This summary is based on the fourth quarter fiscal 2007 earnings call conducted by Williams-Sonoma Inc. (WSM: chart) on March 27, 2008.

Management:

President: Laura J Alber
Group President: David DeMattei
CEO and Chairman: Howard W Lester
CFO, COO and EVP: Sharon L McCollam
EVP, Chief Marketing Officer and Director: Patrick J Connolly
Director, IR: Stephen C Nelson

Key Investor Issues:

- Quarterly EPS rose 8.5% to $1.15 versus $1.06 last year quarter.
- Full year net revenues increased 5.8% to $3.945 billion from $3.728 billion last year.
- The company forecasts EPS of $1.42 to $1.56 for full year 2008.

Fiscal 2007 Financial Highlights

- Diluted EPS on a non-GAAP basis increased 0.6% to $1.77 from $1.76 last year.
- Retail net revenues rose 5.9% to $2.281 billion versus $2.154 billion last year.
- On a comparable 53-week to 53-week basis, retail net revenues increased 4.3% due to the increase in retail leased square footage.
- The direct-to-consumer net revenues for the 53 weeks ended February 3, 2008 rose 5.7% to $1.664 billion versus $1.574 billion for the 52 weeks ended January 28, 2007. The increase was a result of higher net revenues in the PBteen, West Elm and Williams-Sonoma brands.
- Internet revenues firmed 19% to $1.104 billion from $927.6 million last year.

- The gross margin as a percentage of net revenues was 38.9% for the year versus 39.9% in the previous year.
- The SG&A expenses were $1.223 billion or 31% of net revenues compared with $1.160 billion or 31.1% of net revenues for the year ended January 28, 2007.

Fourth Quarter Fiscal 2008 Financial Highlights

The net revenues for the 14-week Q4 of fiscal year 2007 increased by 9.5% to $1.374 billion.

This is in comparison with $1.255 billion in the 13-week Q4 of fiscal year 2006. On a 14-week to 14-week basis, the net revenues increased 3.4% despite a comparable store sales decrease of 0.1%.

The retail net revenues in the 14-week Q4 of 2007 increased by 7.7% to $846.6 million versus $785.8 million in the 13-week Q4 of fiscal 2006.

On a comparable 14-week to 14 week basis, retail net revenues increased by 3.4% due to a 5.3% year-over-year increase in retail leased square footage, including 12 net new stores. Net revenues generated in the Williams-Sonoma, West Elm, Pottery Barn and Williams-Sonoma Home brands were the key contributors to the year-over-year revenue increase.

The quarter direct-to-consumer net revenues increased 12.5% to $527.8 million.

- This is in comparison with $469.1 million in the 13-week Q4 of year 2006.
- Internet revenues for the quarter rose 29.1% to $368.6 million versus $285.5 million in the year ago quarter. On a comparable 14-week to 14-week basis, Internet revenues increased by 18.7%.

The gross margin as a percentage of net revenues was 41.6% versus 43.2% of net revenues in the last year quarter.

This represents a 160 basis points decrease as a percentage of net revenues driven by increased markdowns, higher cost merchandise sold due to increased raw material costs, and higher inventory related costs. This was partially offset by fixed occupancy expense leverage generated by incremental revenues during the additional week in Q4 of fiscal year 2007.

The SG&A expenses were $374.6 million or 27.3% of net revenues compared with $346.3 million, or 27.6% of net revenues in Q4 of fiscal year 2006.

This represents a 30 basis points decrease due to certain asset disposal and asset impairment costs incurred in the Q4 of 2006 that did not recur in the Q4 of 2007. The positive trend was however partially offset by increased employment costs.

The effective income tax rate in the fourth quarter of fiscal 2007 was 37.1% versus 38.6% in the fourth quarter of fiscal 2006.

The decrease of 150 basis points was driven by certain favorable income tax resolutions during the Q4 of 2007.

The management repurchased and retired 1,796,095 common stock shares at a weighted average cost of $26.52 per share.