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"There's nothing I want more than to decorate my house like a page from Pottery Barn." This sentence may not be familiar to you, but I've heard it said, and posted on Facebook, by more than one person over the past few months. And this got me thinking. How is the company behind Pottery Barn, Williams-Sonoma (NYSE: WSM  ) , doing investing-wise?

Country-cottage chic, and so much more
If you're not familiar with Pottery Barn or Williams-Sonoma, try to imagine the world's most perfect shops for home furnishings and all things kitchen-related. To say they are a mecca for designers, and consequently financially well-off, is putting it mildly. For example, an All-Clad Tri-Ply Stainless-Steel Stir Fry Pan from Williams-Sonoma will set you back about $200. But oh, it's a must-have for those who want the best way to fry. And who wouldn't want a Monogrammed Square Paperwhite Soap Set from Pottery Barn for a meager $39?

These prices might seem outrageous, especially when you consider you can get a nonstick stir-fry pan from Bed Bath & Beyond (Nasdaq: BBBY  ) for $14.99, but as a Williams-Sonoma/Pottery Barn customer myself, I can tell you it's totally worth it. Plus with the holidays coming up, I've already made my dream list of "essential" holiday decorations.

So am I the only Williams-Sonoma/Pottery Barn nut out there? No, far from it. Although Williams-Sonoma didn't escape the recession unscathed, it did manage to weather it nicely and is currently rebounding.

Net income grew from $30 million in 2008 to $200 million in 2010. Additionally, gross margin increased from 39.5% in 2008 to 44.4% in 2010, free cash flow increased from $38 million in 2009 to $294 million in 2011, and the icing on this designer cake (tray): Williams-Sonoma pays a dividend yield of 2.2% with what looks like a sustainable payout ratio of 31%. Great news when you consider competitors Bed Bath & Beyond, (Nasdaq: AMZN  ) , and Pier 1 Imports (NYSE: PIR  ) don't offer a dividend, and Costco (Nasdaq: COST  ) has a yield of 1.1%.

A Pottery Barn/Williams-Sonoma holiday
Right now, Williams-Sonoma is trading right around $31 a share, which is above its 52-week low of $27.90, but nowhere near its 52-week high of $45.48. So is now the time to buy in? Well, it's a little bit higher than we Fools like to see it, but with the holidays coming up, Williams-Sonoma could see some great gains. Plus with its dividend yield, this is definitely a stock to follow.

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Fool contributor Katie Spence LOVES Pottery Barn. ... Her husband and his paycheck do not. She does not own shares of any company mentioned above. The Motley Fool owns shares of Costco Wholesale. Motley Fool newsletter services have recommended buying shares of Williams-Sonoma, Bed Bath & Beyond,, and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/26/2016 4:02 PM
WSM $46.65 Down -0.03 -0.06%
Williams-Sonoma CAPS Rating: ***
AMZN $822.59 Down -12.59 -1.51% CAPS Rating: ****
BBBY $40.57 Down -0.15 -0.37%
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COST $150.98 Down -0.01 -0.01%
Costco Wholesale CAPS Rating: ****
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