Despite choppy demand, Williams-Sonoma registered a solid third quarter, delivering results that were a bit above expectations.
A Yahoo Finance published analyst consensus estimate called for diluted earnings per share of $3.71 and revenues of $2.15 billion.
Williams-Sonoma comparable sales in the quarter were up 8.1%, with Pottery Barn up 19.6%, West Elm up 4.2%, Williams Sonoma down 1.5% and Pottery Barn Kids and Teen down 4.8%
Net revenues were $2.19 billion versus $2.05 billion in the year-earlier quarter, Williams-Sonoma stated. Operating income was $339.6 million versus $330.3 million in the period a year prior.
In a conference call, Laura Alber, Williams-Sonoma president and CEO, said the company remains aware current economic uncertainty is a concern for consumers and investors. In the third quarter, Williams-Sonoma experienced deceleration and choppiness in demand but is determined to control what it can and seek opportunities to reduce costs without negatively affecting the customer experience, Alber noted. She emphasized that ensuring service and innovation is key to outperforming company peers. Williams-Sonoma will continue avoiding sitewide promotions but, rather, focus on marking down and clearing overstocks. Alber said the company also is working with vendors to reduce costs and pass savings strategically to customers.
Out-of-market and redundant shipping expenses and transportation costs have negatively impacted Williams-Sonoma gross margin, Alber pointed out, adding the company will continue focusing on such pressures and mitigate costs, which should boost Williams-Sonoma’s business in the future, particularly in the second half of next year.
Alber said Williams-Sonoma is uniquely positioned to take market share in a home furnishings downturn as the company has built a portfolio of popular brands with a shared platform of competitive differentiators; in-house design; a digital-first, but not digital-only strategy; and value. In addition, Williams-Sonoma has identified growth opportunities through strategic initiatives such as B2B, global and marketplace, Alber added.
“We are proud of another strong quarter generating an 8.1% comp, or a 25% two-year comp and an almost 50% three-year comp, with record EPS growth of 12% over last year to $3.72 per share,” Alber said. “These results reflect the continuation of backlog order fulfillment, strong product margins and disciplined cost control. 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.”
Jeff Howie, Williams-Sonoma CFO, added, “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.”