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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934

For the fiscal year ended JANUARY 29, 1995

Commission file number 2-83992

WILLIAMS-SONOMA, INC.
(Exact Name of Registrant as Specified in Its Charter)


CALIFORNIA 94-2203880
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)


100 NORTH POINT STREET, SAN FRANCISCO, CA 94133
(Address of Principal Executive Offices) (Zip Code)


Registrant's Telephone Number, Including Area Code (415) 421-7900

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by checkmark 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 X No
--- ---

Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
---

As of April 20, 1995, the approximate aggregate market value of voting stock
held by non-affiliates of the Registrant was $340,965,014.

As of April 20, 1995, 25,349,327 shares of the Registrant's Common Stock
were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the following documents have been incorporated herein by
reference:

1) Registrant's Annual Report to Shareholders for the Fiscal Year ended
January 29, 1995 (the "1994 Annual Report") in Parts I, II and IV hereof and
attached hereto as Exhibit 13;

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2) Registrant s Proxy Statement for the 1994 Annual Meeting (the "Proxy
Statement") in Part III hereof.



WILLIAMS-SONOMA, INC.
FORM 10-K ANNUAL REPORT
FISCAL YEAR ENDED JANUARY 29, 1995




TABLE OF CONTENTS




PART I PAGE


Item 1. Business 3

Item 2. Properties 6

Item 3. Legal Proceedings 7

Item 4. Submission of Matters to a Vote of Security 7
Holders

PART II

Item 5. Market for the Registrant's Common Equity 8
and Related Stockholder Matters

Item 6. Selected Financial Data 8

Item 7. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations

Item 8. Financial Statements and Supplementary Data 9

Item 9. Changes in and Disagreements with Accountants 9
on Accounting and Financial Disclosure

PART III

Item 10. Directors and Executive Officers of the 10
Registrant

Item 11. Executive Compensation 10

Item 12. Security Ownership of Certain Beneficial 10
Owners and Management




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Item 13. Certain Relationships and Related Transactions 10

PART IV

Item 14 Exhibits, Financial Statement Schedules 11
and Reports on Form 8-K



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PART I


ITEM 1. BUSINESS

Williams-Sonoma, Inc., together with its subsidiaries (the Company), is a
national specialty retailer of fine quality cooking and serving equipment, home
furnishings and home and garden accessories, which it markets through 214 retail
stores and five mail order catalogs. The Company believes that it is one of the
country's largest specialty retailers of such equipment, furnishings and
accessories. Retail sales accounted for approximately 58% of the Company's net
sales during the fiscal year ended January 29, 1995 (Fiscal 1994), while mail
order sales accounted for the balance.

The Company offers high quality, home-centered merchandise through five
concepts, each of which is focused on a different area of the home:
Williams-Sonoma offers culinary and serving equipment; Pottery Barn features
items in casual home furnishings, flatware and table accessories; Hold
Everything offers innovative household storage products; Gardener's Eden
features home gardening equipment and accessories; and Chambers offers high
quality bed and bath products. Together, these concepts help customers satisfy
their home-centered needs from the kitchen and garden to the bedroom and bath.

The Company was founded in 1956 in Sonoma, California, by Charles E. Williams,
currently Vice Chairman and a director of the Company. Williams-Sonoma was one
of the first retailers of fine quality cookware in the United States. Two years
later, the Sonoma store was moved to San Francisco. In 1972, the Company began
to offer its Williams-Sonoma kitchen products through mail order catalogs. The
Company expanded into areas of the home-centered business beyond kitchen
products by acquiring: Gardener's Eden, a mail order merchandiser of home
gardening equipment and accessories and housewares, in 1982; Pottery Barn, a
retailer of home furnishings, accessories and housewares, in 1986; and
California Closet Company, Inc., a direct marketer and installer of customized
closet systems, in 1990. The Company also internally developed Hold
Everything, a retail and mail order merchandiser of innovative household storage
products, and Chambers, a mail order merchandiser of high-quality bed and bath
products. In August 1994 the Company sold California Closet Company, Inc.,
which accounted for 2% of sales for the fiscal year ended January 30, 1994
(Fiscal 1993).


MERCHANDISING CONCEPTS

The Company has five merchandising concepts: Williams-Sonoma, Pottery Barn, Hold
Everything, Gardener's Eden, and Chambers. The Company believes that these
specialty concepts together can fulfill a customer's home-centered needs, from
the kitchen and garden to the bedroom and bath.



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RETAIL STORES

Three of the Company's five merchandising concepts are marketed through retail
stores - Williams-Sonoma, Pottery Barn and Hold Everything. Williams-Sonoma
stores offer a wide selection of culinary and serving equipment, including
cookware, cookbooks, cutlery, informal dinnerware, glassware and table linen. In
addition, these stores carry a variety of quality foods, including a line of
Williams-Sonoma food products, such as gourmet coffees and pasta sauces.
Pottery Barn stores feature a large assortment of items in casual home
furnishings, flatware and table accessories from around the world that are
designed to be combined to create a dynamic look in the home. The Hold
Everything concept was developed by the Company to offer innovative solutions to
household storage needs by providing efficient organization solutions for every
room in the house.

As of January 29, 1995 the Company operated 214 retail stores, located in 26
states and the District of Columbia. This represents 120 Williams-Sonoma, 57
Pottery Barn, 35 Hold Everything, and 2 outlet stores. During Fiscal 1994 the
Company opened 11 new large format stores and expanded eight existing store
sites to the larger format. The 15 larger format Williams-Sonoma stores are, on
average, 31% larger than the average Williams-Sonoma store. The 4 large format
Pottery Barn stores are, on average, 100% larger than the average Pottery Barn
store. The Company plans 50 new or expanded large-format stores in Fiscal 1995
- -- 33 Williams-Sonoma and 17 Pottery Barn. The Company closed 2 Williams-Sonoma
stores, 2 Hold Everything stores and 2 Pottery Barn stores during Fiscal 1994.

MAIL ORDER OPERATIONS

The Company's mail order business began in 1972 when it introduced its flagship
catalog, "A Catalog for Cooks," which markets the Williams-Sonoma concept.
Since then, it has expanded its mail order business to include the four other
concepts - Pottery Barn, Hold Everything, Gardener's Eden and Chambers. The
mail order business complements the retail business by building customer
awareness of a concept and acting as an effective advertising vehicle. In
addition, the Company believes that the mail order catalogs act as a cost
efficient means of testing market acceptance of new products.

The Company sends its catalogs to addresses from its proprietary customer list,
as well as to names from lists which the Company receives in exchange or rents
from other mail order merchandisers, magazines and other companies. In
accordance with prevailing industry practice, the Company rents its list to
other merchandisers. The Company's customer list is continually updated to
include new prospects and eliminate non-responders.

SUPPLIERS

The Company purchases its merchandise from numerous foreign and domestic
manufacturers and importers, none of which accounted for more than 5% of
purchases during Fiscal 1994. Approximately 38% of the Company's merchandise is
foreign-sourced. The primary sources for imported merchandise are located in
Europe and Asia. The Company relies on long-standing arrangements with many of
its buying agents.



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MANAGEMENT INFORMATION SYSTEMS

The Company's management information systems (MIS) are designed to provide its
management and other personnel with information necessary to control and manage
its business. The Company is planning to expand and upgrade its automatic call
directing phone switch in mail order operations which routes customer calls. A
significant investment in store systems is planned for 1995, with implementation
of enhanced merchandising receiving, electronic mail, time and attendance, and
electronic forms modules. Management believes that there will be a reduction in
the administrative duties of its store employees, thereby allowing more time for
even better customer service.


COMPETITION AND SEASONALITY

The specialty retail business is highly competitive. The Company's specialty
retail stores and mail order catalogs compete with other retail stores,
including specialty stores and department stores and other mail order catalogs.
Certain of the Company's competitors have greater financial, distribution and
marketing resources than the Company. The recent substantial sales growth in
the mail order catalog industry has encouraged the entry of many new
competitors and an increase in competition from established companies. The
Company competes on the basis of the quality of its merchandise, service
to its customers and its proprietary customer list.

The Company's business is subject to substantial seasonal variations in demand.
Historically, a significant portion of the Company's sales and net income have
been realized during the period from October through December, and levels of net
sales and net income have generally been significantly lower during the period
from February through July. The Company believes this is the general pattern
associated with the mail order and retail industries. In anticipation of its
peak season, the Company hires a substantial number of additional employees in
its retail stores and mail order processing and distribution areas, and incurs
significant fixed catalog production and mailing costs. (See Quarterly
Financial Information on page 24 of the 1994 Annual Report which is incorporated
herein by reference).


