Of Stock-Settled Stock Appreciation Rights


	Shares
Balance at January 30, 2011		3,429,200
Granted		1,387,460
Converted		(372,365	)
Canceled		(155,705	)
Balance at July 31, 2011		4,288,590
Vested at July 31, 2011		1,004,079
Vested plus expected to vest at July 31, 2011		3,780,800

Summary Of Restricted Stock Units


	Shares
Balance at January 30, 2011		2,050,898
Granted		589,933
Released		(266,096	)
Canceled		(81,741	)
Balance at July 31, 2011		2,292,994
Vested plus expected to vest at July 31, 2011		1,904,731

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Stock-Based Compensation

6 Months Ended

Jul. 31, 2011

Stock-Based Compensation

Stock-Based Compensation

NOTE C. STOCK-BASED COMPENSATION

Equity Award Programs

On May 25, 2011, our shareholders approved an amendment and restatement of our Amended and Restated 2001 Long-Term Incentive Plan (the "Plan") to, among other things, increase the shares issuable by 7,300,000 shares and extend the term to 2021. The Plan provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights (collectively, "option awards"), restricted stock awards, restricted stock units, deferred stock awards (collectively, "stock awards") and dividend equivalents up to an aggregate of 25,759,903 shares. As of July 31, 2011, there were 9,112,108 shares available for future grant. Awards may be granted under the Plan to officers, employees and non-employee Board members of the company or any parent or subsidiary. Annual grants are limited to 1,000,000 shares covered by option awards and 400,000 shares covered by stock awards on a per person basis. All grants of option awards made under the Plan have a maximum term of seven years. Incentive stock options that may be issued to 10% shareholders, however, have a maximum term of five years. The exercise price of these option awards is not less than 100% of the closing price of our stock on the day prior to the grant date or not less than 110% of such closing price for an incentive stock option granted to a 10% shareholder. Option awards granted to employees generally vest over a period of four to five years. Stock awards granted to employees generally vest over a period of three to five years for service based awards. Certain option awards, stock awards and other agreements contain vesting acceleration clauses resulting from events including, but not limited to, retirement, merger or a similar corporate event. Option and stock awards granted to non-employee Board members generally vest in one year. Non-employee Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of shareholders (so long as they continue to serve as a non-employee Board member). Shares issued as a result of award exercises will be funded with the issuance of new shares.

Stock-Based Compensation Expense

Stock Options

The following table summarizes our stock option activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		1,367,629
Granted		0
Exercised		(336,158	)
Canceled		(700	)
Balance at July 31, 2011 (100% vested)		1,030,771

Stock-Settled Stock Appreciation Rights

The following table summarizes our stock-settled stock appreciation right activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		3,429,200
Granted		1,387,460
Converted		(372,365	)
Canceled		(155,705	)
Balance at July 31, 2011		4,288,590
Vested at July 31, 2011		1,004,079
Vested plus expected to vest at July 31, 2011		3,780,800

Restricted Stock Units

The following table summarizes our restricted stock unit activity during the twenty-six weeks ended July 31, 2011:


	Shares
Balance at January 30, 2011		2,050,898
Granted		589,933
Released		(266,096	)
Canceled		(81,741	)
Balance at July 31, 2011		2,292,994
Vested plus expected to vest at July 31, 2011		1,904,731

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

+ References+ Details

XML 24 R14.htm IDEA: XBRL DOCUMENT

Related Party Transaction

6 Months Ended

Jul. 31, 2011

Related Party Transaction

Related Party Transaction

NOTE I. RELATED PARTY TRANSACTION

On May 16, 2008, we entered into an Aircraft Lease Agreement (the "Lease Agreement") with a limited liability company (the "LLC") owned by Mr. Lester for use of a Bombardier Global 5000 aircraft owned by the LLC. Under the terms of the Lease Agreement, in exchange for use of the aircraft, we were required to pay the LLC $375,000 for each of the 36 months of the lease term through May 2011. We were also responsible for all use-related costs associated with the aircraft, including fixed costs such as crew salaries and benefits, insurance and hangar costs, and all direct operating costs.

