THE TIMES 100 / THE BEST PERFORMING COMPANIES IN AMERICA : A VIEW FROM THE STREET : What Rises Faster Than Dough? Williams-Sonoma Stock : The purveyor of fancy kitchenware spent 1993 following a different recipe for profit.

When Williams-Sonoma Inc. shareholders gathered at the company’s headquarters near Fisherman’s Wharf in San Francisco last spring, they had reason for concern. Why weren’t the hand-painted Portuguese plates and Australian crystallized ginger selling as well as they used to?

Profit for the San Francisco-based retailer, best known for fancy kitchenware and gourmet food, had plummeted during an expansion that increased the company’s retail outlets by more than 30%.

“We were building stores but not profits,” Williams-Sonoma Chairman W. Howard Lester said, recalling his description of the company’s problems at last year’s annual meeting. “We decided we would open no new stores. Instead, we decided to go back to work and find ways to make existing stores as productive as possible before opening any additional sites.”

The strategy worked. Williams-Sonoma executives expect an upbeat atmosphere next month when shareholders gather for the 1994 annual meeting.

And they have reason to be happy. An investor who purchased 100 shares of Williams-Sonoma stock for $883 (or $8.83 each) on March 31, 1993, would have seen that investment swell to $3,750 on April 8, 1994, when the company’s shares were trading at $37.50. (The company’s stock closed Friday at $33.75 a share.)

That made the retailer’s stock the biggest percentage gainer among California companies, according to data compiled by Star Services, a San Francisco business research company.

The stock price gain would look even more impressive had the company not approved a 3-for-2 stock split in January, which lowered the value of each share without changing the shareholders’ equity.

Williams-Sonoma’s experience supports the notion that bigger is not always better--especially if the company is ill-prepared to manage growth. But Williams-Sonoma seems to have learned from its mistakes. It has succeeded in its efforts to boost productivity at its 209 stores, which include the Pottery Barn and Hold Everything housewares chains.

One tack the company took was to streamline management.

Previously, for example, each of its retail chains and its catalogue division had separate managers who reported to a general merchandise manager who in turn reported to the president.

But the company consolidated the Pottery Barn’s retail and catalogue operations under a vice president for merchandising. The same kind of consolidation was made in the Hold Everything retail and catalogue operations.

The company also eliminated the general merchandise manager’s position and gave much of those responsibilities to Gary Friedman, executive vice president.

“Previously, there were too many lines of management,” Chief Financial Officer Jim Riley said. “Now the people making merchandise decisions are not as far removed from the front lines of store and catalogue operations.”

At its Pottery Barn stores, the company abandoned its strategy of moving toward higher-priced products after sales plummeted. Now it offers more lower-cost housewares. It is also aggressively promoting those goods to budget-minded consumers.

Joseph Ellis, an analyst with Goldman Sachs, likes the changes he has seen.

“In our view,” Ellis said in a recent report, “the new management structure . . . will improve the company’s focus on each of these businesses and materially improve their merchandising and marketing momentum.”

Some analysts believe that Williams-Sonoma’s stock will also be buoyed by the company’s association with Catalog 1, the nation’s first catalogue-based cable TV shopping network. The network, a joint venture of Spiegel Inc. and Time Warner Inc., features products by Williams-Sonoma and six other companies with catalogue sales operations. Catalog 1 operates in four cities and will be expanded soon into others.

“Wall Street believes that all catalogue companies can benefit from video shopping,” said Steven Ashley, an analyst at Cleary Gull in Milwaukee. “Catalogue operators already have the warehouses and the product delivery systems. They can simply put the products featured in their catalogues onto the television screen.”

Williams-Sonoma operates 209 stores in three chains: Williams-Sonoma, known for its kitchenware and food items; Pottery Barn, which sells lower-cost housewares and Hold Everything, which sells closet organizers and shelving goods. The company also has five catalogues--one for each of the three chains; a lounge wear and bathroom products publication called Chambers, and a gardening products catalogue called Gardener’s Eden.