EMPLOYEES

At January 29, 1995, the Company employed approximately 6,900 persons,
approximately 2,100 of whom were full-time employees. During the 1994 peak
season, in accordance with its normal hiring practices, the Company hired
approximately 3,000 temporary employees in its stores and in its mail order
processing and distribution areas.



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ITEM 2. PROPERTIES

The Company's corporate offices are located in three facilities in San
Francisco, California, totaling 96,000 square feet under leases expiring in 1996
and 1997. In December 1993 the Company purchased a headquarters building with
plans to consolidate the headquarters staff in the spring of 1995. In the
fourth quarter of Fiscal 1993 the Company recorded a $3,000,000 reserve for the
estimated cost of sub-leasing the leased space before the expiration of the
leases. Sales growth experienced in the current year and planned growth in
Fiscal 1995 require the Company to retain some of the leased space it planned to
vacate. Therefore, in the fourth quarter of Fiscal 1994 the Company reversed
$2,000,000 of the lease reserve established in Fiscal 1993.

On April 1, 1994 the Company entered into an agreement with a bank for a
$7,000,000 mortgage at LIBOR plus 1.25%. The Company then fixed the mortgage
interest rate at 7.8% by entering into an interest rate swap agreement with the
bank. The mortgage is secured by the new corporate headquarters building.
Interest and principal payments are due quarterly through March 2001.

In July 1984, the Company began distributing its merchandise through a
centralized leased facility of approximately 243,000 square feet located in
Memphis, Tennessee. In October 1986 an additional 190,000 square feet of
distribution center was constructed. The lessor is a partnership consisting of
two directors and/or officers of the Company. The construction of the entire
facility was financed by the partnership through the aggregate issuance of
$2,900,000 of industrial development bonds. The lease, which was amended in
October 1986 to include the additional 190,000 square feet of space, had an
initial non-cancelable term of ten years expiring on June 30, 1994 with two
optional five-year renewals by the Company. In December 1993, the Company
exercised the two five-year renewal options and is now obligated to lease the
space until June 30, 2004. In addition, the Company is obligated to renew the
lease annually so long as the bonds which financed the project are outstanding.
Effective July 1, 1994, the fixed basic monthly rent will increase from $46,500
to $51,500. In connection with the December 1993 transaction, both the
partnership and the Company provided to an unaffiliated bank an indemnity
against certain environmental liabilities.

In August 1990, the Company entered into a lease agreement for an additional
307,000 square feet of distribution space adjacent to its existing Memphis
facility. The lessor is a partnership that includes three directors and/or
officers of the Company. The construction was financed by the partnership
through the sale of $10,550,000 of industrial development bonds. The lease has
an initial, non-cancelable term of ten years, with four five-year renewals at
the option of the Company, and mandatory annual renewals so long as the bonds
are outstanding. In September 1994 this lease was amended to include an
approximately 306,000 square-foot expansion. The expansion is currently under
construction and is expected to be completed in July 1995. (See Note F of Notes
to the Company's Consolidated Financial Statements).

The Company's net selling area totaled approximately 538,000 square feet of
leased space at January 29, 1995 for 214 stores. All of the existing stores are
leased by the Company with original lease terms ranging from eight to nineteen
years, expiring between 1995 and 2009, except for one store with a 49-year lease
term extending through 2040. Most leases for the Company's stores provide for
contingent rent based upon sales. (See Note E of Notes to the Company's
Consolidated Financial Statements).



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ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings against the Company. The
Company is, however, involved in routine litigation arising in the ordinary
course of its business, and, while the results of the proceedings cannot be
predicted with certainty, the Company believes that the final outcome of such
matters will not have a materially adverse effect on the Company's consolidated
financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during the fourth
quarter of the 1994 fiscal year.



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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock is currently traded on the NASDAQ National Market
System. Information contained under the caption "Common Stock" on page 24 of
the 1994 Annual Report is incorporated herein by reference. The closing sales
price of the Company's stock in the NASDAQ National Market System on April 20,
1995 was $19.125.

SHAREHOLDERS

The number of shareholders of record as of April 20, 1995 was approximately 551.
This number excludes shareholders whose stock is held in nominee or street name
by brokers.

DIVIDEND POLICY

The Company has never declared or paid a cash dividend on its common stock, and
the current policy of its Board of Directors is to retain its earnings to
finance future growth. In addition, the Company is prohibited from paying cash
dividends by certain covenants in its credit agreement and its sublease for its
Memphis distribution center.

STOCK SPLITS

In January 1994 the Company declared a 3-for-2 stock split to shareholders of
record as of January 28, 1994. The split was effected on February 18, 1994 with
the issuance of 5,574,594 additional shares.

In August 1994 the Company declared a 3-for-2 stock split to shareholders of
record as of September 7, 1994. The split was effected on September 27, 1994
with the issuance of 8,414,056 additional shares.


ITEM 6. SELECTED FINANCIAL DATA

Information contained under the caption "Five Year Selected Financial Data" on
page 11 of the 1994 Annual Report is incorporated herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Information contained under the caption "Management's Discussion and Analysis"
on pages 12 - 14 of the 1994 Annual Report is incorporated herein by reference.



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following documents are incorporated by reference to pages 15 through 23 of
the 1994 Annual Report to Shareholders filed as Exhibit 13.1 to this Annual
Report on Form 10-K:



Independent Auditors' Report

Consolidated Balance Sheets as of January 29, 1995 and January 30,
1994

Consolidated Statements of Earnings for the three fiscal years
ended January 29, 1995

Consolidated Statements of Shareholders' Equity for the three
fiscal years ended January 29, 1995

Consolidated Statements of Cash Flows for the three fiscal years
ended January 29, 1995

Notes to Consolidated Financial Statements

The quarterly information contained under the caption "Quarterly Financial
Information" on page 24 of the 1994 Annual Report is incorporated herein by
reference.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

Not Applicable.



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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information contained in the table under the caption "Election of Directors" in
the Proxy Statement is incorporated herein by reference.

Information contained in the last paragraph under the caption "Voting Securities
and Principal Shareholders" on page 4 of the Proxy Statement is incorporated
herein by reference.

At each Annual Meeting, directors are elected to serve until the next annual
meeting of shareholders or until the election and qualification of their
successors. The Company's Bylaws provide for not less than six nor more than
eleven directors, the exact number having been fixed by the Board of Directors
at ten.

Executive officers of the Company are elected by the Board of Directors at the
annual organizational meeting held immediately following the Annual Meeting and
serve at the pleasure of the Board. Information contained in the first table
under the caption "Information Concerning Executive Officers" on page 8 of the
Proxy Statement is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

Information relating to the aggregate cash compensation paid by the Company to
each of its five most highly compensated executive officers for the fiscal year
ended January 29, 1995, is contained under the caption "Executive Compensation"
on pages 9 through 16 of the Proxy Statement and is incorporated herein by
reference (except the information contained in the Compensation Committee Report
and the Performance Graph).


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

a) Information with respect to those persons known to the Company to be
beneficial owners of more than 5% of its common stock as of March 31,
1995, is contained under the caption "Voting Securities and Principal
Shareholders" on pages 1 through 4 of the Proxy Statement and is
incorporated herein by reference.


b) Information concerning the beneficial ownership of the Company's common
stock by its directors, by each executive officer named in the "Summary
Compensation Table" set forth on page 9 of the Proxy Statement, and by its
directors and officers as a group, as of March 31, 1995, is contained in
the tables under the captions "Voting Securities and Principal
Shareholders" and "Election of Directors" on pages 1 through 8 of the
Proxy Statement and is incorporated herein by reference.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information with respect to certain relationships and related transactions is
contained under the caption "Certain Transaction" on page 8 of the Proxy
Statement and is incorporated herein by reference (see Note F of Notes to
Consolidated Financial Statements).



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INDEPENDENT AUDITORS' REPORT ON FINANCIAL
STATEMENT SCHEDULE

To the Board of Directors and Shareholders
of Williams-Sonoma, Inc.:

We have audited the consolidated financial statements of Williams-Sonoma, Inc.
and subsidiaries as of January 29, 1995 and January 30, 1994, and for each of
the three fiscal years in the period ended January 29, 1995, and have issued
our report thereon dated March 24, 1995; such financial statements and report
are included in your 1994 Annual Report to Shareholders and are incorporated
herein by reference. Our audits also included the financial statement schedule
of Williams-Sonoma, Inc. and subsidiaries listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.



DELOITTE & TOUCHE LLP
San Francisco, California

March 24, 1995

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PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Documents filed as part of the Form 10-K: See Item 8 for a list of
Financial Statements incorporated herein by reference.