In conjunction with a retirement and consulting agreement entered into between us and Mr. Lester on January 25, 2010, Mr. Lester agreed to give us an option to purchase this aircraft at the end of the lease term for its then estimated fair value of $32,000,000. On January 3, 2011, we provided the LLC with notice under the agreement of our intent to exercise our option to purchase the aircraft at the end of the lease term. Immediately prior to the end of the lease term, we assigned our rights to purchase the aircraft to Wells Fargo Equipment Finance, Inc. ("Wells Fargo"). We then entered into a Master Lease Agreement (the "Master Lease") with Wells Fargo to lease the aircraft. The Master Lease commenced on May 16, 2011, has a term of 10 years and is classified as an operating lease.

- Definition

The entire disclosure for related party transactions, including the nature of the relationship(s), a description of the transactions, the amount of the transactions, the effects of any change in the method of establishing the terms of the transaction from the previous period, stated interest rate, expiration date, terms and manner of settlement per the agreement with the related party, and amounts due to or from related parties. If the entity and one or more other entities are under common ownership or management control and this control affects the operating results or financial position, disclosure includes the nature of the control relationship even if there are no transactions between the entities. Disclosure may also include the aggregate amount of current and deferred tax expense for each statement of earnings presented where the entity is a member of a group that files a consolidated tax return, the amount of any tax related balances due to or from affiliates as of the date of each statement of financial position presented, the principal provisions of the method by which the consolidated amount of current and deferred tax expense is allocated to the members of the group and the nature and effect of any changes in that method. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(k))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

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-Article 3A
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Earnings Per Share (Tables)

6 Months Ended

Jul. 31, 2011

Earnings Per Share

Reconciliation Of Net Earnings Per Share


Dollars and amounts in thousands, except per share amounts	Net Earnings		Weighted Average Shares		Earnings Per Share
Thirteen weeks ended July 31, 2011
Basic	$	39,309		104,467	$	0.38
Effect of dilutive stock-based awards				2,299
Diluted	$	39,309		106,766	$	0.37
Thirteen weeks ended August 1, 2010
Basic	$	30,759		107,668	$	0.29
Effect of dilutive stock-based awards				2,556
Diluted	$	30,759		110,224	$	0.28
Twenty-six weeks ended July 31, 2011
Basic	$	70,924		104,795	$	0.68
Effect of dilutive stock-based awards				2,276
Diluted	$	70,924		107,071	$	0.66
Twenty-six weeks ended August 1, 2010
Basic	$	50,297		107,370	$	0.47
Effect of dilutive stock-based awards				2,525
Diluted	$	50,297		109,895	$	0.46

XML 26 R15.htm IDEA: XBRL DOCUMENT

Commitments And Contingencies

6 Months Ended

Jul. 31, 2011

Commitments And Contingencies

Commitments And Contingencies

NOTE J. COMMITMENTS AND CONTINGENCIES

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
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-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
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-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.25)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

+ Details

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Related Party Transaction (Details) (USD $)	6 Months Ended
Related Party Transaction (Details) (USD $)	Jul. 31, 2011
Lease amount payable to related party, monthly	$ 375,000
Estimated fair value of leased asset	$ 32,000,000
Lease Agreement With Related Party, Expired [Member]
Term of lease agreement	36 months
Lease commencement date	May 16, 2008
Lease expiration date	May 2011
Master Lease [Member]
Term of lease agreement	10 years
Lease commencement date	May 16, 2011

XML 28 R13.htm IDEA: XBRL DOCUMENT

Memphis-Based Distribution Facility

6 Months Ended

Jul. 31, 2011

Memphis-Based Distribution Facility

Memphis-Based Distribution Facility

NOTE H. MEMPHIS-BASED DISTRIBUTION FACILITY

Our Memphis-based distribution facilities include an operating lease entered into in July 1983 for a distribution facility in Memphis, Tennessee. The lessor is a general partnership ("Partnership 1") comprised of the estate of W. Howard Lester ("Mr. Lester"), our former Chairman of the Board of Directors and Chief Executive Officer, and the estate of James A. McMahan, a former Director Emeritus and significant shareholder. Partnership 1 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The terms of the lease automatically renewed until the bonds were fully repaid in December 2010. We are currently operating the distribution center on a month-to-month lease.

