Blending a little bit of the old with the new is something that any hard-core patron of Williams-Sonoma's (NYSE:WSM) cookware stores should be able to appreciate. After all, how else is sourdough bread made, but for blending a little bit of old dough into the new batch?

In the case of Williams-Sonoma, management seems to be looking for mature businesses like the namesake Williams-Sonoma and Pottery Barn to hand over the growth baton to newer concepts like Pottery Barn Kids, Hold Everything, and West Elm.

That's not to say that the old businesses are doing poorly, as the company's fourth-quarter and year-end results show. Sales were up about 8%, while net income (excluding the all-too-common lease adjustment) climbed about 12%. Same-store sales were up about 1.5% for the quarter, while total square footage climbed 11.4%.

If those sound like "ho-hum" figures, consider the competition. Other retailers, like Pier One (NYSE:PIR) and Linens 'n Things (NYSE:LIN), would be happy with those results in an environment that's been a bit tough for home furnishings.

Better still, the company grew free cash flow nicely in 2004. For the 12 months, Williams-Sonoma generated $304 million in operating cash flow, up roughly 50% from last year. And it hit $123 million in FCF, compared with a negative number for last year.

So why does the company need new concepts like Pottery Barn Kids and West Elm?

While Williams-Sonoma operates fine stores, the stores' prices keep their appeal from becoming universal. I'm an avid amateur chef, but I can point to only one or two items in my kitchen that I've purchased from Williams-Sonoma, and I just can't justify spending top-dollar on its items when I can usually find similar -- and cheaper -- items at rivals or at restaurant supply outlets.

Accordingly, it's probably a good idea for Williams-Sonoma to cast its net a bit wider with new concepts to capture even more of the "upper-middle" market that it's been so good at targeting for so long.

It's probably just coincidence that Williams-Sonoma's goods and its stock are both a bit pricey. The stock trades at about 24 times trailing earnings and sports an EV-to-FCF ratio of 33. That said, the company does post a return on equity above 20%, has demonstrated strong growth for more than a decade, and has some promising new opportunities in the near future.

For now at least, I'm going to do what I've always done -- read the Williams-Sonoma catalog and then go off to look for basically the same merchandise elsewhere for 10% less. That's pretty much what I'm doing with the stock as well. I think the business is strong and very well-run, but consumers can be fickle, and I'd rather not pay 33 times free cash flow for a stake of my own.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).