(a)(2) Financial Statement Schedules



Description Page


Independent Auditors' Report on Financial Statement Schedule 12

Schedule II Valuation and Qualifying Accounts 13


Schedules other than those referred to above have been omitted because
they are not required or are not applicable.

(b) Reports on Form 8-K: No Form 8-K filings were made during the last
quarter of the fiscal year ended January 29, 1995.

(c) Exhibits: See Exhibit Index on pages 16 through 19.



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SCHEDULE II

WILLIAMS-SONOMA, INC. & SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS



Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------

Additions
Balance at Charged to Balance at
Beginning Costs and End of
Description of Period Expenses Deductions Period
- ----------- ---------- ---------- ---------- ----------

Period Ended January 31, 1993:
Allowance for Doubtful Accounts $635,000 $256,000 $263,000 (A) $628,000

Period Ended January 30, 1994:
Allowance for Doubtful Accounts $628,000 $ 42,000 $332,000 (A) $338,000

Period Ended January 29, 1995:
Allowance for Doubtful Accounts $338,000 $ 14,000 $113,000 (B) $239,000





(A) Consists of direct write-offs charged against the allowance account during
the period.

(B) Includes $4,000 of direct write-offs and $109,000 allowance included in the
financial statements of a wholly-owned subsidiary that was sold in August 1994.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.


WILLIAMS-SONOMA, INC.


Date: April 24, 1995 By/s/W. Howard Lester
-------------------
Chairman and
Chief Executive Officer


Pursuant to the requirements of Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.


Date: April 24, 1995 /s/W. Howard Lester
--------------------------
Chairman
Chief Executive Officer

Date: April 24, 1995 /s/Russell Solt
--------------------------
Russell Solt
Sr. Vice President-Finance
Principal Financial
Officer
Principal Accounting
Officer

Date: April 24, 1995 /s/Charles E. Williams
--------------------------
Charles E. Williams
Vice-Chairman
Director

Date: April 24, 1995 /s/Gary G. Friedman
--------------------------
Gary G. Friedman
Director
Executive Vice President
President-Williams-Sonoma
Division

Date: April 24, 1995 /s/Patrick J. Connolly
--------------------------
Patrick J. Connolly
Director
Sr. Vice President-Mail
Order



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Date: April 24, 1995 /s/James A. McMahan
---------------------
James A. McMahan
Director

Date: April 24, 1995 /s/Nathan Bessin
---------------------
Nathan Bessin
Director

Date: April 24, 1995 /s/F. Warren Hellman
---------------------
F. Warren Hellman
Director

Date: April 24, 1995 /s/Millard S. Drexler
---------------------
Millard S. Drexler
Director

Date: April 24, 1995 /s/John Martin
---------------------
John Martin
Director



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EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE
FISCAL YEAR ENDED JANUARY 29, 1995



EXHIBIT
NUMBER EXHIBIT DESCRIPTION Page


3.1 Certificate of Amendment of the Restated Articles of Incorporation,
(incorporated by reference to Exhibit 4.1 to the Company's
registration statement on Form S-2 filed with the Commission on
June 28, 1990 as amended by amendment number 1 on Form S-2 filed
with the Commission on July 17, 1990)

3.1 A Restated Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to the Company's Report on Form 10-K for the fiscal
year ended January 31, 1988, as filed with the Commission on April
29, 1988 (file no. 2-83992))

3.2 Restated and Amended Bylaws of Registrant (incorporated by
reference to Exhibit 3.2 to the Company's Report on Form 10-K for
the fiscal year ended January 31, 1988, as filed with Commission on
April 29, 1988)

10. Material Contracts

10.1 1983 Incentive Stock Option Plan and Form of Agreement
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-1, as filed with the Commission on
May 25, 1983)

10.1 A 1976 Stock Option Plan and Form of Agreement as amended
(incorporated by reference to Exhibit 10.20 to the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 1993 as
filed with the Commission on May 3, 1993)

10.1 B 1993 Stock Option Plan approved by the Shareholders at the 1993
Annual Meeting (incorporated by reference to Exhibit 10.22 to the
Company's Report on Form 10-Q for the period ended May 2, 1993 as
filed with the Commission on June 16, 1993)

10.2 Warehouse - distribution facility lease dated July 1, 1983 between
the Lester-McMahan Partnership as lessor and the Company as lessee
(incorporated by reference to Exhibit 10.28 to the Company's Report
on Form 10-Q for the period ended September 30, 1983, as filed with
the Commission on October 14, 1983)



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10.2 A The Amendment, dated December 1, 1985, to the lease for the
distribution center, dated July 1, 1983 between the Company as
lessee and the Lester-McMahan Partnership as lessor
(incorporated by reference to Exhibit 10.48 to the Company's
Report on Form 10-K for the fiscal year ended February 3, 1985,
as filed with the Commission on April 26, 1985)

10.2 B The Sublease, dated as of August 1, 1990, by and between Hewson-
Memphis Partners and the Company (incorporated by reference to
Exhibit 10 to the Company's Report on Form 10-Q for the period
ended October 28, 1990, as filed with the Commission on December
12, 1990)

10.2 C Second Amendment to Lease between the Company and The
Lester-McMahan Partnership, dated December 1, 1993 (incorporated
by reference to Exhibit 10.27 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 30, 1994 as filed
with the Commission on April 29, 1994)

10.2 D Second Amendment to Sublease between the Company and
Hewson-Memphis Partners, dated September 1, 1994 (incorporated
by reference to Exhibit 10.38 to the Company's Report on Form
10-Q for the period ended October 30, 1994 as filed with the
Commission on December 13, 1994)

10.3 The lease for the Company's Corporate Offices at 100 North Point
Street, San Francisco, California dated January 13, 1986,
between the Company as lessee and Northpoint Investors as lessor
(incorporated by reference to Exhibit 10.49 to the Company's
Report on Form 10-K for the year ended February 3, 1985, as
filed with the Commission on April 26, 1985)

10.4 Joint Venture Agreement and Trade Name and Trade Mark Licensing
Agreement, dated May 3, 1988 between the Company and Tokyu
Department Store Co., Ltd. (incorporated by reference to Exhibit
10.1 to the Company's Report on Form 10-Q for the period ended
July 31, 1988, as filed with the Commission on September 15,
1988)

10.4 A Stock Purchase Agreement dated as of May 15, 1989, by and
between the Company and Tokyu Department Store Co., Ltd.
(incorporated by reference to Exhibit 4.1 to the Company's
registration statement on Form S-2 filed with the Commission on
June 28, 1990 as amended by amendment Number 1 on Form S-2 filed
with the Commission on July 17, 1990)

10.5 Williams-Sonoma, Inc. Employee Profit Sharing and Stock
Incentive Plan effective as of February 1, 1989 (incorporated by
reference to Exhibit 4.2 of the Company's Form S-8 (File No.
33-33693) filed February 22, 1990)



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10.5 A Williams-Sonoma, Inc. Employee Profit Sharing and Stock
Incentive Plan Trust Agreement, dated September 20, 1989
(incorporated by reference to Exhibit 4.2 of the Company's Form
S-8 (File No. 33- 33693) filed February 22, 1990)

10.5 B Amendment Number One to the Williams-Sonoma, Inc. Employee
Profit Sharing and Stock Incentive Plan, dated April 27, 1990
(incorporated by reference to Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 3,
1991, as amended by a Form 8 Amendment to Form 10-K, filed with
the Commission on July 26, 1991)

10.5 C Amendment Number Two to the Williams-Sonoma, Inc. Employee
Profit Sharing and Stock Incentive Plan, dated December 12, 1990
(incorporated by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended February 3,
1991, as amended by a Form 8 Amendment to Form 10-K, filed with
the Commission on July 26, 1991)

10.5 D Amendment Number Three to the Williams-Sonoma, Inc. Employee
Profit Sharing and Stock Incentive Plan, dated March 10, 1992
(incorporated by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 31,
1993 as filed with the Commission on May 3, 1993)

10.5 E Amendment Number Four to the Williams-Sonoma, Inc. Employee
Profit Sharing and Stock Incentive Plan, dated June 9, 1993
(incorporated by reference to Exhibit 10.24 to the Company's
Report on Form 10-Q for the period ended May 2, 1993 as filed
with the Commission on June 16, 1993)

10.6 Indemnity Agreement by the Company in favor of Bank of America,
NT & SA, dated December 1, 1993 (incorporated by reference to
Exhibit 10.28 to the Company's Annual Report on Form 10-K for
the fiscal year ended January 30, 1994 as filed with the
Commission on April 29, 1994)