Our other Memphis-based distribution facility includes an operating lease entered into in August 1990 for another distribution facility that is adjoined to the Partnership 1 facility in Memphis, Tennessee. The lessor is a general partnership ("Partnership 2") comprised of the estate of Mr. Lester, the estate of James A. McMahan and two unrelated parties. Partnership 2 does not have operations separate from the leasing of this distribution facility and does not have lease agreements with any unrelated third parties. The term of the lease automatically renews on an annual basis until these bonds are fully repaid in August 2015.

XML 29 R6.htm IDEA: XBRL DOCUMENT

Financial Statements - Basis Of Presentation

6 Months Ended

Jul. 31, 2011

Financial Statements - Basis Of Presentation

Financial Statements - Basis Of Presentation

NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION

These financial statements include Williams-Sonoma, Inc. and its wholly owned subsidiaries ("we," "us" or "our"). The condensed consolidated balance sheets as of July 31, 2011 and August 1, 2010, the condensed consolidated statements of earnings for the thirteen and twenty-six weeks then ended and the condensed consolidated statements of cash flows for the twenty-six weeks then ended have been prepared by us, without audit. In our opinion, the financial statements include all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and twenty-six weeks then ended. Significant intercompany transactions and accounts have been eliminated. The balance sheet as of January 30, 2011, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2011.

The results of operations for the thirteen and twenty-six weeks ended July 31, 2011 are not necessarily indicative of the operating results of the full year.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

+ References

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-Name Accounting Standards Codification
-Topic 720
-SubTopic 15
-URI http://asc.fasb.org/subtopic&trid=2122524

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-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 1
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-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=6970148&loc=SL6228881-111685

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-Name Statement of Position (SOP)
-Publisher AICPA
-Number 94-6
-Paragraph 10
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Accounting Standards Codification
-Topic 272
-SubTopic 10
-Section 50
-Paragraph 3
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-Name FASB Staff Position (FSP)
-Number FAS140-4/FIN46(R)-8
-Paragraph 8, C1, C7
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-Publisher FASB
-Number 46R
-Paragraph 4, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-SubTopic 10
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-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 2-6
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-SubTopic 10
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XML 30 R9.htm IDEA: XBRL DOCUMENT

Comprehensive Income

6 Months Ended

Jul. 31, 2011

Comprehensive Income

Comprehensive Income

NOTE D. COMPREHENSIVE INCOME

Comprehensive income for the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010 was as follows:


	Thirteen Weeks Ended					Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		August 1, 2010			July 31, 2011		August 1, 2010
Net earnings	$	39,309	$	30,759		$	70,924	$	50,297
Other comprehensive income
Foreign currency translation adjustment		73		(885	)		2,460		807
Comprehensive income	$	39,382	$	29,874		$	73,384	$	51,104

- Definition

The entire disclosure for comprehensive income. Includes, but is not limited to, the following: 1) the amount of income tax expense or benefit allocated to each component of other comprehensive income, including reclassification adjustments, 2) the reclassification adjustments for each classification of other comprehensive income and 3) the ending accumulated balances for each component of comprehensive income. Components of comprehensive income include: (1) foreign currency translation adjustments; (2) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (3) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (4) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (5) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (6) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (7) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References

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-Name Accounting Standards Codification
-Glossary Reclassification Adjustments
-URI http://asc.fasb.org/extlink&oid=6522872

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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 130
-Paragraph 14-26
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Accounting Standards Codification
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-SubTopic 10
-Section S99
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-Subparagraph (SX 210.3-04)
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-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e709-108580

+ Details

XML 31 R31.htm IDEA: XBRL DOCUMENT

Memphis-Based Distribution Facility (Details) (Lease Agreements [Member], USD $)	Jul. 31, 2011
Lease Agreements [Member]
Assets (primarily buildings)	$ 12,195,000
Debt	8,338,000
Other long-term liabilities	$ 3,857,000

XML 32 R10.htm IDEA: XBRL DOCUMENT

Earnings Per Share

6 Months Ended

Jul. 31, 2011

Earnings Per Share

Earnings Per Share

NOTE E. EARNINGS PER SHARE

The following is a reconciliation of net earnings and the number of shares used in the basic and diluted earnings per share computations:


