Williams-Sonoma Inc. (WSM), a household name in America for high-end kitchenware and modern furnishings, started out as a small hardware store in Sonoma, California. Company founder Chuck Williams first moved to Sonoma in 1947, where he began working as a contractor and fell in with a group of friends who shared his love of cooking. A trip to Europe in 1953 was the catalyst that transformed his passion into a vocation. During his travels, Williams was introduced to classic French cooking equipment unlike anything he had seen back in America. One year later, he purchased a hardware store in downtown Sonoma, and soon after transformed it into a shop specializing in French cookware. Thus, Williams-Sonoma was born. Since then, the company has expanded to sell high-end items for the home of all kinds.

Benefitting from the changes in dining and food culture during the '60s and '70s, Williams-Sonoma continued to expand in size. The company caught the eye of entrepreneur Howard Lester, who then purchased the company with a friend in 1976 and assumed the role of Chief Executive Officer (CEO). In 1982, Williams-Sonoma raised financing through an initial public offering (IPO) to accelerate its expansion. Today, the company has more than 600 stores globally with a market capitalization of $6.4 billion. For its 2019 fiscal year (FY), Williams-Sonoma reported net earnings of $356.1 million on net revenue of $5.9 billion.

Williams-Sonoma today sells furnishings and decorative accessories for every room in the home. It also has launched two distinct brands: West Elm, offering modern furnishings and décor; and Mark and Graham, an online platform for personalized gift buying.

Williams-Sonoma has used acquisitions to complement its internal growth, although not all of them have been successful. In 1978, for example, it ventured into retail gardening by purchasing Gardener's Eden, a catalog company that sells plants, tools, and accessories. Williams-Sonoma sold it in 1999. But other acquisitions have proved far more successful in expanding Williams-Sonoma's sales, including one that uses augmented reality to give customers a whole new retail buying experience.

We take a look at three of these acquisitions in more detail below. The company provides sales breakdowns for some, but not all of these deals.

Pottery Barn Inc.

  • Type of Business: Omnichannel Home Furnishings Retailer
  • Acquisition Price: Not Available
  • Acquisition Date: September 1, 1986
  • Annual Net Revenue (FY 2019): $2.2 billion

Pottery Barn was established in 1949 as a home furnishings retailer focused on offering products marked by exceptional comfort, quality, style, and value. Williams-Sonoma purchased the company from Gap Inc. (GPS) in 1986. At that time, Pottery Barn had about 21 stores located mainly in Manhattan, where they sold a limited range of products. Since then, Williams-Sonoma has transformed it into a premier home furnishings retailer selling items in stores and online. Pottery Barn's products include furniture, bedding, bathroom accessories, rugs, lighting, and curtains.

Williams-Sonoma built on the Pottery Barn brand, launching Pottery Barn Kids in 1999 and then Pottery Barn Teen in 2003. The former focuses on furnishings and décor for nurseries, bedrooms, and play spaces, while the latter offers furniture, bedding, lighting, and more for the teenage bedroom, college dorm rooms, study spaces, and lounges.

The Pottery Barn and parent Williams-Sonoma brands have been built on a reputation for selling high-quality products. But that image was tarnished by a $1 million Federal Trade Commission (FTC) fine imposed this year on Williams-Sonoma for false "Made in America" claims on certain products. This included Pottery Barn Teen and Pottery Barn Kids-branded upholstered furniture, and Goldtouch Bakeware and Rejuvenation-branded products.

Rejuvenation Inc.

  • Type of Business: Lighting and Home Improvement Store
  • Acquisition Price: Not disclosed
  • Acquisition Date: November 4, 2011

Rejuvenation was founded in 1977 by two friends, Jim Kelly and Barbara Kerr, who borrowed $2,500 to open a hardware and house parts store. By 2004, the company was posting about $25 million in annual revenue. The company was acquired by Williams-Sonoma in 2011. Rejuvenation, whose manufacturing and distribution facilities are located in Portland, Oregon, specializes in made-to-order lighting fixtures. The company also sells other hardware, furniture, and home décor. Rejuvenation's high-quality, specialized products complement Williams-Sonoma's brand and bolster its line of home furnishing products.

Outward Inc.

  • Type of Business: 3-D Imaging and Augmented Reality
  • Acquisition Price: $112 million
  • Acquisition Date: November 16, 2017 (announced)

Outward is an enterprise technology startup founded in 2012 in San Jose, California. The company offers 3-D imaging and augmented reality specifically geared toward digital applications for the home furnishings and decorative accessories industry. Applications using augmented reality add virtual images to the viewer's field of vision, as opposed to virtual reality, which completely immerses the viewer in a virtual world cutoff from the real physical world.

Williams-Sonoma acquired Outward in 2017 in an all-cash purchase. Outward's technology gives Williams-Sonoma customers highly-interactive shopping experiences, enabling them to see a 3D-preview of what their home could look like with new furnishings.