10.6 A Standing Loan Agreement and Deed of Trust between the Company
and Bank of America, NT & SA, dated March 9, 1994 (incorporated
by reference to Exhibit 10.31 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 30, 1994 as filed
with the Commission on April 29, 1994)

10.6 B Master Agreement between the Company and Bank of America, NT &
SA, dated March 30, 1994 (incorporated by reference to Exhibit
10.33 to the Company's Annual Report on Form 10-K for the fiscal
year ended January 30, 1994 as filed with the Commission on
April 29, 1994)



18
20


Page
10.6 C Amended and Restated Credit Agreement between the Company and
Bank of America, NT & SA, dated October 13, 1994 (incorporated
by reference to Exhibit 10.37 to the Company's Report on Form
10-Q for the period ended October 30, 1994 as filed with the
Commission on December 13, 1994)

10.7 Purchase and Sale Agreement between the Company and Bancroft-
Whitney, a division of Thomson Legal Publishing, Inc., dated
December 14, 1993 (incorporated by reference to Exhibit 10.29
to the Company's Annual Report on Form 10-K for the fiscal year
ended January 30, 1994 as filed with the Commission on April 29,
1994)

10.8 Stock Purchase Agreement between the Company and Bill Levine,
dated August 12, 1994 (incorporated by reference to Exhibit
10.36 to the Company's Report on Form 10-Q for the period ended
July 31, 1994 as filed with the Commission on September 13,
1994)

11.1 Statement re computation of per share earnings 20

13.1 1994 Annual Report to Shareholders 22

21.1 Subsidiaries 42

23.1 Independent Auditors' Consent 44

24.1 Financial Data Schedule 46




19
21

EXHIBIT 11.1

STATEMENT RE COMPUTATION OF PER SHARE EARNINGS



20
22


EXHIBIT 11.1: COMPUTATION OF EARNINGS PER SHARE




52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29, 1995 January 30, 1994 January 31, 1993
---------------- ---------------- ----------------

Net earnings $19,572,000 $11,221,000 $1,799,000
----------- ----------- ----------

Average shares of common
stock outstanding during
period 25,155,000 25,015,000 24,582,000

Incremental shares from
assumed exercise of stock
options (primary) 972,000 479,000 432,000
---------- ---------- ----------
26,127,000 25,494,000 25,014,000
---------- ---------- ----------


Primary earnings per share $0.75 $0.44 $0.07
===== ===== =====
Average shares of common
stock outstanding during
period 25,155,000 25,015,000 24,999,000

Incremental shares from
assumed exercise of stock
options (fully diluted) 1,001,000 539,000 188,000
---------- ---------- ----------
26,156,000 25,554,000 25,187,000
---------- ---------- ----------

Fully diluted earnings per
share $0.75 $0.44 $0.07
===== ===== =====




Note: Amounts are adjusted to reflect the 3-for-2 stock splits in February 1994
and September 1994.


21
23

EXHIBIT 13.1

1994 ANNUAL REPORT TO SHAREHOLDERS


22
24
EXHIBIT 13.1: 1994 ANNUAL REPORT TO SHAREHOLDERS

WILLIAMS-SONOMA, INC.
1994 Annual Report

Corporate Profile

Since 1956, when Chuck Williams opened his first kitchenware store
in Sonoma, California, Williams-Sonoma has represented quality and value in
products for the home. Today Williams-Sonoma, Inc. embraces five related
merchandising concepts: Williams-Sonoma, Gardeners Eden, Pottery Barn, Hold
Everything and Chambers. Together, our divisions offer products and services for
virtually every home-centered need, from cookware essentials to garden
furnishings, from contemporary tableware to storage basics and fine bedding and
bath accessories. Our five direct-mail catalogs have an annual mailing of more
than 126 million, reaching customers throughout the United States; our three
retail businesses operate 214 stores in 26 states and Washington, D.C. A joint
venture with Tokyu Department Store continues to give us an effective entree
into the Japanese market with twelve stores and a mail order business.


Financial Highlights



Fiscal Fiscal
Dollars in thousands except per share amounts 1994 1993
- -------------------------------------------------------------------------------------

Net Sales $528,543 $410,056

Net Earnings $ 19,572 $ 11,221

Net Earnings per Share $ .75 $ .44

Total Assets $217,878 $167,604

Working Capital $ 49,506 $ 40,405

Shareholders' Equity $118,216 $ 95,311


(1) Per share amounts have been restated to reflect the 3-for-2 stock splits in
February 1994 and September 1994.




23
25



Five-Year Selected Financial Data

52 WEEKS ENDED 52 WEEKS ENDED 52 WEEKS ENDED 52 WEEKS ENDED 53 WEEKS ENDED
AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGES, JANUARY 29 JANUARY 30 JANUARY 31 FEBRUARY 2 FEBRUARY 3
PER SHARE AMOUNTS AND RETAIL STORES DATA 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------

Results of Operations
Net sales $528,543 $410,056 $344,944 $312,654 $287,053
Earnings before income taxes 33,435 19,398 3,048 2,731 19,000
Net earnings 19,572 11,221 1,799 1,611 11,210
Primary and fully diluted
net earnings per share(1) .75 $ .44 $ .07 $ .06 $ .47

Financial Position
Working capital $ 49,506 $ 40,405 $ 32,909 $ 29,050 $ 40,991
Long-term debt 6,781 587 723 1,144 1,643
Total assets 217,878 167,604 147,087 138,120 118,240
Shareholders' equity per share
(book value)(1) $ 4.70 $ 3.80 $ 3.34 $ 3.25 $ 3.13

Catalog Sales
Catalogs mailed in year 126,833 99,807 94,326 95,618 92,510
Catalog sales growth 55.0% 23.9% (.2)% (3.8)% 23.0%
Catalog sales as percent of total sales 40.8% 33.9% 32.4% 36.0% 40.7%
Number of orders filled during year 2,729 1,921 1,749 1,996 2,146


Retail Stores
Number of stores at year-end 214 209 213 189 148
Comparable store sales growth 16.5% 13.8% 2.1% 0.5% 7.8%
Store selling area at year-end (sq. ft.) 537,969 487,883 493,434 433,958 353,627
- -----------------------------------------------------------------------------------------------------------------------------


(1) Per share amounts have been restated to reflect the 3-for-2 stock splits
in June 1990, February 1994 and September 1994.




Management's Discussion and Analysis
- ------------------------------------
Net Sales
- ---------
Net sales consist of the following components:

52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars in thousands 1995 %Total 1994 %Total 1993 %Total
- ------------------------------------------------------------------------------------------------------------------

Catalog sales $215,458 41% $139,038 34% $112,234 32%
Retail sales 307,327 58% 260,572 64% 223,490 65%
California Closet revenue 5,758 1% 10,446 2% 9,220 3%
------------ --- ------------ --- -------- ----
Total net sales $ 528,543 100% $410,056 100% $344,944 100%
- -----------------------------------------------------------------------------------------------------------------


Net sales for Williams-Sonoma, Inc. and subsidiaries (the Company) for the
fiscal year ended January 29, 1995 (Fiscal 1994) increased 28.9% compared to net
sales for the fiscal year ended January 30,1994 (Fiscal 1993). Net sales for
Fiscal 1993 increased 18.9% over net sales for the fiscal year ended January 31,
1993


24
26

(Fiscal 1992). In August 1994 the Company sold California Closet Company, Inc.,
a wholly-owned subsidiary which markets custom home closet systems, primarily
through a network of franchise stores. The Company does not expect the sale of
this business to significantly impact future net sales.

Catalog sales in Fiscal 1994 and 1993 increased 55% and 24%, respectively,
over those of the previous years. The Pottery Barn catalog was the fastest
growing segment of the catalog business during these years and accounted for 42%
of the catalog sales growth in Fiscal 1994 and 69% in Fiscal 1993. Most of this
growth was the result of altering the merchandise content of the Pottery Barn
catalog in Fiscal 1992. The Williams-Sonoma catalog was the next fastest growing
segment of the catalog business and accounted for 32% of the catalog sales
growth in Fiscal 1994 and 10% in Fiscal 1993. The Company attributes much of the
Fiscal 1994 improvement to the new, larger format of the Williams-Sonoma
catalog.

The number of catalogs mailed in Fiscal 1994 and 1993 increased 27% and 6%,
respectively, over the previous fiscal years. However, as a result of recent
increases in postal rates and higher paper costs, the Company expects to mail
fewer catalogs during the fiscal year ending January 28, 1996 (Fiscal 1995) than
in Fiscal 1994.