Dollars and amounts in thousands, except per share amounts	Net Earnings		Weighted Average Shares		Earnings Per Share
Thirteen weeks ended July 31, 2011
Basic	$	39,309		104,467	$	0.38
Effect of dilutive stock-based awards				2,299
Diluted	$	39,309		106,766	$	0.37
Thirteen weeks ended August 1, 2010
Basic	$	30,759		107,668	$	0.29
Effect of dilutive stock-based awards				2,556
Diluted	$	30,759		110,224	$	0.28
Twenty-six weeks ended July 31, 2011
Basic	$	70,924		104,795	$	0.68
Effect of dilutive stock-based awards				2,276
Diluted	$	70,924		107,071	$	0.66
Twenty-six weeks ended August 1, 2010
Basic	$	50,297		107,370	$	0.47
Effect of dilutive stock-based awards				2,525
Diluted	$	50,297		109,895	$	0.46

- Definition

The entire disclosure for earnings per share.

+ References+ Details

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Earnings Per Share (Details) (USD $) In Thousands, except Share data	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Aug. 01, 2010	Jul. 31, 2011	Aug. 01, 2010
Earnings Per Share
Net Earnings, Basic	$ 39,309	$ 30,759	$ 70,924	$ 50,297
Net Earnings, Diluted	$ 39,309	$ 30,759	$ 70,924	$ 50,297
Weighted Average Shares, Basic	104,467,000	107,668,000	104,795,000	107,370,000
Effect of dilutive stock-based awards	2,299,000	2,556,000	2,276,000	2,525,000
Weighted Average Shares, Diluted	106,766,000	110,224,000	107,071,000	109,895,000
Earnings Per Share, Basic	$ 0.38	$ 0.29	$ 0.68	$ 0.47
Earnings Per Share, Diluted	$ 0.37	$ 0.28	$ 0.66	$ 0.46
Stock-based awards excluded from the computation of diluted earnings per share	1,530,000	1,995,000	1,697,000	2,008,000

- Definition

Securities (including those issuable pursuant to contingent stock agreements) that could potentially dilute basic earnings per share (EPS) or earnings per unit (EPU) in the future that were not included in the computation of diluted EPS or EPU because to do so would increase EPS or EPU amounts or decrease loss per share or unit amounts for the period presented.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Antidilution
-URI http://asc.fasb.org/extlink&oid=6505113

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-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 171
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-Number 128
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-Number 07-4
-Paragraph 4
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Diluted Earnings Per Share
-URI http://asc.fasb.org/extlink&oid=6510752

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6508534

+ Details

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References+ Details

- Definition

The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period.

+ References+ Details

- Definition

Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period.

+ References

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-Number 128
-Paragraph 171
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Weighted-Average Number of Common Shares Outstanding
-URI http://asc.fasb.org/extlink&oid=6528421

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 40
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 128
-Paragraph 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 07-4
-Paragraph 4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

XML 35 R33.htm IDEA: XBRL DOCUMENT

Stock Repurchase Program (Details) ($125M Stock Repurchase Program [Member], USD $)	3 Months Ended	6 Months Ended
	Jul. 31, 2011	Jul. 31, 2011
$125M Stock Repurchase Program [Member]
Authorized amount of common stock under stock repurchase program	$ 125,000,000	$ 125,000,000
Number of shares of common stock repurchased	806,282	1,566,508
Weighted average cost per share of common stock repurchased	$ 38.75	$ 39.90
Total cost of repurchase of common stock	31,246,000	62,496,000
Remaining amount available for repurchases	$ 62,504,000	$ 62,504,000

- Definition

Equity impact of the value of stock that has been repurchased and retired during the period. The excess of the purchase price over par value can be charged against retained earnings (once the excess is fully allocated to additional paid in capital).

