Williams-Sonoma, Inc. Reports Third Quarter Operating Results 

November 17, 2022  by HFBusiness Staff in Business Strategy, Industry   

Comparable brand revenue increased 8.1% with a 2-year comp of 25.0 percent and a 3-year comp of almost 50 percent. Gross margin decreased at a rate of 41.5 percent which was 220bps below last year, driven by higher shipping and freight costs with merchandise margin flat to last year with occupancy deleverage of 30bps. Occupancy costs increased 10.5 percent to $202 million.

“We are proud of another strong quarter generating an 8.1 percent comp, or a 25 percent two-year comp and an almost 50 percent three-year comp, with record EPS growth of 12 percent over last year to $3.72 per share,” said Laura Alber, president and chief executive officer.

“These results reflect the continuation of backlog order fulfillment, strong product margins and disciplined cost control.”

Selling, general, and administrative expenses are at a rate of 26.0 percent leveraging 160bps on a GAAP basis and 150bps on a non-GAAP basis, reflecting employment and advertising leverage.

The operating income was $340 million, increasing 2.8 percent on a GAAP basis and 2.0 percent on a non-GAAP basis, with operating margin of 15.5 percent.

“We delivered another quarter of record revenues and earnings in a challenging environment. Our topline results illustrate our ability to gain market share. Our bottom-line results demonstrate the power of our operating model to sustain merchandise margin and control SG&A expenses,” added Jeff Howie, Chief Financial Officer.

Alber concluded, “Although the macro backdrop has become more uncertain, we believe our strong positioning, growth initiatives, and culture of financial discipline will allow us to outperform in any environment.”

Diluted EPS is $3.72 per share, increasing 13.1 percent on a GAAP basis and 12.0 percent on a non-GAAP basis. Cash and cash flow ended the quarter with $113 million in cash and generated $205 million in operating cash flow.

Williams-Sonoma, Inc. are reiterating their fiscal year 2022 guidance of mid-to-high single digit annual net revenue growth and operating margins relatively in-line with fiscal year 2021 operating margin.