52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars in thousands 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------

Retail sales $307,327 $260,572 $223,490
Total net sales $528,543 $410,056 $344,944
Growth percentage 17.9% 16.6% 17.2%
Comparable store sales growth 16.5% 13.8% 2.10%
-------- -------- --------
Number of stores - beginning of year 209 213 189
Number of new stores 11 - 26
Number of closed stores 6 4 2
-------- -------- --------
Number of stores - end of year 214 209 213
Number of remodeled or expanded stores 9 2 2



Retail sales in Fiscal 1994 increased 17.9% over retail sales in Fiscal
1993. Comparable store sales increased 16.5% during the same period. Retail
sales grew 16.6% in Fiscal 1993 while comparable store sales grew 13.8%. Pottery
Barn, with 27% of the store locations in 1994, accounted for 39% and 38% of the
retail sales growth in Fiscal 1994 and 1993, respectively.

In Fiscal 1994 the Company opened 19 (11 new and 8 expanded) large-format
stores - 15 Williams-Sonoma and 4 Pottery Barn. The large-format
Williams-Sonoma stores are, on average, 31% larger than the average
Williams-Sonoma store, and the large-format Pottery Barn stores are, on average,
100% larger than the average Pottery Barn store. The larger-format stores enable
the Company to more clearly display merchandise. The Company plans 50 new or
expanded large-format stores in Fiscal 1995 - 33 Williams-Sonoma and 17 Pottery
Barn.

For the purpose of determining comparable store sales, comparable stores are
defined as those whose gross square feet did not change by more than 20% in the
previous twelve months and which have been open for at least twelve months, and
are compared monthly for purposes of this analysis. Under this definition, sales
from existing stores recently converted to the larger, more productive format
are excluded from the calculation of comparable store sales. Thus, the Company's
current plans to convert many of its existing stores to the larger format may
temporarily depress comparable store sales growth in Fiscal 1995.

Cost of Goods Sold and Occupancy

The cost of goods sold and occupancy expense (expressed as a percentage of
sales) has steadily declined from 64.0% in Fiscal 1992 to 62.3% in Fiscal 1993
and 59.9% in Fiscal 1994. Seventy percent of the improvement in the expense rate
in Fiscal 1994 and 1993 is due to the fact that sales increased at double the
rate occupancy costs increased. This disparity is the combined effect of the
growth in catalog sales (which have no occupancy expense) outpacing the growth
in retail sales and double digit comparable store sales growth (which improved
store productivity). The cost of goods sold also improved in Fiscal 1994 and
1993 due to the higher growth rate of catalog sales, which have a higher gross
margin, over retail sales.



25
27

Selling, General and Administrative

Selling, general and administrative expense (expressed as a percentage of
sales) increased .9 percentage points in Fiscal 1994 to 33.5% due to higher
advertising and net shipping expense rates offset by a .5 percentage point
decline in the employment expense rate. Selling, general and administrative
expense expressed as a percentage of sales declined 2.0 percentage points in
Fiscal 1993 to 32.6% from 34.6% in Fiscal 1992. Employment expenses during this
period declined 1.1 percentage points and advertising expense declined .9
percentage points.

The Company currently leases space in three separate buildings in San
Francisco, California, for its corporate offices. In December 1993 the Company
purchased a headquarters building with plans to consolidate the headquarters
staff in the building. In the fourth quarter of fiscal 1993 the Company
established a $3,000,000 reserve for the estimated cost of vacating leased
office space prior to the expiration of the leases. Sales growth experienced in
the current year and planned growth in Fiscal 1995 require the Company to retain
some of the leased office space it planned to vacate. Therefore, in the fourth
quarter of Fiscal 1994 the company reversed $2,000,000 of the lease reserve
established in 1993. In the fourth quarter of Fiscal 1992 the Company
established a $1,117,000 store closing reserve related to certain non-performing
stores which were closed in Fiscal 1993 and 1994.

Interest Expense

Average month-end short-term borrowings decreased 28% from $17,931,000 in
Fiscal 1993 to $12,977,000 in Fiscal 1994, primarily as a result of transferring
short-term borrowings to long-term debt. In December 1993, the Company purchased
a new headquarters building with working capital and then secured a seven-year,
$7 million, 7.8% mortgage on the building in April 1994. The Company's weighted
average interest rate on short-term borrowings increased to 6.3% in Fiscal 1994
from 6.0% in Fiscal 1993. Net interest expense increased $136,000 from the prior
year.

Average month-end short-term borrowings declined 29% from $25,346,000 in
Fiscal 1992 to $17,931,000 in Fiscal 1993. The decline in borrowings was a
result of improved cash flows from operations and the fact that no new stores
were opened in Fiscal 1993. The Company's weighted average interest rate on
short-term borrowings was 6.0% in Fiscal 1992 and Fiscal 1993. Net interest
expense declined $410,000 from the prior year.

Income Taxes

The Company's effective rate was 41.5% for Fiscal 1994 - a decrease of .7%
from Fiscal 1993. This is a result of lower aggregate state tax rates based on
the mix of retail sales and catalog sales in the various states where the
Company has sales or conducts business.

Liquidity and Capital Resources

Cash and working capital at January 29, 1995, increased by $6,724,000 and
$9,101,000, respectively, over that at January 30, 1994. Although net income
increased significantly, net cash provided by operations in Fiscal 1994 was
$7,360,000 less than that in Fiscal 1993. The primary factors are changes in
inventories, prepaid catalog expenses and income taxes payable. Higher inventory
balances are a result of additional stores, larger-format stores and an overall
increase in the level of sales in Fiscal 1994. Sixty percent of the increase in
prepaid catalog expenses is due to the timing of payments to a paper vendor, and
the remainder is due to the increased size and quantity of the January 1995
catalogs mailed compared to the January 1994 catalogs. During Fiscal 1994 the
Company began to purchase paper directly from the manufacturer rather than
through the printer. This results in lower total paper costs but a higher
prepaid balance because the expenditure is made sooner. Total costs for the
January 1995 catalogs increased over the prior year due to a 28% increase in the
number of catalogs mailed and an 8% increase in the number of pages. The Company
paid approximately $10,000,000 more in income taxes in Fiscal 1994 than in
Fiscal 1993. Capital expenditures increased significantly in Fiscal 1994 because
the company opened 11 new stores, expanded 8 stores and increased its investment
in information systems. Cash flows from financing activities increased
$22,472,000 from Fiscal 1993 to Fiscal 1994. This is primarily due to the
$7,000,000



26
28

mortgage on the new headquarters building (see Note C to Notes to Consolidated
Financial Statements), an increase in cash overdrafts and lower bank debt at
the beginning of the year, resulting in lower repayments.

Cash and working capital at January 30, 1994, increased by $7,848,000 and
$7,496,000, respectively, over that at January 31, 1993. Net cash provided by
operating activities increased from $5,129,000 to $27,467,000 due primarily to a
$9,422,000 increase in net earnings, a $5,247,000 increase in accrued expenses
and an $8,876,000 increase in taxes payable. Reduced capital expenditures were
responsible for the $1,001,000 decline in net cash used in investing activities.
Although the Company did not open any new stores in Fiscal 1993, a new
headquarters building was purchased. Lower bank borrowings and an increase in
repayments were principally responsible for the decline in net cash provided by
financing activities.

The Company leases its stores, distribution center, management information
systems and operating equipment. The Company plans to open 35 new large-format
stores and expand an additional 15 stores. Store construction and expansion and
seasonal inventory requirements will be financed through cash flow from
operations, landlord construction allowances and bank debt. The Company has a
line-of-credit agreement with a bank that expires July 1, 1996. Fixed
obligations consist of debt (see Note C of Notes to Consolidated Financial
Statements) and operating leases (see Note E of Notes to Consolidated Financial
Statements). The Company plans to fund these fixed obligations with a
combination of cash flows from operations and bank debt.

Impact of Inflation

The impact of inflation on results of operations has not been significant.

Seasonality

The Company's business is subject to substantial seasonal variations in
demand. Historically, a significant portion of the Company's sales and net
income have been realized during the period from October through December, and
levels of net sales and net income have generally been significantly lower
during the period from February through July. The Company believes this is the
general pattern associated with the mail order and retail industries. In
anticipation of its peak season, the Company hires a substantial number of
additional employees in its retail stores and mail order processing and
distribution areas, and incurs significant fixed catalog production and mailing
costs.



27
29



Consolidated Statements of Earnings

52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars and shares in thousands, except earnings per share amounts 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------

Net sales $528,543 $410,056 $344,944
Costs and expenses
Cost of goods sold and occupancy 316,827 255,650 220,836
Selling, general and administrative 176,972 133,835 119,477
Interest expense - net 1,309 1,173 1,583
------------ ------------ ------------

Earnings before income taxes 33,435 19,398 3,048
Income taxes 13,863 8,177 1,249
------------ ------------ ------------
Net earnings $ 19,572 $ 11,221 $ 1,799
------------ ------------ ------------

Primary and fully diluted earnings per share $ .75 $ .44 $ .07
Average number of common shares outstanding
Primary 26,127 25,494 25,014
Fully diluted 26,156 25,554 25,187
------------ ------------ ------------


See Notes to Consolidated Financial Statements.