+ References+ Details

XML 36 R30.htm IDEA: XBRL DOCUMENT

Segment Reporting (Segment Information) (Details) (USD $)

3 Months Ended

6 Months Ended

Jul. 31, 2011

Aug. 01, 2010

Jul. 31, 2011

Aug. 01, 2010

Jan. 30, 2011

Net revenues

$ 814,750,000

^[1]

$ 775,554,000

^[1]

$ 1,585,575,000

^[1]

$ 1,493,191,000

^[1]

Depreciation and amortization expense

33,021,000

34,880,000

65,899,000

73,882,000

Earnings (loss) before income taxes

64,016,000

^[2]

51,074,000

^[2],[3],[4]

115,715,000

^[2]

83,407,000

^[2],[3],[4]

Assets

2,010,124,000

^[5]

1,995,493,000

^[5]

2,010,124,000

^[5]

1,995,493,000

^[5]

2,131,762,000

Capital expenditures

40,289,000

13,458,000

62,525,000

30,889,000

30,300,000

25,200,000

56,600,000

45,600,000

787,000

4,280,000

2,309,000

10,317,000

Exit of excess distribution capacity expense (benefit)

(400,000)

Long-term assets related to foreign operations

26,000,000

28,100,000

26,000,000

28,100,000

Chief Executive Officer [Member]

1,000,000

4,300,000

Direct-To-Customer [Member]

Net revenues

368,041,000

^[1]

325,678,000

^[1]

712,162,000

^[1]

631,535,000

^[1]

Depreciation and amortization expense

4,951,000

5,313,000

10,063,000

10,697,000

Earnings (loss) before income taxes

83,348,000

^[2]

68,344,000

^[2],[3],[4]

158,262,000

^[2]

136,955,000

^[2],[3],[4]

Assets

315,176,000

^[5]

282,213,000

^[5]

315,176,000

^[5]

282,213,000

^[5]

Capital expenditures

8,873,000

3,065,000

13,227,000

6,821,000

Retail [Member]

Net revenues

446,709,000

^[1]

449,876,000

^[1]

873,413,000

^[1]

861,656,000

^[1]

Depreciation and amortization expense

19,791,000

21,870,000

39,401,000

47,942,000

Earnings (loss) before income taxes

38,275,000

^[2]

34,446,000

^[2],[3],[4]

68,754,000

^[2]

57,026,000

^[2],[3],[4]

Assets

882,388,000

^[5]

896,831,000

^[5]

882,388,000

^[5]

896,831,000

^[5]

Capital expenditures

13,860,000

5,718,000

20,723,000

13,652,000

800,000

4,300,000

2,300,000

10,300,000

Unallocated [Member]

Net revenues

^[1]

Depreciation and amortization expense

8,279,000

7,697,000

16,435,000

15,243,000

Earnings (loss) before income taxes

(57,607,000)

^[2]

(51,716,000)

^[2],[3],[4]

(111,301,000)

^[2]

(110,574,000)

^[2],[3],[4]

Assets

812,560,000

^[5]

816,449,000

^[5]

812,560,000

^[5]

816,449,000

^[5]

Capital expenditures

$ 17,556,000

$ 4,675,000

$ 28,575,000

$ 10,416,000

[1]	Includes net revenues in the retail channel of approximately $30.3 million and $25.2 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $56.6 million and $45.6 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.
[2]	Includes expenses in the retail channel of approximately $0.8 million and $4.3 million for the thirteen weeks ended July 31, 2011 and August 1, 2010, respectively, and $2.3 million and $10.3 million for the twenty-six weeks ended July 31, 2011 and August 1, 2010, respectively, related to asset impairment and early lease termination charges for underperforming retail stores.
[3]	Unallocated costs before income taxes include $1.0 million and $4.3 million for the thirteen and twenty-six weeks ended August 1, 2010, respectively, related to the retirement of our former Chairman of the Board and Chief Executive Officer.
[4]	Unallocated costs before income taxes include a net benefit of $0.4 million for the thirteen and twenty-six weeks ended August 1, 2010 related to the exit of excess distribution capacity.
[5]	Includes $26.0 million and $28.1 million of long-term assets as of July 31, 2011 and August 1, 2010, respectively, related to our foreign operations.

