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From Home Furnishing Business

Williams Sonoma Report Third Quarter Earnings

November 16, 2023  by HFBusiness Staff in Business Strategy, Industry   

“We beat profitability estimates with a record third quarter operating margin of 17.0% with earnings per share of $3.66. These results were achieved in an environment filled with on-going consumer hesitancy on high-ticket discretionary furniture spend and elevated levels of promotional activity."

Alber concluded, "The strength of our operating model produced strong earnings again this quarter, driven by our full-price selling, supply chain efficiencies, and best-in-class customer service. Our early seasonal reads are strong, and we are optimistic about the holiday season."

THIRD QUARTER 2023 HIGHLIGHTS

Comparable brand revenue -14.6% with a 2-year comp -6.5% and a 4-year comp +34.8%.

Gross margin of 44.4% +290bps to LY with selling margin +450bps due to lower shipping and freight costs, and occupancy deleverage of 160bps. Occupancy costs of $200 million, -1.0% to LY.

SG&A rate of 27.4% +140bps to LY driven by employment and general expense deleverage. SG&A of $507 million, -11.1% to LY.

Operating income of $315 million with an operating margin of 17.0%.

Diluted EPS of $3.66 per share.

Merchandise inventories -17.2% to the third quarter LY to $1.4 billion.

Cash at quarter-end of $699 million with no borrowings outstanding.

Operating cash flow of $290 million funding dividends and stock repurchases.

OUTLOOK

We are updating our fiscal 2023 guidance. We now expect net revenue growth in the range of -10% to -12% with an operating margin between 16% to 16.5%. Our lower sales outlook is offset by our expected increased operating margin, producing higher implied EPS guidance.

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

WEBCAST INFORMATION

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