28
30




Consolidated Statements of Shareholders' Equity


Common Stock Retained
Dollars and shares in thousands Shares Amount Earnings Total
- ---------------------------------------------------------------------------------------------------------------

Balance at February 2, 1992 24,521 $41,338 $38,208 $ 79,546
Issuance pursuant to stock option plans
and tax benefit from sale of optioned
stock by employees 477 2,195 - 2,195
Net earnings - - 1,799 1,799
------ ------- ------- -------
Balance at January 31, 1993 24,998 43,533 40,007 83,540
Issuance pursuant to stock option plans
and tax benefit from sale of optioned
stock by employees 88 550 - 550
Net earnings - - 11,221 11,221
------ ------- ------- -------
Balance at January 30, 1994 25,086 44,083 51,228 95,311
Issuance pursuant to stock option plans - - - -
and tax benefit from sale of optioned
stock by employees 256 3,333 - 3,333
Net earnings - - 19,572 19,572
------ ------- ------- -------
Balance at January 29, 1995 25,342 $47,416 $70,800 $118,216
- ---------------------------------------------------------------------------------------------------------------



See Notes to Consolidated Financial Statements.




29
31



Consolidated Balance Sheet

January 29 January 30
Dollars in thousands 1995 1994
- -------------------- ---- ----

Assets
Current assets
Cash and cash equivalents $ 17,481 $ 10,757
Accounts receivable (less allowance for doubtful
accounts of $239 and $338) 5,394 3,734
Merchandise inventories 87,949 70,339
Prepaid expenses and other assets 5,849 5,156
Prepaid catalog expenses 11,205 5,718
Deferred income taxes 259 2,617
----------- -----------
Total current assets 128,137 98,321
Property and equipment - net 79,395 64,076
Investments and other assets (less accumulated amortization
of $1,000 and $932) 6,325 2,239
Deferred income taxes 4,021 2,968
----------- -----------
$217,878 $167,604
----------- -----------

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 49,357 $ 28,608
Accrued expenses 4,407 6,051
Accrued salaries and benefits 8,138 7,586
Income taxes payable 8,329 9,570
Current portion of long-term obligations 141 132
Customer deposits 5,631 3,252
Other liabilities 2,628 2,717
----------- -----------
Total current liabilities 78,631 57,916
Deferred lease credits 14,250 13,790
Long-term debt 6,781 587
Shareholders' equity
Preferred stock, no par value,
authorized 7,500,000 shares, none issued
Common stock, no par value, authorized 126,562,500 shares,
issued and outstanding 25,342,077 and 25,086,095 shares 47,416 44,083
Retained earnings 70,800 51,228
----------- -----------
Total shareholders' equity 118,216 95,311
----------- -----------
$217,878 $167,604
- -------------------------------------------------------------------------------------------------------------



See Notes to Consolidated Financial Statements.



30
32



Consolidated Statements of Cash Flows



52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars in thousands 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
Net earnings $ 19,572 $ 11,221 $ 1,799
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 11,632 11,190 10,364
Reserve for California Closet - (392) (1,580)
Store closing reserve (445) (119) 1,117
Reserve for termination of corporate headquarters leases (2,000) 3,000 -
Amortization of deferred lease incentives (1,122) (988) (908)
Change in allowance for doubtful accounts 10 (290) (7)
Change in deferred rents 290 (188) 1,346
Change in deferred income taxes 1,305 (2,535) (848)
Loss on disposal of assets 563 355 11
Tax benefit from sale of optioned stock by employees 2,167 177 330
Change in:
Accounts receivable (2,443) 625 62
Merchandise inventories (18,510) (7,195) (2,934)
Prepaid catalog expenses (5,487) (809) (285)
Prepaid expenses and other assets (3,216) (271) (590)
Accounts payable 14,298 (437) (6,195)
Accrued expenses and other liabilities 4,764 5,247 2,753
Income taxes payable (1,271) 8,876 694
--------- -------- --------
Net cash provided by operating activities 20,107 27,467 5,129
--------- -------- --------
Cash flows from investing activities:
Purchase of property and equipment (30,145) (13,955) (15,186)
Other 87 133 363
--------- -------- --------
Net cash used in investing activities (30,058) (13,822) (14,823)
--------- -------- --------
Cash flows from financing activities:
Change in cash overdrafts 7,095 2,699 (1,327)
Deferred lease incentives 1,622 115 3,099
Borrowings under line of credit 120,400 72,500 82,500
Repayments under line of credit (120,400) (81,200) (75,900)
Proceeds from issuance of long-term debt 7,000 - -
Repayments of long-term debt (208) (284) (421)
Proceeds from exercise of stock options 1,166 373 1,865
--------- -------- --------
Net cash provided by (used in) financing activities 16,675 (5,797) 9,816
--------- -------- --------
Net increase in cash and cash equivalents 6,724 7,848 122
Cash and cash equivalents at beginning of year 10,757 2,909 2,787
Cash and cash equivalents at end of year $ 17,481 $ 10,757 $ 2,909
--------- -------- --------



In a non-cash transaction, the Company received a $2,100,000 note as partial
proceeds from the sale of a subsidiary.


31


33

Notes to Consolidated Financial Statements

Note A
Summary of Significant Accounting Policies

The Company and its subsidiaries are specialty retailers of fine quality cooking
and serving equipment and other selected household products, which are marketed
primarily through retail stores and mail-order catalogs. These consolidated
financial statements include Williams-Sonoma, Inc. and its subsidiaries.
Significant inter-company transactions and accounts have been eliminated.

Cash equivalents consist of short-term investments with original maturities
of 90 days or less.

Merchandise inventories are stated at the lower of cost (first-in, first-out
method) or market.

Prepaid catalog expenses consist of the cost to produce, print and
distribute catalogs. Such costs are amortized over the expected sales life of
each catalog. Typically, over 90% of the cost of a catalog is amortized in the
first four months.

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method based upon the estimated useful lives of the assets
ranging from 3 to 39 years. Amortization of improvements to leased properties is
based upon the term of the applicable lease or the estimated useful lives of
such assets, whichever is shorter.

Investments and other assets include lease rights and interests acquired
from the Pottery Barn, which are being amortized over the life of the respective
leases which range from 5 to 14 years, non-current receivables, and long-term
deposits.

Deferred lease incentives include construction allowances received from
landlords, which are amortized on a straight-line basis over the initial lease
term. For leases which contain fixed escalations of the minimum annual lease
payment during the original term of the lease, the Company recognizes rental
expense on a straight-line basis and records the difference between rent expense
and the amount currently payable as deferred lease incentives.

Effective February 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109). The
cumulative effect of adopting SFAS 109 in Fiscal 1993 did not have an impact on
the financial position of the Company. SFAS 109 requires the Company to compute
deferred income taxes on the difference between the financial statement and tax
basis of the assets and liabilities using enacted tax rates in effect in the
years in which the differences are expected to reverse.

Primary and fully diluted earnings per share were computed based on the
weighted average number of common shares outstanding during the year plus common
stock equivalents consisting of shares subject to stock options. Earnings per
share, number of shares and stock options for all periods have been restated to
reflect a 3-for-2 stock split in February 1994 and September 1994.

Certain items in the prior years' consolidated financial statements have
been reclassified to conform to the Fiscal 1994 presentation.




Note B

Property and Equipment

Property and equipment consist of the following:

January 29 January 30
Dollars in thousands 1995 1994
- ----------------------------------------------------------------------------------------

Land and buildings $ 8,041 $ 8,874
Leasehold improvements 69,474 60,960
Fixtures and equipment 45,008 35,985
Property under capital leases - 1,663
Construction in progress 8,104 1,955
--------- --------
130,627 109,437
Less accumulated depreciation and amortization 51,232 45,361
--------- --------
Total property and equipment - net $ 79,395 $ 64,076
--------- --------





32

34



Note C

Borrowing Arrangements

Long-term debt consists of the following:

January 29 January 30
Dollars in thousands 1995 1994
- -------------------------------------------------------------------------------------------------------

Revenue bond payable - $ 597
Obligations under capital leases - 102
Other - 20
Mortgage $ 6,922 -
------------ ----------
6,922 719
Less current maturities 141 132
------------ ----------
Total long-term debt $ 6,781 $ 587
------------ ----------



The Company's credit agreement provides for an available credit facility which
permits line of credit borrowings at either the Bank's Reference Rate or the
Offshore Rate plus .875%. The amount available under the line of credit varies
during the business year from $45,000,000 to $65,000,000. At January 29, 1995,
there was $45,000,000 available under the revolving line of credit. This
facility expires July 1, 1996. At January 29, 1995, the Company had no
borrowings under the line of credit. Additionally, the credit agreement provides
for $25,000,000 for letters of credit, of which approximately $9,708,000 were
outstanding at January 29, 1995. The agreement contains certain restrictive loan
covenants, including current and debt-to-equity ratios, minimum tangible net
worth, minimum net income, restrictions on capital expenditures and a
prohibition on payment of cash dividends. The Company was in compliance with
these covenants at January 29, 1995.