XML 37 R18.htm IDEA: XBRL DOCUMENT

Comprehensive Income (Tables)

6 Months Ended

Jul. 31, 2011

Comprehensive Income

Summary Of Comprehensive Income


	Thirteen Weeks Ended					Twenty-Six Weeks Ended
Dollars in thousands	July 31, 2011		August 1, 2010			July 31, 2011		August 1, 2010
Net earnings	$	39,309	$	30,759		$	70,924	$	50,297
Other comprehensive income
Foreign currency translation adjustment		73		(885	)		2,460		807
Comprehensive income	$	39,382	$	29,874		$	73,384	$	51,104

- Definition

Tabular disclosure of components of comprehensive income (loss) including, but not limited to: (a) foreign currency translation adjustments; (b) gains (losses) on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity; (c) gains (losses) on intercompany foreign currency transactions that are of a long-term-investment nature, when the entities to the transaction are consolidated, combined, or accounted for by the equity method in the reporting enterprise's financial statements; (d) change in the market value of a futures contract that qualifies as a hedge of an asset reported at fair value; (e) unrealized holding gains (losses) on available-for-sale securities and that resulting from transfers of debt securities from the held-to-maturity category to the available-for-sale category; (f) a net loss recognized as an additional pension liability not yet recognized as net periodic pension cost; and (g) the net gain (loss) and net prior service cost or credit for pension plans and other postretirement benefit plans.

+ References+ Details

XML 38 R11.htm IDEA: XBRL DOCUMENT

Asset Impairment And Lease Termination Charges

6 Months Ended

Jul. 31, 2011

Asset Impairment And Lease Termination Charges

Asset Impairment And Lease Termination Charges

NOTE F. ASSET IMPAIRMENT AND LEASE TERMINATION CHARGES

We review the carrying value of all long-lived assets for impairment, primarily at a store level, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We review for impairment all stores for which current or projected cash flows from operations are not sufficient to recover the carrying value of the assets. Impairment results when the carrying value of the assets exceeds the estimated undiscounted future cash flows over the remaining life of the lease. Our estimate of undiscounted future cash flows over the store lease term (generally 5 to 22 years) is based upon our experience, historical operations of the stores and estimates of future store profitability and economic conditions. The future estimates of store profitability and economic conditions require estimating such factors as sales growth, gross margin, employment rates, lease escalations, inflation on operating expenses and the overall economics of the retail industry, and are therefore subject to variability and difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the net carrying value and the asset's fair value. Long-lived assets are measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. The fair value is estimated based upon future cash flows (discounted at a rate that is commensurate with the risk and approximates our weighted average cost of capital).

For any store or facility closure where a lease obligation still exists, we record the estimated future liability associated with the rental obligation on the cease use date.

XML 39 R21.htm IDEA: XBRL DOCUMENT

Borrowing Arrangements (Credit Facility) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Aug. 01, 2010	Jul. 31, 2011	Aug. 01, 2010
Amount of borrowings under credit facility during period	$ 0	$ 0	$ 0	$ 0
Amount outstanding under credit facility	0	0	0	0
Interest rate description	We may elect interest rates calculated at (i) Bank of America's prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio.		We may elect interest rates calculated at (i) Bank of America's prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio.
LIBOR [Member] \| Unsecured Revolving Line Of Credit [Member]
Additional percentage over reference rate	1.00%		1.00%
Federal Funds [Member] \| Unsecured Revolving Line Of Credit [Member]
Additional percentage over reference rate	0.50%		0.50%
Unsecured Revolving Line Of Credit [Member]
Current borrowing capacity	300,000,000		300,000,000
Additional borrowing capacity	200,000,000		200,000,000
Default interest rate increase	2.00%		2.00%
Credit facility, maturity date	September 23, 2015		September 23, 2015
Maximum borrowing capacity including additional borrowing capacity	500,000,000		500,000,000
Standby Letters Of Credit [Member]
Amount issued but undrawn under credit facility	$ 9,420,000		$ 9,420,000

XML 40 R29.htm IDEA: XBRL DOCUMENT

Asset Impairment And Lease Termination Charges (Details) (USD $)	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Aug. 01, 2010	Jul. 31, 2011	Aug. 01, 2010
Asset impairment and early lease termination charges	$ 787,000	$ 4,280,000	$ 2,309,000	$ 10,317,000
Exit of excess distribution capacity expense (benefit)		(400,000)		(400,000)
Maximum [Member]
Store lease term, in years			22
Minimum [Member]
Store lease term, in years			5
Selling, General And Administrative [Member]
Asset impairment and early lease termination charges	518,000	4,110,000	2,040,000	9,689,000
Exit of excess distribution capacity expense (benefit)		$ (403,000)		$ (403,000)

- Definition

The charge against earnings in the period, comprised of costs incurred associated with an exit or disposal activity other than for a discontinued operations as defined under generally accepted accounting principles. Costs of such activities include those for one-time termination benefits, termination of an operating lease or other contract, consolidating or closing facilities, and relocating employees, and costs associated with an ongoing benefit arrangement, but excludes costs associated with the retirement of a long-lived asset.

