Williams-Sonoma Announces Second Quarter Operating Results

August 24, 2023  by HFBusiness Staff in Business Strategy, Industry   

"We are pleased to deliver another quarter of strong earnings. We significantly exceeded profitability estimates with an operating margin of 14.6% with earnings per share of $3.12, well-above our pre-pandemic results. Our sales ran -11.9% in Q2, but our 2-year comp was essentially flat, and our 4-year comp to 2019 was +39.7%. We achieved these results against an increasingly promotional environment and softening industry metrics by focusing on regular price selling, driving improved customer service and controlling costs," said Laura Alber, president and chief executive officer.

Alber concluded, "Connecting these results to our expectation for the balance of the year, we are updating our guidance to reflect both the ongoing topline uncertainty and the proven strength in our operating model. We now expect annual revenues to come in at a range of down 5% to down 10%, but we are raising our outlook on operating margin to a range of 15% to 16%. The reduction in our revenue outlook is offset by our raised operating margin guidance."

SECOND QUARTER 2023 HIGHLIGHTS

Comparable brand revenue -11.9% with a 2-year comp -0.6% and a 4-year comp +39.7%.

Gross margin of 40.7% -280bps to LY with selling margin -90bps due to higher shipping and freight costs, and occupancy deleverage of 190bps. Occupancy costs +5.3% to $203 million.

SG&A rate of 26.1% -30bps to LY driven by employment and advertising leverage. SG&A -13.7% to $486 million.

Operating income of $272 million with an operating margin of 14.6%.

Diluted EPS of $3.12 per share.

Merchandise inventories -16% to $1.3 billion.

Cash at quarter-end of $514 million with no borrowings outstanding.

Operating cash flow of $372 million funding dividends and stock repurchases.

OUTLOOK

We are revising our fiscal 2023 guidance to reflect lower net revenue trends and higher operating margin expectations. The net effect of these changes holds earnings materially in line with our prior implied EPS guidance.

In fiscal 2023, we now expect net revenue growth in the range of -5% to -10% with an operating margin between 15% to 16%.

Over the long-term, we continue to expect mid-to-high single-digit annual net revenue growth with operating margin above 15%.
 

A replay of the webcast will be available at http://ir.williams-sonomainc.com/events