Interest expense was $1,509,000, $1,210,000 and $1,636,000 for Fiscal 1994,
1993 and 1992, respectively.

Interest paid was $1,505,000, $1,198,000 and $1,685,000 for Fiscal 1994,
1993 and 1992, respectively.

Accounts payable at January 29, 1995, and January 30, 1994, includes cash
overdrafts of $16,736,000 and $9,641,000, respectively, for checks issued and
not presented to the bank for payment.

On April 1, 1994, the Company entered into an agreement with a bank for a
$7,000,000 mortgage at LIBOR plus 1.25%. The Company then fixed the mortgage
interest rate at 7.8% for the full term by entering into an interest rate swap
agreement with the bank. Interest and principal payments are due quarterly
through March 2001. The mortgage is secured by the new corporate headquarters
building purchased by the Company in December 1993.




Note D

Income Taxes

The provision for income taxes consists of the following:
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars in thousands 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------

Current payable
Federal $ 10,910 $ 7,467 $ 1,571
State 1,648 3,245 458
------------ ------------ -----------
12,558 10,712 2,029
Deferred
Federal 1,067 (1,534) (613)
State 238 (1,001) (167)
------------ ------------ -----------
1,305 (2,535) (780)
------------ ------------ -----------
$ 13,863 $ 8,177 $ 1,249
------------ ------------ -----------




33


35

Notes to Consolidated Financial Statements

Income taxes paid were $11,535,000, $1,962,000 and $1,335,000 for Fiscal 1994,
1993 and 1992, respectively. A reconciliation of income taxes at the federal
statutory corporate rate to the effective rate is as follows:




52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------

Federal income taxes at the statutory rate 35.0% 35.0% 34.0%
State income tax rate, less federal benefit 5.9 6.2 7.0
Other .6 1.0 -
---- ---- ----
41.5% 42.2% 41.0%


Significant components of the Company's deferred tax accounts are as follows:


January 29, 1995 January 30, 1994
Dollars in thousands Deferred Tax Assets Deferred Tax Liabilities Deferred Tax Assets Deferred Tax Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------

Current:
Compensation $ 1,195 - $1,015 -
Inventory 2,315 - 1,503 -
Reserves 695 - 1,903 -
Other 713 $ 82 685 $ 87
Deferred catalog costs - 4,577 - 2,402
------- ------ ------ ------
Total current 4,918 4,659 5,106 2,489
======= ====== ====== ======

Non-current:
Depreciation 4,495 - 3,052 -
Deferred rent 859 - 935 -
Deferred lease incentive - 1,333 - 1,019
Capital loss 5,160 - - -
Valuation allowance (5,160) - - -
------- ------ ------ ------
Total non-current 5,354 1,333 3,987 1,019
------- ------ ------ ------
Total $10,272 $5,992 $9,093 $3,508
======= ====== ====== ======


A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax assets will not be realized. The Company has
established a valuation allowance as of January 29, 1995 due to the uncertainty
of realizing future tax benefits from its capital loss carryforwards.

Note E
Leases

The Company leases store locations and its warehouses and certain equipment
under operating leases for original terms ranging from 3 to 25 years extending
through 2015, except for one store lease with a 49-year term extending through
2040. Most store leases require the payment of minimum rentals against
percentage rentals based on store sales. Certain leases contain renewal options
for periods of up to 20 years.

In December 1993 the Company purchased a headquarters building with plans
to consolidate the headquarters staff in the building. In the fourth quarter of
fiscal 1993 the Company established a $3,000,000 reserve for the estimated cost
of vacating leased office space prior to the expiration of the leases. Sales
growth experienced in the current year and planned growth in Fiscal 1995 require
the Company to retain some of the leased office space it planned to sublease.
Therefore, in the fourth quarter of Fiscal 1994 the Company reversed $2,000,000
of the lease reserve established in 1993.



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36

Total rental expense for all operating leases was as follows:



52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
January 29 January 30 January 31
Dollars in thousands 1995 1994 1993
- ---------------------------------------------------------------------------------------------

Minimum rent expense $21,766 $20,812 $19,321
Contingent rent expense 2,407 1,230 815
------- ------- -------
Total rent expense $24,173 $22,042 $20,136
------- ------- -------


The aggregate minimum annual rental payments under non-cancelable operating
leases in effect at January 29, 1995, were as follows:



Dollars in thousands
- --------------------

Fiscal 1995 $ 27,100
Fiscal 1996 24,736
Fiscal 1997 20,519
Fiscal 1998 18,935
Fiscal 1999 17,433
Later years 79,042
---------
Total minimum lease commitment $187,765
---------
---------



Note F
Related Party Lease Transactions

The Company's warehouse and distribution center is located in Memphis,
Tennessee, and leased from two partnerships whose partners include directors,
executive officers and/or significant shareholders of the Company. The
distribution center consists of two separate facilities -- one for mail order
operations and one for retail store operations.

Mail Order Operating Facility

In July 1983, the Company entered into an agreement to lease a
243,000-square-foot distribution center. The lessor is a partnership comprised
of W. Howard Lester, chairman, chief executive officer and significant
shareholder of the Company, and James A. McMahan, a director and significant
shareholder of the Company and member of the Compensation Committee. The
partnership financed the construction through the sale of $6,300,000 principal
amount of industrial development bonds due June 2008. The lease had an initial,
non-cancelable term of ten years expiring on June 30, 1994, with two optional
five-year renewals by the Company. In December 1985, the partnership financed
the construction of an additional 190,000 square feet of space through the sale
of $2,900,000 principal amount of industrial development bonds due 2010. The
Company's lease with the partnership was amended to include additional rent plus
interest on the new bonds for the same lease term as the original lease. In
December 1993, the Company exercised the two five-year renewal options and is
now obligated to lease the space until June 30, 2004. Effective July 1, 1994,
the fixed basic monthly rent is $51,500. Rental payments consist of the basic
monthly rent, plus interest on the bonds (a floating rate equal to 55% of the
prime rate of a designated bank), applicable taxes, insurance and maintenance
expenses. In connection with the December 1993 transaction, both the partnership
and the Company provided to an unaffiliated bank an indemnity against certain
environmental liabilities.


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37

Retail Store Operating Facility

In August 1990, the Company entered into a separate agreement to lease a second
distribution center, consisting of approximately 307,000 square feet adjacent to
the existing distribution center in Memphis, Tennessee. The lessor is a
partnership that includes Messrs. Lester, McMahan and Robert K. Earley, senior
vice president of distribution. The partnership financed the construction of the
distribution center through the sale of $10,500,000, 10.36% principal amount of
industrial development bonds due in August 2015.

Notes to Consolidated Financial Statements, continued

In September 1994, this lease was amended to include an approximately
306,000-square-foot expansion of the facility. The expansion is currently under
construction and expected to be completed in July 1995. The lessor is financing
the construction of the expansion through a $500,000 capital contribution from
its partners and the sale of $12,500,000, 9.01% principal amount of industrial
development bonds due in August 2015. The amended lease has an initial,
non-cancelable term of 15 years beginning in August 1991 and ending in July
2006, with three optional five-year renewals. Rentals (including interest on the
bonds, sinking fund payments, and fees) for the primary term are payable at an
average rate of $623,895 per quarter plus applicable taxes, insurance and
maintenance expenses.

Both facilities (including the 1994 expansion) are constructed to the
Company's specifications. After the option periods, the Company is obligated to
renew each lease annually so long as the bonds which financed the specific
projects remain outstanding. The facility leases qualify as operating leases for
accounting purposes. The Company believes that the facility leases are on terms
no less favorable than the Company could have obtained from third parties in
arm's-length transactions.