+ References+ Details

XML 41 R5.htm IDEA: XBRL DOCUMENT

Condensed Consolidated Statements Of Cash Flows (USD $)	6 Months Ended
Condensed Consolidated Statements Of Cash Flows (USD $)	Jul. 31, 2011	Aug. 01, 2010
Cash flows from operating activities:
Net earnings	$ 70,924,000	$ 50,297,000
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	65,899,000	73,882,000
(Gain)/loss on sale/disposal of assets	646,000	(2,033,000)
Impairment of assets	172,000	2,032,000
Amortization of deferred lease incentives	(13,999,000)	(19,709,000)
Deferred income taxes	(4,830,000)	(6,327,000)
Tax benefit from exercise of stock-based awards	5,865,000	8,011,000
Stock-based compensation expense	12,256,000	15,269,000
Changes in:
Accounts receivable	(9,048,000)	6,345,000
Merchandise inventories	(42,669,000)	(52,160,000)
Prepaid catalog expenses	(4,839,000)	(9,021,000)
Prepaid expenses and other assets	(17,262,000)	(17,952,000)
Accounts payable	(42,240,000)	(2,561,000)
Accrued salaries, benefits and other current and long-term liabilities	(46,523,000)	(18,710,000)
Customer deposits	(846,000)	(4,991,000)
Deferred rent and lease incentives	7,648,000	(743,000)
Income taxes payable	(28,885,000)	(30,740,000)
Net cash used in operating activities	(47,731,000)	(9,111,000)
Cash flows from investing activities:
Purchases of property and equipment	(62,525,000)	(30,889,000)
Restricted cash deposits	(2,209,000)	(12,502,000)
Proceeds from sale of assets	41,000	10,715,000
Other	(200,000)	0
Net cash used in investing activities	(64,893,000)	(32,676,000)
Cash flows from financing activities:
Repayments of long-term obligations	(66,000)	(1,348,000)
Net proceeds from exercise of stock-based awards	7,412,000	9,573,000
Tax withholdings related to stock-based awards	(8,181,000)	(11,024,000)
Excess tax benefit from exercise of stock-based awards	4,821,000	5,992,000
Payment of dividends	(33,617,000)	(27,023,000)
Repurchase of common stock	(62,496,000)	(44,306,000)
Other	(20,000)	0
Net cash used in financing activities	(92,147,000)	(68,136,000)
Effect of exchange rates on cash and cash equivalents	1,002,000	17,000
Net decrease in cash and cash equivalents	(203,769,000)	(109,906,000)
Cash and cash equivalents at beginning of period	628,403,000	513,943,000
Cash and cash equivalents at end of period	$ 424,634,000	$ 404,037,000

XML 42 R22.htm IDEA: XBRL DOCUMENT

Borrowing Arrangements (Letter Of Credit Facilities And Long-Term Debt) (Details) (USD $)	6 Months Ended
	Jul. 31, 2011
Long-term debt obligations	$ 8,606,000
Federal Funds [Member] \| Unsecured Letter Of Credit Facilities [Member]
Additional percentage over reference rate	0.50%
Unsecured Letter Of Credit Facilities [Member]
Maximum borrowing capacity under letter of credit facilities including additional borrowing capacity	90,000,000
Letter of credit facilities, renewal date	September 2, 2011
Letter of credit facilities, maturity date	August 31, 2012
Interest rate description	lender's prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0%
Additional percentage over reference rate	2.00%
Latest expiration date possible for future letters of credit	January 28, 2013
Outstanding letter of credit facilities	$ 30,184,000

- Definition

Including current and noncurrent portions, aggregate carrying amount of long-term borrowings as of the balance sheet date. May include notes payable, bonds payable, commercial loans, mortgage loans, convertible debt, subordinated debt and other types of debt, which had initial maturities beyond one year or beyond the normal operating cycle, if longer, and after deducting unamortized discount or premiums, if any.

