Williams-Sonoma Announces Fourth Quarter & Year End Operating Results

March 19, 2025  by Karen Parrish in Business Strategy, Industry   

“We are proud of our strong finish to 2024. In Q4, our comp came in above expectations at positive 3.1%. We exceeded profitability estimates with an operating margin of 21.5% and earnings per share of $3.28. This success was fueled by the strength of our operating model, our standout seasonal offerings, our impactful collaborations, and a strong improvement in both retail and online furniture sales. On the full year, our comp ran down 1.6%. We delivered a record annual operating margin of 17.9% with full-year earnings per share of $8.50,” said Laura Alber, President and Chief Executive Officer.

Alber concluded, “Looking to 2025, we are confident in our strategies and competitive positioning. Despite an uncertain backdrop, we have been, and will continue to be, focused on returning to growth, enhancing our world-class customer service, and driving earnings. We are innovators and operators and are well set up for a great 2025.”

FOURTH QUARTER 2024 HIGHLIGHTS
— Comparable brand revenue +3.1%.

— Gross margin of 47.3% +130bps to LY driven by (i) occupancy leverage of +80bps, (ii) higher merchandise margins of +40bps and (iii) supply chain efficiencies of +10bps. Occupancy costs of $205 million, -1.6% to LY.

— SG&A rate of 25.8% -10bps to LY driven by lower general expenses, partially offset by higher performance-based incentive compensation and advertising expenses. SG&A of $635 million, +7.6% to LY.

— Operating income of $530 million with a record operating margin of 21.5%. +140bps to LY.

— Diluted EPS of $3.28 per share. +20.6% to LY.

— For the fourth quarter fiscal 2024, we estimate this additional week contributed +510bps to revenue growth and +60bps to operating margin.

FISCAL YEAR 2024 HIGHLIGHTS
— Comparable brand revenue -1.6%.

— Gross margin of 46.5%, including a benefit of +70bps from the out-of-period freight adjustment in Q1 FY24. Without this adjustment, gross margin of 45.8%, which increased +320bps to LY GAAP basis, driven by (i) higher merchandise margins of +170bps, (ii) supply chain efficiencies of +130bps and (iii) occupancy leverage of +20bps. Occupancy costs of $793 million, -2.6% to LY GAAP basis.

—Gross margin of 46.5%, including a benefit of +70bps from the out-of-period freight adjustment in Q1 FY24. Without this adjustment, gross margin of 45.8% which increased +310bps to LY non- GAAP basis, driven by (i) higher merchandise margins of +160bps, (ii) supply chain efficiencies of +130bps and (iii) occupancy leverage of +20bps. Occupancy costs of $793 million, -2.6% to LY non-GAAP basis.

— SG&A rate of 27.9% +130bps to LY GAAP basis driven by higher performance-based incentive compensation and advertising expense, partially offset by lower general expenses. SG&A of $2.15 billion, +4.5% to LY GAAP basis.

— SG&A rate of 27.9% +160bps to LY non-GAAP basis driven by higher performance-based incentive compensation and advertising expense, partially offset by lower general expenses. SG&A of $2.15 billion, +5.7% to LY non-GAAP basis.

— Operating income of $1.43 billion with an operating margin of 18.6%, including a benefit of +70bps from the out-of-period freight adjustment in Q1 FY24. Without this adjustment, operating income of $1.38 billion with an operating margin of 17.9%, +180bps to LY GAAP basis and +150bps to LY non-GAAP basis.

— Diluted EPS of $8.79, including a benefit of $0.29 per share from the out-of-period freight adjustment in Q1 FY24. Without this adjustment, diluted EPS of $8.50 per share, +16.8% to LY GAAP basis and +14.4% to LY non-GAAP basis.

— ROIC of 54.0% driven primarily by net earnings.

— Maintained strong liquidity position of $1.2 billion in cash and $1.4 billion in operating cash flow enabling the company to deliver returns to stockholders of nearly $1.1 billion through $807 million in stock repurchases and $280 million in dividends. Stock repurchase authorization of $1.2 billion remaining under our stock repurchase programs.

— Fiscal 2024 results included a 53rd week, which we estimate contributed +150bps to revenue growth and +20bps to operating margin in fiscal 2024.

DIVIDENDS AUTHORIZATION
— Increased our quarterly dividend 16%, or $0.09, to $0.66 per share.

OUTLOOK
— Fiscal 2025 is a 52-week year. Our financial statements will be prepared on a 52-week basis in fiscal 2025 versus 53-week basis in fiscal 2024. However, we will report comps on a 52-week versus 52-week comparable basis. All other year-over-year comparisons will be 52-weeks in fiscal 2025 versus 53-weeks in fiscal 2024.

— In fiscal 2025, we expect annual net revenues in the range of -1.5% to +1.5% due to the impact from the 53rd week in fiscal 2024, with comps in the range of flat to +3.0%; and an operating margin between 17.4% to 17.8%, inclusive of the impact of 20bps from the 53rd week in fiscal 2024.

— Over the long term, we continue to expect mid-to-high single-digit annual net revenue growth with an operating margin in the mid-to-high teens.

FIRST QUARTER 2024 OUT-OF-PERIOD FREIGHT ADJUSTMENT
Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal 2021, 2022 and 2023 for a cumulative amount of $49 million. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. We then evaluated whether the cumulative amount of the over-accrual was material to our projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, our Consolidated Financial Statements for fiscal 2024 include an out-of-period adjustment of $49 million, recorded in the first quarter of fiscal 2024, to reduce cost of goods sold and accounts payable, which corrected the cumulative error on the balance sheet as of January 28, 2024.

SECOND QUARTER 2024 COMMON STOCK SPLIT
On July 9, 2024, we effected a 2-for-1 stock split of our common stock through a stock dividend. All historical share and per share amounts in this release have been retroactively adjusted to reflect the stock split.

CONFERENCE CALL AND WEBCAST INFORMATION
Williams-Sonoma, Inc. hosted a live conference call on March 19, 2025, at 7:00 A.M. (PT). A replay of the webcast will be available at http://ir.williams-sonomainc.com/events.