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38

Note G
Stock Options

The Company's 1993 Stock Option Plan (the 1993 Plan), which provides for grants
of incentive and non-qualified stock options up to an aggregate of 2,250,000
shares, was approved and adopted in 1993. The 1993 Plan replaces the 1976
non-qualified plan which was terminated and the 1983 Incentive Stock Option
Plan, which expired on March 27, 1993. Options granted under the 1976 and 1983
Plans remain in force until they are exercised or expire. All incentive stock
option grants made under the 1993 Plan have a maximum term of ten years, except
those issued to 10% shareholders which have a term of five years. The exercise
price of all incentive stock options shall be 100% of the fair market value of
the stock at the option grant date or 110% for a 10% shareholder. The exercise
price for non-qualified options shall not be less than 75% of the fair market
value of the stock at the option grant date.

Total options exercisable in all plans were 500,605 and 484,713 as of
January 29, 1995, and January 30, 1994, respectively.

The following table reflects the activity under the Company's stock option
plans:




Options Average Price Per Share
1993 Plan 1983 Plan 1976 Plan Total 1993 Plan 1983 Plan 1976 Plan Total
- ---------------------------------------------------------------------------------------------------------

Balance at
February 2, 1992 - 540,294 177,075 717,369 - $5.32 $ 4.21 $ 5.04
Granted - 127,778 313,200 440,978 - 5.11 5.23 5.19
Exercised - 39,152 - 39,152 - 3.37 - 3.37
Canceled - 92,588 123,075 215,663 - 7.02 5.31 6.05
- ---------------------------------------------------------------------------------------------------------
Balance at
January 31, 1993 - 536,332 367,200 903,532 - 5.12 4.71 4.95
Granted 587,365 - 135,000 722,365 $ 9.99 - 5.28 9.11
Exercised - 81,484 6,750 88,234 - 4.14 5.89 4.27
Canceled 8,325 47,633 - 55,958 7.11 5.77 - 5.97
- ---------------------------------------------------------------------------------------------------------
Balance at
January 30, 1994 579,040 407,215 495,450 1,481,705 10.04 5.24 4.85 6.98
Granted 279,075 - - 279,075 21.84 - - 21.84
Exercised 14,985 159,910 81,250 256,145 7.11 4.37 4.48 4.57
Canceled 7,067 3,564 - 10,631 11.38 9.99 - 10.91
- ---------------------------------------------------------------------------------------------------------
Balance at
January 29, 1995 836,063 243,741 414,200 1,494,004 $14.02 $5.75 $ 4.92 $10.14




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39

Note H
Employee Profit Sharing and Stock Incentive Plan

In Fiscal 1989, the Company established a defined contribution retirement plan,
which is qualified under the Internal Revenue Code 401(a) and 401(k), for
eligible employees. The amount of the annual profit sharing contribution is
determined by the Board of Directors subject to limitations based upon
resolutions adopted by the directors.

The plan permits employees to make salary deferral contributions in
accordance with Internal Revenue Code Section 401(k) regulations. The fund
options were determined by the Administrative Committee and represent a money
market reserve fund, a balanced mutual fund portfolio and Williams-Sonoma, Inc.
stock. The Company matches a portion of the employee's contributions invested in
Williams-Sonoma, Inc. stock under a predetermined formula. The Company's
contributions under this plan vest on behalf of the employee over a five-year
period.

The Company's contributions to the plan for Fiscal 1994, 1993 and 1992 were
$770,000, $602,000 and $242,000, respectively.

Note I
Estimated Fair Value of Financial Instruments

Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments, requires disclosure of the estimated fair value
of financial instruments. The carrying value of cash and cash equivalents,
accounts receivable, investments, accounts payable and debt approximates their
estimated fair values at January 29, 1995, and January 30, 1994.



38
40
Deloitte & Touche LLP

Independent Auditors' Report

To the Board of Directors and the Shareholders of Williams-Sonoma, Inc.:

We have audited the accompanying consolidated balance sheets of Williams-Sonoma,
Inc. and subsidiaries (the Company) as of January 29, 1995, and January 30,
1994, and the related consolidated statements of earnings, shareholders' equity
and cash flows for each of the three fiscal years ending January 29, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Williams-Sonoma, Inc. and
subsidiaries as of January 29, 1995, and January 30, 1994, and the results of
its operations and its cash flows for each of the three fiscal years ending
January 29, 1995, in conformity with generally accepted accounting principles.

As discussed in Note A of the consolidated financial statements,
effective February 1, 1993, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109.


Deloitte & Touche LLP
San Francisco, California
March 24, 1995



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41



Quarterly Financial Information

Fiscal 1994, dollars in thousands Quarter Ended Quarter Ended Quarter Ended Quarter Ended
except per share amounts May 1 July 31 October 30 January 29
- ----------------------------------------------------------------------------------------------------------------

Net sales $102,842 $108,014 $113,443 $204,244
Gross profit 39,390 40,858 42,984 88,484
Earnings before income taxes 3,082 3,669 3,928 22,756
-------- -------- -------- --------
Net earnings 1,788 2,124 2,282 13,378
-------- -------- -------- --------
Primary and fully diluted
earnings per share(1) $ .07 $ .08 $ .09 $ .51


Note: The fourth quarter ended January 29, 1995, includes an after-tax credit to
net earnings of $1,170,000 (.04 per share) related to the reserve established in
Fiscal 1993 for the cost of vacating the headquarters buildings prior to
termination of the leases. (See Management's Discussion and Analysis -- Selling,
General and Administrative.)



Fiscal 1993, dollars in thousands Quarter Ended Quarter Ended Quarter Ended Quarter Ended
except per share amounts May 2 August 1 October 31 January 30
- ----------------------------------------------------------------------------------------------------------

Net sales $76,197 $81,951 $89,189 $162,719
Gross profit 26,642 27,369 32,492 67,903
Earnings (loss) before income taxes (1,193) (801) 1,600 19,792
------- ------- ------- --------
Net earnings (loss) (704) (471) 948 11,448
------- ------- ------- --------
Primary and fully diluted
earnings (loss) per share(1) $ (.03) $ (.02) $ .04 $ .45


Note: The fourth quarter ended January 30, 1994, includes an after-tax charge to
net earnings of $1,740,000 ($.07 per share) related to the cost of vacating the
headquarters buildings prior to the termination of the leases. (See Management's
Discussion and Analysis -- Selling, General and Administrative.)

(1) These amounts have been restated to reflect the 3-for-2 stock splits in
February 1994 and September 1994.



40
42


Common Stock

Williams-Sonoma's common stock is traded on the Over-The-Counter Market under
the NASDAQ symbol WSGC. The following table sets forth the high and low closing
sales prices in the NASDAQ National Market System for the periods indicated.

On March 31, 1995, there were 541 shareholders of record, excluding
shareholders whose stock is held in nominee or street name by brokers. The
Company's present policy is to retain its earnings to finance future growth, and
it does not intend to pay cash dividends. In addition, the Company's bank line
of credit prohibits payment of cash dividends (see Note C of Notes to
Consolidated Financial Statements).



Fiscal 1994 (1) High Low
- ---------------------------------------------------

1st Quarter 26 1/4 15 3/4
2nd Quarter 23 7/8 18 3/4
3rd Quarter 34 1/2 21 3/8
4th Quarter 34 3/4 23 7/8





Fiscal 1993 (1) High Low
- --------------------------------------------------

1st Quarter 6 1/4 4 5/8
2nd Quarter 8 6
3rd Quarter 12 1/4 7 1/2
4th Quarter 18 3/8 12 1/2


(1) These amounts have been restated to reflect the 3-for-2 stock splits in
February 1994 and September 1994.



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43

EXHIBIT 21.1

SUBSIDIARIES OF WILLIAMS-SONOMA, INC. AS OF
FISCAL YEAR ENDED JANUARY 29, 1995


42

44
EXHIBIT 22.1: SUBSIDIARIES OF WILLIAMS-SONOMA, INC.
AS OF FISCAL YEAR END JANUARY 29, 1995




Subsidiary Name State/Date of Incorporation
- --------------- ---------------------------

Williams-Sonoma Stores, Inc. California, October 29, 1984


Gardener's Eden, Inc. California, October 29, 1984


The Pottery Barn East, Inc. California, August 18, 1986


Hold Everything, Inc. California, September 30, 1986



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45

EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT


44

46


EXHIBIT 23.1: INDEPENDENT AUDITORS' CONSENT


INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration Statements No.
2-89801, No. 33-28490, No. 33-33693 and No. 33-65656 on Form S-8 of
Williams-Sonoma, Inc. of our reports dated March 24, 1995, appearing in and
incorporated by reference in the Annual Report on Form 10-K of Williams-Sonoma,
Inc. for the fiscal year ended January 29, 1995.

DELOITTE & TOUCH LLP
San Francisco, California

April 26, 1995



45