+ References+ Details

XML 43 R24.htm IDEA: XBRL DOCUMENT

Stock-Based Compensation (Summary Of Stock Options) (Details)	6 Months Ended
	Jul. 31, 2011
Stock-Based Compensation
Balance at January 30, 2011	1,367,629
Granted	0
Exercised	(336,158)
Canceled	(700)
Balance at July 31, 2011	1,030,771
Vested percentage	100.00%

- Definition

The number of shares reserved for issuance under stock option agreements awarded under the plan that validly exist and are outstanding as of the balance sheet date, including vested options.

+ References+ Details

- Definition

Number of share options (or share units) exercised during the current period.

+ References+ Details

XML 44 R7.htm IDEA: XBRL DOCUMENT

Borrowing Arrangements

6 Months Ended

Jul. 31, 2011

Borrowing Arrangements

Borrowing Arrangements

NOTE B. BORROWING ARRANGEMENTS

Credit Facility

We have a credit facility that provides for a $300,000,000 unsecured revolving line of credit that may be used for loans or letters of credit. Prior to March 23, 2015, we may, upon notice to the lenders, request an increase in the credit facility of up to $200,000,000, to provide for a total of $500,000,000 of unsecured revolving credit. The credit facility contains certain financial covenants, including a maximum leverage ratio (funded debt adjusted for lease and rent expense to earnings before interest, income tax, depreciation, amortization and rent expense "EBITDAR"), and covenants limiting our ability to dispose of assets, make acquisitions, be acquired (if a default would result from the acquisition), incur indebtedness, grant liens and make investments. The credit facility contains events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material indebtedness and events constituting a change of control. The occurrence of an event of default will increase the applicable rate of interest by 2.0% and could result in the acceleration of our obligations under the credit facility and an obligation of any or all of our U.S. subsidiaries that have guaranteed the credit facility to pay the full amount of our obligations under the credit facility. As of July 31, 2011, we were in compliance with our financial covenants under the credit facility and, based on current projections, we expect to be in compliance throughout fiscal 2011. The credit facility matures on September 23, 2015, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized.

We may elect interest rates calculated at (i) Bank of America's prime rate (or, if greater, the average rate on overnight federal funds plus one-half of one percent, or a rate based on LIBOR plus one percent) plus a margin based on our leverage ratio or (ii) LIBOR plus a margin based on our leverage ratio.During the thirteen and twenty-six weeks ended July 31, 2011 and August 1, 2010, we had no borrowings under the credit facility, and no amounts were outstanding as of July 31, 2011 or August 1, 2010. Additionally, as of July 31, 2011, $9,420,000 in issued but undrawn standby letters of credit was outstanding under the credit facility. The standby letters of credit were issued to secure the liabilities associated with workers' compensation and other insurance programs.

Letter of Credit Facilities

As of July 31, 2011, we had three unsecured letter of credit reimbursement facilities for a total of $90,000,000. On September 2, 2011, we renewed the three unsecured commercial letter of credit reimbursement facilities, each of which matures on August 31, 2012. The letter of credit facilities contain covenants and provide for events of default that are consistent with our unsecured revolving line of credit. Interest on unreimbursed amounts under the letter of credit facilities accrues at the lender's prime rate (or if greater, the average rate on overnight federal funds plus one-half of one percent) plus 2.0%. As of July 31, 2011, an aggregate of $30,184,000 was outstanding under the letter of credit facilities, which represent only a future commitment to fund inventory purchases to which we had not taken legal title. The latest expiration possible for any future letters of credit issued under the facilities is now January 28, 2013.

Long-Term Debt

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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XML 45 R16.htm IDEA: XBRL DOCUMENT

Stock Repurchase Program

6 Months Ended

Jul. 31, 2011

Stock Repurchase Program

Stock Repurchase Program

NOTE K. STOCK REPURCHASE PROGRAM

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