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August 26, 2021
Williams-Sonoma Looks Ahead After Second Quarter Gains
Posted In: Retail Articles

By Mike Duff

Contributing Editor

The second quarter came in strong for Williams-Sonoma and CEO Laura Alber said there was more opportunity ahead of this year and beyond.

The company posted net earnings of $246.1 million, or $3.21 per diluted share, versus $134.6 million, or $1.70 per diluted share, in the period a year earlier.

Adjusted for one-time events, earnings per share were $3.24 versus $1.80 in the year-prior quarter.

A Yahoo Finance-published analyst average earnings per diluted share estimate were $2.60 in the second quarter.

Overall comparable sales, or comparable brand revenue, as Williams-Sonoma puts it, grew 29.8%, with West Elm up 51.1%, Pottery Barn up 29.6%, Pottery Barn Kids and Teen up 18.%, and Williams Sonoma up 6.4%.

Revenues gained 30.7% to $1.95 billion, with strong growth across all brands and channels, including e-commerce, holding at 65% of total company revenues. E-commerce and retail comparable brand revenue growth on a two-year basis were 58% and 56.5%, respectively, the company reported.

Revenues beat an analyst average estimate of $1.81 billion.

Operating income was $323.1 million versus $185.4 million in the year-before quarter, the company indicated, while adjusted operating income was $325.9 million versus $195.1 million.

In a conference call, Alber, Williams-Sonoma president and CEO, said that, by working on a commitment to sustainability and equity, omnichannel positioning and in-house design capabilities, the company had established a momentum that would drive it to higher sales and market share. Looking at the rest of the year and beyond, she said the company sees the macro environment as rife with opportunity as more people prioritize their homes and household decor. Growing home sales and changes in William-Sonoma’s internal operations, including the rollout of new store merchandising, are among the factors that will help increase traction.

In a specific example of how Williams-Sonoma is capitalizing on growth opportunities, Alber pointed to West Elm expanding into product white space and accelerating its presence online and through new stores as driving brand awareness from 20% to 60%. She added that the company expects to reach almost $5 billion in Pottery Barn sales by 2024 through driving incremental growth in upholstery, bath, baby and dorm. At the same time, Williams-Sonoma is advancing the Rejuvenation and Mark and Graham businesses, where the company is pushing profitable e-commerce growth in underserved categories.

 

We do not see any evidence that growth trends are waning, and in fact, we see favorability in the macro environment as more people prioritize their homes and home décor. We believe we are at the intersection of a transformative change that will accelerate the growth of our industry, and our market share within the industry.

-Laura Alber, CEO, Williams-Sonoma

 

In announcing the financial results, Alber said, “We are proud to report another quarter of outperformance with a 30% comp, strong growth across all brands and channels, and 360 basis points of operating margin expansion. These second-quarter results demonstrate the success of our growth strategies and the earnings power of our company. We have an advantage in the industry due to our exclusive in-house design capability, our channel strategy which is digital-first but not digital-only, and our values, with sustainability and equity underlying all that we do. The momentum we are seeing in our business and our winning positioning set us up to continue to take share in a fractured market.

“We do not see any evidence that growth trends are waning, and in fact, we see favorability in the macro environment as more people prioritize their homes and home décor. We believe we are at the intersection of a transformative change that will accelerate the growth of our industry, and our market share within the industry. In addition, our growth strategies are gaining traction faster than we predicted, and our key differentiators are further distancing us from our competition.

She added that Williams-Sonoma sees “a clear path to beating our previous revenue and profitability targets and we are raising our full-year revenue outlook again, with revenue growth now expected to be in the high teens to low twenties and operating margins now expected to be in the range of 16% to 17%. Given our increased optimism, we now expect to achieve our long-term goal of $10 billion in revenues in 2024, one year faster than previously expected, and with higher profitability, which will now be at or above our increased fiscal year 21 operating margin.”

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